With the recent acquisition of Pushpanjali Crosslay Hospital, Max Healthcare has become the biggest healthcare network in NCR in terms of number of beds. In addition, an influx of funds of Rs 766 crores from South Africa’s Life Healthcare, has propelled the company’s growth. At the helm of this new development is an astute leader, Rajit Mehta who recently took charge as MD & CEO, Max Healthcare. In an interaction with M Neelam Kachhap, he outlines the company’s expansion plans and unique initiatives to increase efficiency and improve patient care
From COO of Max Life Insurance to DMD and promotion to MD & CEO Max Healthcare, congratulations! How are you liking your new role at Max Healthcare?
Thanks. I have spent 14 months in this sector and I’m really loving it. Having worked in life insurance I used to feel that my work there was touching peoples life. But here, now what we do impact lives everyday. This is really different from my previous work and it is heartening to know how small decisions taken impact patients’ lives. For example, a simple training programme for nurses can bring about a change in patient care so can the clinical pathways we follow. I find this very encouraging and humbling.
How has your journey been for the past 14 months?
It has been very interesting, rewarding and learning. It is fantastic to learn a new domain and how it works. While I have had over three decades of experience, I really had to customise and adapt to the healthcare domain. For instance, there are different communities you deal with in healthcare; there is a nursing community, clinician community, administration and patients. So, you really have to understand the business extremely carefully. Indeed has been a learning experience, very rewarding and I have enjoyed seeing the change happen.
Were there any preconceived notions about the industry that changed while you started work here?
I had to relearn. See, there is a corporate management way of dealing with the organisation; defining strategy, aligning the people, disseminating communication, holding dialogues in town halls. Now you have to customise it to the healthcare sector. Here you cannot do a town hall dialogue with all employees as the hospital will come to a grinding halt. So, you have to innovate. In fact, the nurses response to different motivators, clinicians engage differently. Perhaps it’s the admin part which is close to the corporate world.
For example; let’s look at performance appraisals. How do you appraise a cardiac surgeon vis-à-vis a nursing supervisor? So really you have to adapt and customise at every step, be it the way of communication or the way management process work, implement technologies, etc. So, a lot of learning has taken place on how to make sure that you adapt what you have learnt to this sector.
Indeed, quite a few paradigms have changed. I had to change my own perception of how this sector works. This sector is so sensitive to patient needs that I’m very conscious of the changes I make. My favourite quote is ‘get your DNA right’. You can only deliver care to the patient if doctors, nurses and admin come together.
How do people inside the organisation perceive you?
I think it should be a mixed feeling. You don’t become a favourite leader within 14 months, it takes many years. Having said that, the buzz I have heard is both positive and negative. The clinicians are happy that somebody is listening to them. They have the freedom to do what they do best. They feel that somebody is putting patient at the centre. I believe financial outcomes are the only outcomes. What you really can influence is the input matrix and patient safety. Revenue is just an outcome. Hence, now a lot of quick decisions are happening which were pending for a long time, such as decisions on upgrading the equipment, decision on new facility and growth. We have launched seven centres of excellence and just acquired a new hospital which is the first acquisition of the company. Pushpanjali Crosslay Hospital (PCH ) just four km from Max Super Speciality Hospital in Patparganj. On the other hand, the feeling may be negative because of too much pressure on execution, and lots of follow-up.
There has been a lull phase at Max Healthcare in the past couple of years?
I think that the healthcare model for Max has evolved over a period of time. They started off with a small day-care outfit in Panchsheel and then expanded further. They slowly evolved over time. Over the past few years, there have been challenges of frequent management changes. Also, there have been challenges in going from a day care model in the Panchsheel unit to a tertiary care hospital in Saket and a PPP model in Mohali and Bhatinda. So there have been quite a few changes and we looked at what worked for us. But now, I think we are hopefully coming out of it. Last 12-18 months have been extremely good in terms of stabilising operations and getting the required financial outcomes. We have been building new teams, new clinical programmes and the clinician bench strength. So, I think we are on the right path and our journey has just begun.
What has been your focus after joining Max Healthcare?
As I mentioned before, has been 14 months since I started work here. There have been a couple of focus areas. The first objective was to stabilise the operations because the financial performances was not up to the mark. The cultural values were not what we wanted and the clinician engagement was wanting. Therefore, my focus was really to a) stabilise the operations b) increase positivity and engage with clinicians for them to contribute their best c) look at what processes we could strengthen specifically in execution.
