A small but growing band of companies wants to make healthcare affordable, accessible, and ubiquitous. Like the larger groups, their services are of a high quality, but costs are kept under a tight leash. With early models starting to scale, social investors are not the only ones being drawn to such companies...

1. 6 Special Feature Low-cost Healthcare THE ECONOMIC TIMES | BANGALORE | THURSDAY | 12 MAY 2011
A small but growing band of companies wants to make healthcare affordable, accessible, and ubiquitous. Like the
larger groups, their services are of a high quality, but costs are kept under a tight leash. With early models starting
to scale, social investors are not the only ones being drawn to such companies, writes Gauri Kamath
The Udipis of Healthcare
VAATSALYA “You have
to reduce
Started Hospitals
capex
2005 10 drastically
so as not to
Promoter: Ashwin Naik worry about
and Veerendra Hiremath recovering
Investors: Aavishkaar, it over a fixed period”
Oasis fund and Seedfund ASHWIN NAIK
Co-founder & CEO, Vaatsalya
Expansion Plans: From two
states to five states in 5 years
Model: Set up affordable Some solutions
secondary care hospitals in I Bring back specialists
semi-urban and rural areas native to the town who
Focus: High-frequency, rela- have moved to the city
tively low-value procedures because of no local
such as maternity, paedi- options or infrastructure
atrics, general surgery, inter- I Partner local nursing
nal medicine, dialysis, mini- colleges for internship
mally-invasive procedures and to design curriculum
Early challenges: Hiring I Employ local doctors to
and retaining doctors generate visibility for
and nurses the brand
EYE-Q “We found
that even 100
Started Hospitals
km beyond
2007 11 Delhi,
healthcare
Promoter: Rajat Goel and infrastructure
ASHWANI NAGPAL Ajay Sharma was poor... we
A visiting doctor from Eye-Q’s Gurgaon hub examines a patient at its spoke hospital in Rewari, 82 km away from Delhi
brought in better quality at
Investors: Song Advisors
the same price”
or the rich, famous and pregnant and ubiquitous? `80 lakh to `1 crore per bed to set up trained paramedics. There was all
F
Expansion Plans: 50 in the
living in Hyderabad’s upmarket “Initially, the approach was build a tertiary care hospital in a big city . of one in Gulbarga, and it wasn’t up RAJAT GOEL
Jubilee Hills, there is The Cradle, a and people will come,’” says Ashwin Such hospitals focus on big-ticket to speed. Vaatsalya was promising next two-and-a-half years Co-founder & CEO, Eye-Q
high-end, luxury ‘birthing centre’ Naik, CEO and co-founder of Ban- surgeries such as heart or cancer. to change that. Model: Hub-and-spoke. Hub
recently launched by Apollo Hospi- galore-based Vaatsalya, which ven- But these entrepreneurs focus on Doshetty knew there was demand
tals. It’s a relatively new idea, at the tured into semi-urban areas of Kar- low-value but high-frequency serv- — many of his patients travelled all is a super-speciality hospital Some solutions
top end of India’s booming private nataka with its brand of multi-spe- ices, whether it is child birth, gall the way from Gulbarga to Banga- in a city while spokes are
I Partner local doctors
healthcare business. But the bigger ciality hospitals in 2005. It now has bladder surgery, eye care or kidney lore some 600 km away Others were
. smaller hospitals in tier-2
innovations are happening at the 10 such centres. “But over time the dialysis. This helps them cut set-up travelling 100 km to Sholapur. A by buying out and
and 3 towns.
other end of the economic spec- industry realised that one shop costs and use volumes to drive oper- chat with doctors in other Vaatsalya refurbishing their
trum, closer to the bottom of the doesn’t work for everybody .” ational costs lower. “We have found hospitals convinced him and he has- Focus: Complete range of practice and keeping
pyramid. One such is unfolding at Affordable healthcare is not entire- that 95% of the health need in rural n’t looked back. “We are growing to eye care or ophthalmology
LifeSpring Hospitals in Chilkalgu- ly new to the private sector. areas is secondary care,” says Azim. be a good family now,” he says. Vat- them in charge
da, Secunderabad, less than an Deviprasad Shetty’s heart hospital “India needs more models in pri- salya has hired 20 such consultants services I Share doctors and less
hour’s drive from Jubilee Hills. Narayana Hrudayalaya and charita- mary and secondary care,” says from cities, native to Gulbarga, and Early challenges: Attracting frequently-used equip-
Many of the city’s poor live in ble eye hospitals Sankara Vishal Bali, CEO, Fortis Global. moved them to its hospital, he adds.
