Healthcare India- Innovation – Access – Growth

Healthcare  in India - innovation - Access - Growth

Healthcare in India – Innovation – Access – Growth

Healthcare  in India seems to finally be coming of age , came  across a  few  very interesting business models , new ventures  , which should ideally solve  for  existing gaps in the market. Thought would share them with you:

The Glocal Story : In a country such as ours  with  a population of 1.23 Billion, where 22% of the  population is below the  poverty line  (Earning less than Rs. 33.3 (urban) and  Rs.27.2 (rural)), the need for  subsidized / low  cost quality healthcare is  quite clearly evident.  To top that about 70% of our population is rural . Two ex  civil servants did see this gaping hole and  decided to fill it. Glocal healthcare established its first 100 bedded secondary care hospital in Sonamukhi , WestBengal in the year 2010, since then 4  more hospitals have been comisioned in 3 and 4 tier  cities. Whats  even more interesting is that  a plan for commissioning  50 more such hospitals over the next 2  years  is in the pipeline. The total bed capacity would be a whooping 5500 once the plan is executed.

That  is insane but why does it work for them because they use  a Basic model which they have tested over the last five years and perfected to some degree and this includes

1) Well defined catchment area a tier 3 or 4 tier city with a  population of 1 lac urban and 5  lac rural

2) Well defined service mix only  secondary care  well defined specialities ( as per the CEO only 42 diseases account for almost 95% of the disease burden in rural areas)

3) Low project cost – An investment  of only Rs. 8 Crores for the comissioning of the entire hospital  including  civil work, equipment and housing for doctors. (Low land cost, no frills, less area, modular approach and  inhouse construction). And a total of 6- 8  months only for completion.

3) Low fixed cost – A Staff of only 100 for the 100 bedded hospital  which includes 12 onroll doctors thus low fixed costs

4) Utilization of resources which a  bigger corporate hospital would shy away from for example local medicos are welcomed into the hospital and  made part of the care giving team .

5)Partnerships for resource development. Training provided by  a partner agency  to nursing aids and technicians thus filling a  gap in terms of manpower scarcity.

I think this would be the gist of the model  and  of-course the main central  proposition of  quality healthcare at 20 – 40% less than the market rate.

Will the model be a success when scalled up is yet to be seen. Though there is a  definite need for such healthcare, however currently the model works because  it is supported by a state government insurance / Cashless healthcare provision scheme . This accounts for 55% of their business.  But atleast its a  refreshing new approach to healthcare.

The DaVita Nephrolife partnership –  According to recent studies around 17% of the  indian urban population suffers from Chronic Kidney Disease.  Dialysis is a  harsh reality for these patients a  regular affair and no matter how  dark it may sound Nephrolife has  been able to see this demand. With a  potential  market size  of $350 million growing at 20 odd  % annually somebody had to get organised. With what started out as a stand alone dialysis centre in Bangalore  in 2009 after their partnership with DaVita and NEA in 2011 has grown to a network of 14 centres in  a short span of 2  years.  Whats special about this partnership is that the partners not only infused funds  in the tune of $25 million but also brought along with them experience  in previous healthcare  projects and for DaVita healthcare specifically experience in their chosen speciality of Nephrology and Dialysis.

The Key to success be flexible ,  partner, see the bigger picture and  focus on the game.

1) Be Flexible – Various formats of basic business model  – Stand alone  Dialysis centres,  Satellite Dialysis centres , Stand alone integrated Kidney care  centres, Box in Box model for tertiary and secondary care hospitals (either  on rental model or as  a JV)

2) Partner  – The flow of funds  helps when establishing such  a capital intensive setup. Per bed cost is estimated at around the $25 – 40000 mark, however returns are  expected at an EBITA of around 20%. And along with that comes the administrative expertise and  knowhow. Local partners further  reduce capital burdens as well as provide stronger local networks.

3) See the Bigger  Picture: The concept with DaVita  Nephrolife is to provide integrated Kidney care services to build a  care network  , not just  Dialysis  but rather  an entire spectrum of care ranging from prevention ,  diagnosis, Dialysis and end stage kidney disease management (Transplant) , be it through their centre or a  partner centre.

4) Focus on  the game  –  whats interesting is that they realise the chronic nature of most kidney disease and the  importance of establishing long lasting relationships. The single  speciality focus also gives them a certain degree of advantage over multispeciality centres which  can at times  be distracted.

Again its  for time to tell whether  these Healthcare ventures  would succeed  in the future. However its nice to see a new approach to Healthcare in India  an approach based around flexibility,  partnerships and real patient needs.

Disclaimer: The views expressed in this  post are my own and  are  not meant to be derogatory  to any institution or organisation. These are just my thoughts and  these are open for further  discussion and  development. Please do comment and  share and  let’s get some universal cognition into this. Thank you for your patience and  tolerance.

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