New breed of entrepreneurs propelling the growth of niche hospitals

Innovation is sweeping India’s health care sector. Take the example of Nova that focuses on short-stay patients. Those with gall bladder problems or frozen shoulders – surgeries that typically require three-day stays in other hospitals – return home the same day.

In the diabetic capital of the world, Renkare is building a chain of walk-in dialysis centres.

Vaatsalya is tapping Tier II and III cities, building stripped-down versions of hospital chains.

With rising incomes, changing lifestyle and a growing awareness of health issues, hospital business is witnessing both investment and innovation boom in India. On the one hand, existing hospital chains – from Fortis to Apollo – are exploring new niches (like mother-baby care, dialysis centres) looking beyond the multi-speciality large hospitals. On the other, new entrepreneurs like Ashwini Naik (of Vaatsalya) or Suresh Soni (of Nova), backed by private equity, are innovating on new models.

After the 1990s, this is the second wave of private-sector investment in health care in India. Says Rana Mehta, executive director, PricewaterhouseCoopers India. “You will see niche centres of excellence emerge. The new chains will push for unbundling of the big one-stop multi-speciality hospitals.” Partly, it is driven by a demand surge.

Take dialysis for example. India today is the diabetic capital of the world with a base of 64 million. Typically, 10% of diabetic patients need regular dialysis. So far done by big hospitals, a neighbourhood dialysis centre will be a boon for patients.

The other factor is the emergence of ambitious entrepreneurs and private-equity investors who are willing to take risks and build a scaleable business model. Matrix India has invested in Cloud Nine and Centre for Sight.

“In India demand was never an issue. Just that entrepreneurs have now figured out a business model and Indians are willing to try them,” says Bharti Jacob, founder, Seedfund. What attracts them to these niche businesses is that they are less capital intensive (a third of a typically multi-speciality hospital) and achieve break-even much faster (12-24 months as against 5-7 years for large hospitals), says Avnish Bajaj, MD, Matrix.

ET on Sunday takes a peek at five such niche hospitals.

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