My experience in building business in India is that India is always an execution challenge and not a strategic challenge. Today I can proudly say that I have built this business brick by brick. We really strengthened execution, looked at patient centricity. Under the new Clinical Director we modelled a new era of clinical quality. We invested a lot in clinical data analytics to make sure we follow the right clinical practice. Also, we looked at progressive medicine, molecular medicine or disease patterns. We started investing in listening to patients more through IMRB surveys. We implemented a very comprehensive listening mechanism so we really know what the patients want and what we should improve as we go along. Finally, building a new team, both on the unit side and executive committee has kept me occupied. We have a very simple, 5C model for focus to happen. It is clinical excellence, patient care, meeting our commitments, compliance and cohesion. We are following this 5C framework to guide thought and action and we are working to align the entire organisation to 5Cs.
You are known for turning around Max Life Insurance. Do you think turning around MH is a similar feat?
Let me first point out that no one person can do a turnaround alone. At Max Life Insurance, I was privileged to have a fantastic team which I built over the years. We had superb culture which held the organisation together. It was this strong fabric which helped in the turnaround. Max Life was a superb journey for me. Today, expectations are that one should turnaround Max Healthcare and believe me they weigh very heavy on my shoulders. I believe that one can only do their daily job to the best of their ability and the rest falls in place. So our focus has been to build a right team, the right culture, focus on clinician and let them have a free hand to do what they do best. I perceive that’s how slowly we will win the game and that’s exactly what we are doing.
You have charted a success plan. How has the progress been? What have you achieved in the span that you have been here?
The team has been built. We are putting strong processes to monitor execution. We have hired 100 + revenue adding clinicians in the last year and added new facilities. We have just put execution back on track, therefore the results are there for people to see. Last year, we grew about 24 per cent in terms of revenue with 50 per cent growth in EBIDTA. In FY2015, Max Healthcare had revenues of Rs 1,740 crores from over 2,000 beds across 12 hospitals in North India, as compared to Rs 1,407 crores in FY2013-14. This year we perceive similar growth of about 19 per cent in revenue and 40 per cent EBIDTA. So far the first few months have gone pretty well. If you have the right culture and the right focus you can achieve your targets.
Tell us about some of the steps undertaken to bring about changes at Max Healthcare
Let me tell you about nursing at Max Healthcare. Lot of people in our industry neglect nursing in terms of basic hygiene. We want to establish ourselves as a preferred nursing employer, so as a first step we changed all the nursing hostels. I personally visited all the sites and took note that the facility was hygienic for our nurses. In addition, we are building state-of-the-art nursing hostel for 200 nurses in Greater Noida. It’s air conditioned, hygienic and a place where people would like to stay and feel welcomed. Further, we changed the medical policy to accommodate nurses. They couldn’t examine the patients or recommend diagnostics tests as the case is in the developed countries. We put some money on the table, covered them through medical insurance and allowed them to work with patients. These are some examples from the many engagement activities currently running to empower them.
Technology again is a big enabler. It is a huge leverage, both for efficiency and cost, more importantly to make sure that patient safety is secure. For example, we have a bar coded medical administration system which reduces medical errors. We have just piloted the system of e- prescriptions and appointments where patients can take appointments online. These patients come to the hospital, in the lobby there is a kiosk where they put their appointment number and get a token number which is displayed in the consultant chamber. You can then facilitate the patients’ experience through technology. Wherever they are in the hospital they will get a message that their turn has come. Then they will get an e-prescription and their diagnostic requirements will be sent to the respective departments such as radiology or pathology. When they step out of the consulting room, they would go to the pharmacy where their medicine bag is ready. Then they would pay and move on. This is bringing about huge patient convenience. We are further committed to investing in technology for patient quality and for efficiency.
How is Max Healthcare positioned in the market today?
We believe that we should position ourselves as a tertiary and quaternary care provider over the years. At Saket, Patparganj, Shalimar Bagh and Mohali, we are moving towards being a tertiary provider. That’s the way we want to go. Further, we want to create centres of excellence. For example, oncology is big for us . Actually in North India we are bigger than Rajiv Gandhi Cancer Institute and Research Centre today both in terms of revenue and number of oncologists. We have a huge vision for that and we want to get into disease management groups now. Similarly, in orthopaedics we have launched the Musculoskeletal Institute of Excellence in Saket which deals with joints, spine, rheumatology, pain management, chiropody, sports injury and creating centres of excellence right around these areas.
