Financial viability is extremely important for the survival of any hospital. Cloud Nine hospitals so far has been sailing smoothly. Sumit Agarwal , CFO, Kids Clinic (Cloud Nine) shares his strategy to attain financial stability for his hospital and also talks about the company’s expansion plans with Raelene Kambli
What according to you are the bigger issues that hospitals and health system CFOs experience today. How are these challenges going to affect their day-to-day routine and long-term planning?
Hospitals can be compared directly with the multi-retail environment from the service side whereby the emotion level is very high. Further, given that it has the flavour of the multi-retail environment and high cash transaction, we need to have proper control in place before some unwanted stuff happens. Unlike products, you can bar code stuff. However, in services it’s not possible and hence, we need to have the systems and control in place together with audits. Given that we are in the growth stage, entire cash flow management will be the biggest challenges coupled with the entire forecasting and budgeting exercise.
With your enormous experience in financial management, how do you solve these issues at your organisation?
Well, definitely technology helps to a great extent on tightening up the controls, continuous audit process to ensure the check and balance, make people accountable and responsible and also put the processes in place and be prepared for any set back if any.
What role does technology play in solving these challenges? How have you utilised technology for automation of hospital processes and how has it helped?
At the early stage, we have realised that technology will make a difference to the entire business and will uplift the performance as well as the overall experience. For a growing company, cash flow matters a lot and we have decided to invest in the right pocket for technology and go light. Following the vision, we have first gone with the Electronic Health record (EHR ) system on the SAS model to set the foundation right. This helps us to go with the journey on the paper less environment and retrieve the entire clinical record as well. Further, we have added Microsoft Dynamics CRM, Mobile App, Feedback system on the customer experience side and the journey is on.
We have also heard that you have transformed the way Cloud Nine handles imaging and printing with innovative pricing models. Can you please elaborate on the same?
The major challenge which we were facing in the entire imaging and printing process was maintaining quality and this was worsening as the printers were getting older. Further, over a period of time, we have added sufficient printing volume. We have gone ahead and upgraded the printer from small to network printers, moved from dedicated to shared solution which help for better maintenance and single point to check stuff. We have approached Ricoh and they helped us in providing good printers on the OPEX model by paying per page printing rather than incurring the affront cost. This helps the cash flow and business.
Many investors have an opinion that investing in healthcare burns out their investments, since healthcare is a capital incentive sector. What’s your opinion on the same?
Yes! However, on the long run it is a very lucrative investment. Well unlike multi specialities, in single specialities, the investments ticket size reduces at least one-tenth time and hence makes it more attractive. As a result, investors are showing more interest on target healthcare.
What is key to Cloud Nine’s finance accounting strategy?
We are a private limited company registered as per the Companies act. We follow IGAAP as per the ICAI and also soon going to adopt Ind AS.
You have attracted many investors such as India Value Fund Advisors (IVFA), Matrix Partners India and Sequoia India. Can you share more update on the fund raised so far and how are you going to utilise it?
We are very fortunate that we have the panel of great investors and in December 2015, we have completed the Series C funding with IVFA with the Company valuation of Rs 1200 crores ( post money). Well the funds have been raised for future expansion. Typically, we will break even in 12 to 15 months time.
How do you project yourself different from your competitors, especially when it comes to dealing with vendors?
We treat vendors as business partners and provide a great level of respect. We believe in the strategy of having long lasting relationships and doesn’t believe in shortcuts.
Finally, tell us about your vision for Cloudnine hospitals and your expansion plans?
Our strategy is to have a strong foot in the cities we are already present and then venture out. We are present in Bengaluru, Gurgaon, Mumbai, Pune and Chennai. Our next expansion is in the region of Delhi NCR and Maharashtra and we are preparing to launch 10 more facilities all over India.
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