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‘We Aim At The Mass Market’
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What ails the healthcare sector? Few can access quality healthcare today.
In India, lack of adequate mass healthcare cover is not about money, but planning. For instance, Indians are three times more prone to heart diseases than Europeans. Heart attack is the No.1 killer here. We need to do 2.5 million heart surgeries (in a year) and we do just 90,000. India produces just 80 cardiologists a year against 800 in the US. India has a shortage of one million doctors and two million nurses. About 70 per cent of our doctors live in urban India, whereas 70 per cent of our citizens live in rural India. If India sets up 100 medical colleges a year for the next five years, we may address shortage issues by 2025. Look at one of our successful experiments. The Yeshasvini Cooperative Farmers Healthcare Scheme, started as a joint initiative with the Karnataka government and farmer co-operatives a decade ago, has millions of members now. At just Rs 10 a month per family, they are covered. Hundreds of thousands families have benefited and thousands of heart surgeries have been done.
Unlike in the past, Narayana Hrudayalaya offers more specialities now.
Standalone hospitals will not be viable. To deliver affordable healthcare, you need economies of scale. We did start off with cardiac care, but one has to realise that a lot of these disciplines are interlinked. In the next 12 months, we will add another six hospitals and our bed strength would go up to 8,000.
Isn't the hospital chain's success too dependent on you?
Not at all. I might be the public face of it, but there is an excellent, qualified and competent team. Our CEO, Ashutosh Raghuvanshi, the CFO Sreenath Reddy and a host of senior management run the show. In the past two years, we have been visiting IIM campuses for recruiting. I am the chairman with a non-executive capacity. Our success of is because of the 10,000-strong workforce.
On the financial side, we have done a careful balance between setting up and running our own hospitals as well as managing hospitals in an embedded model. Healthcare is a capital intensive industry, but we have managed well with regard to the investments and the cash flow. Our Ebitda is around the 14-16 per cent mark. Ours is an asset light model.
Our aim is to have 30,000 beds by 2020. I know there will be sceptics. A decade ago when we launched with 150 beds and aimed at doing five (heart) surgeries a day, some of them scoffed at us. Today, we have 5,700 beds under operation and we do 30 surgeries a day. We intend to aim at the mass market, build even more scale, go international. We are a financially conservative group. Our investors and the board are comfortable with where we are and our future plans.
So, will we see you do an initial public offering in the near future?
For now, I don't think it will happen. We have just about Rs 150 crore in debt and we generate significant cash flow and can raise funds. An IPO need not be the only exit route for investors (such as JP Morgan and PineBridge Investments). Also the core promoters (Shetty and family) have no intent to dilute our stake (of 73.5 per cent).
(This story was published in Businessworld Issue Dated 05-03-2012)