Our belief is that we should do more and more high end quaternary and tertiary work. We have inherited small centres by legacy like Panchsheel that’s fast becoming a day care centre; Gurgaon has become a surgical centre with about 70-80 beds. Inevitably, we are converting what we have inherited into some kind of specialised centres, to go the tertiary-quaternary route.
What is your plan for the next year?
We are clear about our plans for the next year as we just had a meeting on that. We have just started to look at what should the next three years look like, work on next three years’ strategy. Our first objective is to maximise what we have to make it very efficient and build on that. In addition, we are looking at building on existing assets, create centres of excellence. We also want to look at brownfield acquisitions.
Tell us your plans for enhancing existing capacity. Will you be adding more beds at this centre (Saket)?
We have the capability to expand bed strength because the floor area ratio (FAR) addition allows us to do so. We can expand in Mohali, Shalimar Bagh, Saket and Patparganj We have just added 400 beds to Pushpanjali and we will build 200 more there. In addition, we have land banks in Malanpur, Greater Noida. At present, our preference is to look for a mix of brownfield and greenfield projects because greenfield always dilute earnings and has long gestation periods. So, we are looking for the right combination.
Why are your efforts limited to North India?
Our expansion plans are primarily in North India because we have the benefits here. First of all healthcare is very local. Your manpower and other inputs have to be local. Besides, there is a lot of advantage in continuity, you can share assets and management control is better. Another plus point is that Max Healthcare is a well known and respected brand and we can leverage the brand here. Max is pretty big in North India.
Are you looking to dilute more equity?
Not really. The year we got additional investment by Life Healthcare Group (LHC), as it raised its shareholding to attain 46.4 per cent shares through additional investment of Rs 766 crores in Max Healthcare. We also acquired a controlling stake of 76 per cent in NCR-based Pushpanjali Crosslay Hospital (PCH) through a combination of fresh investment and acquisition of shares from the existing promoters for Rs 260 crores. As we move forward we will invest more to add more beds there. So far equity has not been a constraint for us.
Today, LHC and Max Healthcare have equal shareholding pattern in the company. Do you think LHC would try to takeover in future?
LHC is Max India’s joint venture partner in Max Healthcare and a leading healthcare provider in South Africa. Both partners are very bullish on the healthcare market. But, as I said earlier healthcare is a local business and I don’t see Life Health taking over operational control in the near future.
Tell us about your growth plans.
Growth will come to us in several ways. We will grow both organic ally and inorganically. We will add new clinical programmes and will sub segment existing programmes. In addition, we could be looking at alternate models, which we have just started talking about, but not finalized yet. In three to five years we want to become the most trusted name in healthcare, known for medical excellence service as well as excellence scientific education and research. Besides hospitals, we also have Max Institute of Health Education and Research (MILER) where we have academic and skill building programmes and I’m proud to say that the first batch of 50 nurses are ready to graduate from the institute. Besides we also have 128 DNS students with us.
Will you be expanding it to a medical college?
No, I don’t think we have thought about a medical college as yet. However, lack of clinical talent and nursing talent, both are constraints for growth and we are looking at several solutions to retain and attract talent. We are looking at building a leadership pipeline. We have set up a full clinical recruitment facility under the new clinical director. we are looking at several retention schemes. We have a clinical scholarship policy, we also conduct several clinical training programmes to upgrade technical knowledge allow clinicians to go for national and international conferences. We even have an employee stock ownership plan (ESP) for select people. We are working on more tools for retaining clinical talent.
What do you think of the existing private healthcare environment in India?
India really needs to look at the healthcare sector very carefully. My biggest worry is will the regulation be progressive or will they just put burden and kill the sector? Hopefully not. We are going to dialogue with the government, I think they are open to dialogue. Secondly, clinicians should come together to look at how to close the trust deficit. There is a trust deficit between doctors and patients. We owe it to patients to do good, honest work. We need to step up advocacy, reach out to more and more people. In fact, we must be proactive to take ownership of fixing what truly is not going right. The level of transparency and communication with patients has to be of a much higher order than what it is currently.