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BW Businessworld

Trying A New Prescription

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The fact that tier-2 and Tier-3 cities badly need quality healthcare facilities has never been the issue. The real question for corporate healthcare chains has been: is there a way of turning this need into a proper business? For a fairly long time, the answer was: probably not.

I remember having a conversation with one of the pioneers in corporate healthcare almost a decade ago. He had tried to tap the small-town market through primary care centres. He had failed because of a number of reasons. First, few patients wanted to pay a premium to go see a general physician. Two, the best doctors either wanted to migrate to bigger cities or start their own practices.

Why didn't he start secondary or tertiary care hospitals, I had asked? He told me he had hired a consultant to do a study and the conclusion was that this would not be a sustainable business. Even the patients who could afford quality healthcare — there were plenty of those in these towns — preferred to go to a bigger city for treatment.

Things have changed quite dramatically in the past five years. Over half a dozen healthcare entrepreneurs are currently setting up hospital chains in these markets. The players include big groups such as Apollo and Fortis, who are now spreading their wings in small town India. And it includes entrepreneurs who want to only explore smaller cities and shun bigger metro markets, at least for the moment. The facilities being set up range from multispecialty hospitals to single-specialty chains. Sure, the economics and operational details differ — but there is a good, profitable market in the small towns as well.

In a way, the change in the business potential of private healthcare in small towns is part of the larger  trend that was first seen in consumer goods. A few months ago, we had carried a cover story on how small-town consumption for all sorts of premium goods was booming. Affluent consumers who earlier went to bigger cities to do their shopping no longer had to step out as similar facilities were now available in their neighbourhood. What was true of the consumer markets is turning out to be true for healthcare too. Senior assistant editor P.B. Jayakumar talked to the players getting into the market to write the cover story.

(This story was published in Businessworld Issue Dated 08-08-2011)