Chilkalguda. When their women go Nethralaya and LV Prasad offer They build small hospitals. Each This is tougher in some areas. In doctors. Since eyecare is ment (like for the
into labour, some head to Life- high-quality, affordable care. But LifeSpring centre has 20-25 beds, Uttar Pradesh, “there is a paucity of technology-intensive, keeping retina) between several
Spring. It is clean, airy and well- they are exceptions, present only in Vaatsalaya has 70-100. Vaatsalya many trained doctors who are will- equipment cost down while centres located within a
staffed. Its rates for maternal deliv- cities. “Momentum has just come also does not invest in specialised ing to work in slightly more remote making the service affordable specific radius
eries and surgeries such as hys- into affordable healthcare,” says tools such as CT scanners that cost areas,” says Rai. Meditech has
terectomies are displayed promi- Abhishek Singh, head (healthcare) crores if they are available locally . struggled to find doctors for its
nently on a board outside the gener- at Crisil Risk & Infrastructure Advi- It chooses to refer patients there. ‘spoke’ hospital in Ghazipur, a two-
al ward. Normal deliveries cost sory “Even the lower middle class
. “We have made it clear that we are hour drive away Currently, a gynae-
.
`4,000, a fraction of what other pri- has been getting conscious about in the business of appropriate tech- cologist, a cardiologist, an
vate hospitals would charge. For quality but did not have options at a nology and not latest technology,” orthopaedic surgeon, and an eye
poor patients, the rates are as much
a source of comfort as the treat-
reasonable cost.” LifeSpring and
Vaatsalya have been early movers
says Naik.
There’s another reason for this
surgeon travel once a week or fort-
nightly from the hub to the spoke. LIFESPRING “We ask
ment itself. and their growth has emboldened prudence. “Conventionally, every “Initially the doctors did not want to prospective
Inside the ward, each bed is sepa- others, including investors. hospital puts in everything into the travel,” admits founder Singh, but Started Hospitals
rated by a pink curtain and there is “The biggest learning from Vaat- system and then the doctor gets a with her persistence and with the
employees
a separate cot for a caregiver. The salya is that this model is worth- commission on every procedure locals fussing over them, the doctors 2005 09 to visit a
environment is frugal, functional while and scaleable,” says Vineet performed which is an incentive for have come around. The company government
and affordable. Rai, founder CEO of venture capital unnecessary investigation,” says has also firmed up a satellite link
“All our hospitals are close to firm Aavishkaar, an investor in the Azim of Glocal. with ISRO which will help provide Promoter: HLL LifeCare and private
urban slums and the working poor,” company Last year, Rai’s venture
. Eye-Q’s network shares both doc- remote care. Others such as EyeQ set-up before they
says Anant Kumar, CEO of the fund put an undisclosed amount tors and equipment. For instance, partner with senior doctors who Investors: Acumen Fund
decide to join us”
maternity hospital chain which into New Delhi’s GV Meditech to retina equipment is expensive but already have a local nursing home
Expansion Plans: 30 by
runs nine centres in Andhra help it expand beyond one hub hos- not used as frequently as a ‘phaco’ but none to bequeath it to. EyeQ ANANT KUMAR
Pradesh, including in Rajah- pital in Benares into several spoke or cataract machine. takes over their practice, upgrades July 2012 CEO, Lifespring
mundry, Vijaywada and Nellore. hospitals — smaller than the hub So a retina specialist it and puts them in charge.
Model: Network of low-cost
“Our customers will not travel and with limited specialties — and These travels once a week An important carrot, says Azim
more than 2 to 5 kilometres micro clinics in villages and towns companies to four centres from of Glocal, is the absence of pressure hospitals in cities for the Some solutions
for delivery .” of Uttar Pradesh. Meditech’s focus on the hub with the to justify the hospital’s capital urban working poor I Be ruthless about cost
Cut to Rewari, a town of one lakh founder MD, gynaecologist Indu low-value equipment in the investment by advising unnecessary
people in Haryana, 82 km south- Singh, had been mulling over this. but high- back of a car or by tests, or procedures. This is echoed Focus: Maternity, child birth not related to care
west of Delhi. Known for its brass But Aavishkaar “possibly strength- frequency train. These centres by the other hospitals. “We have no and other gynaecological pro- I Outsource pharmacy and
products and close to the industrial ened her conviction by telling her services, have pooled patients targets and we don’t ask them to do cedures
hub of Manesar, Rewari is not we had done it before,” says Rai. which helps in advance. unnecessary hysterectomies,” says lab services, don’t procure
exactly the boondocks. Yet, last year Similarly, in 2010, Kolkata-based them cut This sharing has LifeSpring’s Kumar. (Andhra Early challenges: Keeping medicines upfront
when resident Jagannath Bathla, start-up Glocal Healthcare raised set-up costs helped cut the cost of Pradesh is known for such practices).
