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Innovations in Healthcare Management & Informatics

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  • 1. Preparing for Private Equity (or Venture Capital)India-centric PerspectiveInnovations in Healthcare Management & InformaticsSameer MehtaAtlas VenturezDr Mehta’s Hospitals
  • 2. Combined Perspective of Operator & Investor Atlas Venturez advises private equity funds Atlas Venturez helps build high-growth (fundable)companies Atlas Venturez advises boards and leadership teams onpreparing and successfully navigating fund placements Operating role in tertiary care hospitals Dr Mehta’s Hospitals Mehta Children’s Hospitals Mehta Advanced Day Care CenterEvaluated oradvised over50 healthcaretransactions
  • 3. Market Reality (India)• PE Deals 2009 >$3.8 Billion across >232 deals• Healthcare & Lifesciences• >8% of total deals• $328M on 20 deals - 2009 vs $607M on 35 deals – 2008• Big Dogs: Max India, KMC, Apollo, KIMS (hospitals)• Stage Split across all PE deals (by volume)Source: Venture Intelligence 2009 PE Digest
  • 4. Current reality Strategic investors and funds are very keen to get hands on wellmanaged, scalable health-care companies Interest across company phases, though most focused on proven-tech, growth-equity or late-stage companies---------------------------------------vs----------------------------------------- Good prospects have poor scalable growth plans Many real estate, premature or ultra-small prospects Miscellaneous e.g., trusts, franchise, co-own IP / brand… Early stage – not many innovative or robust prospects based onstrong business fundamentals Limited understanding of value or cost of organized capital
  • 5. Focus of TodayMindset, Structure, Lessons Am I fundable? Is organized funding the answer to our dreams? Specific disbursement of fund plans Strengthening financials for fair / favored valuations What are the full range of investor exits Build and agree robust long term growth plan Develop a robust reporting system and MIS Measure performance versus industry benchmarks acrossmultiple facets of the business (incl. clinical) Ensure management team band-width Scalability of business e.g., hub & spoke, add markets Don’t boost numbers – you’ll live with consequences Do not over-shop or over-expose your growth plans Find an advisor with content in healthcareMindsetStructureCaveats
  • 6. MindsetAm I fundable? Intellectual Property (or significant competitivebarriers) Scalable Reach $50M revenues within 4 – 5 years Healthy and sustainable EBITDA and PAT margins Substitutable Service versus Technology / Products Current flavor of the month (investors)
  • 7. Is Organized Funding the answer to ourDreams? Strategic investors and funds are very keen to get hands onwell managed, scalable health-care companies Interest across company phases, though most focused onproven-tech, growth-equity or late-stage companies---------------------------------------vs----------------------------------------- Good prospects have poor scalable growth plans Too many real estate or premature prospects Early stage – not many innovative or robust prospects basedon strong business fundamentals Operators do not fully understand the value or cost oforganized investor capital (PE funding sounds cool!)
  • 8. MindsetSpecific disbursement of fund plans Build a very detailed plan for spending (incl. phasing) Account to nearest $5 - 10k Consider capital ROI of large ticket specific equipment Attempt to build some additional flexibility in draw-down Consider aspects that investors do not like e.g., real estate Historically folks under predict and run out earlier Best Practice: Save 4 – 6 months burn for unpredictability
  • 9. MindsetCase Study – Investor Exit Hospitals Strategic Sale HMS IT Provider IP Transfer
  • 10. Focus of TodayMindset, Structure, Lessons Am I fundable? Is organized funding the answer to our dreams? Specific disbursement of fund plans Strengthening financials for fair / favored valuations What are the full range of investor exits Build and agree robust long term growth plan Develop a robust reporting system and MIS Measure performance versus industry benchmarks acrossmultiple facets of the business (incl. clinical) Ensure management team band-width Scalability of business e.g., hub & spoke, add markets Don’t boost numbers – you’ll live with consequences Do not over-shop or over-expose your growth plans Find an advisor with content in healthcareMindsetStructureCaveats
  • 11. StructureCase Study – Growth / Business Plans What is the difference between? We hired a consultant to help me build detailed growth plans We hired an investment bank to help build forecasts Our CFO or MBA generated our forecasts
  • 12. StructureCase Study – Growth / Business Plans What is the difference between? We hired a consultant to help me build detailed growth plans We hired an investment bank to help build forecasts Our CFO or MBA generated our forecasts Best Practice – Department head and leadership teamdevelops clear long term internal business plans (withcommitted milestones) on our vision, advisor / externalbody has strengthened the presentation of the plan forinvestors
  • 13. StructureReporting Systems Funds will want detailed performance information regularly Build muscle and capability to track and measure financial,commercial, clinical and operational metrics within MIS Management team must understand and be able to defend thedata and rationale behind metrics Compare metrics vs previous and industry benchmarks Best practice – develop a system with one – two levels deeperand more frequently versus investor requirements Best practice – use monthly and quarterly dashboards
  • 14. StructureManagement Team Build bandwidth of the core team Chairman, CEO, CFO, critical unit heads Funds do not invest in 1 man teams Age and breadth of experience of core team Validate qualifications and experiences of key staff No major skeletons or surprises Alignment and incentive structure for key staff Some performance based linked to metrics at the LT level Best practice – active (advisory) board pre-fund raise
  • 15. Focus of TodayMindset, Structure, Lessons Am I fundable? Is organized funding the answer to our dreams? Specific disbursement of fund plans Strengthening financials for fair / favored valuations What are the full range of investor exits Build and agree robust long term growth plan Develop a robust reporting system and MIS Measure performance versus industry benchmarks acrossmultiple facets of the business (incl. clinical) Ensure management team band-width Scalability of business e.g., hub & spoke, add markets Don’t boost numbers – you’ll live with consequences Do not over-shop or over-expose your growth plans Find an advisor with content in healthcareMindsetStructureCaveats
  • 16. CaveatsScaling Model Hub and Spoke Multi-Location (economies of scale and scope) Medical Tourism International Markets Mobile Platform New Markets e.g., Nanotechnology, Education…
  • 17. CaveatsCase Study Numbers Case Study India Clinics Case Study HMS IT
  • 18. Focus of TodayMindset, Structure, Lessons Am I fundable? Is organized funding the answer to our dreams? Specific disbursement of fund plans Strengthening financials for fair / favored valuations What are the full range of investor exits Build and agree robust long term growth plan Develop a robust reporting system and MIS Measure performance versus industry benchmarks acrossmultiple facets of the business (incl. clinical) Ensure management team band-width Scalability of business e.g., hub & spoke, add markets Don’t boost numbers – you’ll live with consequences Do not over-shop or over-expose your growth plans Find an advisor with content in healthcareMindsetStructureCaveats
  • 19. Final Thoughts Congratulations. We think your company has a greatfuture - here’s a check for $AB million You now work for someone else You have just lost a few degrees of operating freedom The world changes – build relationships with your investor tosustain you through uncertainty and rough waters Understand their mind-set and way of working (speak toinvestor portfolio company leadership teams) Have fun – you now have fuel to power your dreams
  • 20. Final Thoughts Alliances Medical and para-medical education Branded healthcare system looking for Indian expansion Beta testing new health care informatics systems Business Seeking investor prospects or support portfolio companies Providing new jet engines to your business Funding your business aspirations (seed to PE) Contact sam@atlasventurez.com or sameer@mehtahospitals.com