The Patni Group is one of an increasing number of new investors who have entered the healthcare market by setting up a chain of short-stay surgery clinics with an aim to cater to the gaps in the healthcare delivery market. Raelene Kambli in an Q&A session with Gaurav Malhotra MD & CEO, Patni Healthcare finds out more about this move, intended results and the company’s future plans
Patni Group has been a leading player in India’s IT sector, what are the attractive prospects that lures you to the Indian healthcare sector?
| Gaurav Malhotra |
India has witnessed an increase in the consumers’ spend on healthcare as well as an increased demand for healthcare facilities. All this has resulted in a CAGR of 15 per cent in the sector and the market size has doubled in every five years. It was Rs 60 billion in the year 2010 and is expected to become Rs 120 billion by the year 2015.
The journey started initially from highly fragmented physicians-owned private clinics to large size super-speciality hospitals, which in turn evolved to large size medicities providing tertiary level of healthcare. The current evolution trend is moving from medium sized, multi-speciality hospitals providing secondary care to asset light models like short stay surgeries centres and single speciality centres. The sector has witnessed a significant deal of activity and interest from private equity investors and big corporate houses.
What are the obstacles in the Indian healthcare sector?
The demand-supply gap in hospital beds, doctors, nurses and technicians are the major areas of concern in today’s scenario. Data has shown that out of a total bed count of 1.37 million only 50 per cent beds are functional and relevant. We have 1.1 bed per 1000 population, which is much lower than other BRIC nations including China and Brazil.
40 per cent of hospital beds are located in top 20 cities where only 10 per cent of the population reside and 60 per cent private hospital beds cater to 80 per cent of all patients. Limited penetration of health insurance also remains an impediment for the common public at large to access quality healthcare. The economical and regulatory environment is still unfriendly for initiating and developing newer projects. Accessibility of good healthcare is a problem area wherein people have to travel at least 500 km on an average to get quality oncology treatment and 100 km to receive specialised cardio or a neurological treatment.
Which other healthcare areas would you like to foray, and why?
In the wide supply gap existing across all segments of India’s healthcare delivery market, it is critical to focus on the right segments to maximise value. We have identified short stay surgery as the segment to target initially. The reason we want to focus on short stay surgery is the fact that it is an attractive opportunity and in the state of evolution. We believe that this segment, with the inherent mis-match between burgeoning demand and largely unorganised supply, is at an inflexion point in the maturity graph.
Short-stay surgery has now come to be an accepted modality of treatment for most surgical patients and it has multiple advantages for all the stakeholders as well as the patients, besides being an economically better option for the health sector which is beleaguered with scarce resources.
Patni Group is planning to establish a nation-wide chain of ‘short-stay centers’. Tell us what kind of facilities you would be offering.
Each short-stay centre is primarily a surgery centre, covering the speciality mix such as general surgeries, orthopaedics, gynaecology, ophthalmology, ENT, bariatric surgery, cosmetic surgery and gastroenterology. These centres also house operating theatres with modern state-of-the-art medical equipment for minimal and non-invasive surgical procedures. Patient flow shall happen through OPDs run by renowned doctors in each of these specialities. Each centre shall have post operative recovery unit and an ICU backed by trained staff and shall be equipped with pharmacy, radio-diagnostics unit, laboratory, optical shop, cafeteria, etc.
How much have you invested in the healthcare sector so far and what ROI do you expect?
We have planned to invest a total amount of Rs 500 crore. The break up will be Rs 300 crore equity and Rs 200 crore debt. The investment doesn’t include real estate investment. Our revenue expectation is Rs 800-1000 crore in next five-seven years with 22-25 per cent earnings before interest, taxes, depreciation, and amortisation (EBITDA) levels.
In which cities do you intend to establish your short stay centres? How many centres are you planning to set up initially?
Our plan in next five-seven years is to open 25 short-stay centres. We want to target few key cities in Maharashtra, UP, Punjab, NCR, Gujarat and Karnataka, initially beginning with Mumbai.