set-up costs down, assuring I Health workers, nurses
73, needed cataract surgery for his `15 crore from Sequoia Capital, and a centre from the ini-
right eye, it felt like one. Elevar Equity to set up eight rural tially estimated `2.5 crore to `90 MILES TO GO patient compliance fan out into community
Bathla would have to travel 50 km hospitals in a year. It has ambitions lakh. This also helps maintain con- Soon, it will be time for these low-
by road one way to the town of of doing 2,000 such hospitals over sistency of service quality, says cost entrepreneurs to expand, for
Mahendragarh for something city- seven years. The first one will be Deependra Vikram Singh, a retina which they will need capital. Initial-
dwellers would get in the neigh- ready this June, says CEO specialist at Eye-Q who travels every ly, only social investors — those who
bourhood. Then he heard of Eye-Q, Sabahat Azim. week to Rewari, among other towns. do not measure returns in financial
a new eye hospital right in the heart
of Rewari. In September last year,
Make no mistake. Low cost does
not mean cutting corners. Rather, it
“Because specialists are moving
across, they can observe any defi-
terms alone — backed them. The
Acumen Fund that has invested in GV MEDITECH “When
he got his right eye operated there is “about providing quality without ciencies (in the smaller hospitals) to LifeSpring is one example. But as people
and was back for the left earlier this the corresponding price increases help improve and ensure that quali- these models scale up, “they will Started Hospitals
month. “It’s just five minutes to or at lower cost,” says Meghna Rao, ty of eye-care becomes uniform.” attract traditional investors,” says seek out
the hospital,” he says. country director, Acumen Fund, “We reduce cost not by providing Rao of Acumen. 2002 05 healthcare,
Eye-Q is targeting smaller cities which invested `5 crore in less, but providing more, more effi- For instance, Song Advisors, an
because people end up wasting time LifeSpring in 2008. ciently says Glocal’s Azim. “At
,” investor in Eye-Q, looks at a combi- they come
Promoter: Indu Singh
and money, and foregoing income to Doctors are paid competitively; `9,000 for a C-section we get the same nation of financial return and prepared
travel for care, says Rajat Goel, there is investment in training of target profit margin as a private hos- socio-economic development. And Investors: Aavishkaar to sell their land”
founder CEO who teamed up with auxiliary staff; there are hospital pital gets charging `20,000 because of Glocal’s two investors, Elevar
eye surgeon Ajay Sharma to start information technology systems to our costs are low,” says LifeSpring’s Equity is focused on improving Expansion Plans: Reach 12 in
INDU SINGH
the company in 2007. EyeQ runs 10 keep track of patients and clinical Kumar. Such low-cost chains could services to the base of the pyramid two years MD, GV Meditech
hospitals in places such as Hald- outcomes; patient feedback is also break even in 6-18 months. while Sequoia is a mainstream pri-
wani and Sahranpur in northern actively sought. vate equity investor. Model: Set up a hub-and-
India where it charges 30% less for These companies are high-quali- THE HARD ROAD “Healthcare in the space that we spoke model of secondary
surgeries than its super-speciality ty, replicable, and scaleable just In 2009, when Vaatsalya first are investing has the potential to care hospitals in cities and
Some solutions
hub in Gurgaon. “It is providing a like the large chains, but with some approached Manjunath Doshetty, a grow 50% to 100% year on year,” small towns and a network I Coax doctors to travel to
Gurgaon facility at Rewari prices,” key differences. The aim is to have kidney specialist, working in Ban- says Rai. “Since we invest in the spokes once a week by
says Vishal Vasishth, founder MD hospitals that are accessible and galore’s reputed Manipal Hospital, early stage, valuations normally of micro-clinics in villages
of Song Investment Advisors, which efficient, run with a tight control he hadn’t heard of them. But Vaat- scale up and you may find an exit to providing comfortable
Focus: Super-speciality care in
invested an undisclosed amount on cost, and a firm grip on pricing. salya, it appeared, had researched the next round of investors.” travel and lodging. Use
in Eye Q in 2010. “It demands tremendous manage- him thoroughly They knew that
. Will large corporate chains end the hub, secondary care in
telemedicine.
ment since they have to work on a Doshetty was a native of Gulbarga up acquiring such companies? “As spokes, primary in
TIGHT COST CONTROLS tight budget,” says Muralidharan in North Karnataka where they India advances its healthcare deliv- I Partner with large hospital
micro clinics
For the better part of the last Nair, partner (healthcare), Ernst & were planning to start their newest ery system to create a wider deliv- for specialist support
decade, a small but growing number Young. They are much like the hospital. Doshetty admits that the ery base, we need many more such Early challenges: Big city
I Use government skilling
of entrepreneurs have been invest- Udipi hotels known for inexpensive absence of infrastructure and staff models,” says Fortis’ Bali. “They lure among doctors makes
ing their energies and resources to quality fare. to practise his discipline in his don’t necessarily have to converge programmes to train
hiring and retention tough,
answer a question that mostly hometown had forced him to move with the larger players but can locals for micro clinics
engages only policy makers and SHARED RESOURCES to Bangalore. Dialysis required enjoy their space.” paucity of trained auxiliary
charities — how do you make quali- Hospitals have always been high- equipment, qualified nursing staff staff, finding inexpensive I Partner local panchayats for
ty healthcare affordable, accessible cost, high-gestation projects. It costs and an intensive care unit with (Additional reporting by Vikas Kumar) locations space to run micro clinics