A “cure“ for rural healthcare

A “cure“ for rural healthcare

What kind of money do people in rural India spend on healthcare? What distances do they travel to reach a health centre? What are the most common diseases and is it possible to standardise treatment protocol and pricing for these diseases? Most importantly, is it possible to offer rural healthcare services at costs that are affordable to people in rural India?  Medical professional Sabahat S. Azim and his team of civil servants-turned-entrepreneurs set out to answer each of these questions. After conducting painstaking research, Azim is convinced that the answer to the final question he posed to himself is that it is certainly possible to offer healthcare services in rural India at costs that are not only affordable, but also less than what people spend on healthcare currently. And Azim, along with M. Damodaran (ex-chairman of SEBI) and Ashutosh Kumar Shrivastava (ex-Major of the Indian Army), founded Glocal Healthcare Systems Pvt. Limited (Glocal) to do just that: offer affordable healthcare services in rural India and do that on an unprecedented scale. Over the next six to seven years, Azim wants to make Glocal a chain of 2,000 hospitals with 30 to 45 beds in each location.

Operations and strategy

Each Glocal hospital will cater to people within a sub-district. It will serve a population of approximately 1.4 million people within a radius of 1.4 kilometres. Each hospital will have both in-patient and out-patient departments including labour rooms, emergency care units and departments to attend to minor injury.

Today, the biggest private hospital player in the country, Apollo Hospitals, is a chain of 54 hospitals with about 8,500 beds. In comparison, a  2,000-chain hospital with a minimum of 30 beds each will be seven times bigger.

Azim bills Glocal as a low-cost modern hospital. According to Azim, currently, the out-of-pocket expenditure in rural India averages Rs 1,115 per person, per year. Azim says, “Our belief is we can offer our services at prices much lower than what is spent currently.” Azim aims to achieve this by standardising treatment protocol and pricing.

The team has gone through a structured process to identify the most common diseases in rural India. The outcome of the study: there are 42 such diseases that afflict the population and most of the healthcare spends goes towards treatment of these. Azim says, “Unnecessary tests will be avoided and the protocol will be in line with those suggested by the World Health Organization.”  Current investors are certainly in line with Azim’s thinking of offering standardised treatments. Sandeep Farias, founder and managing director at Elevar Equity, a venture capital firm that has invested in the company, says, “We liked Glocal’s focus of treating the most common diseases. It was not going after building a super specialty hospital.” He adds, “The other area where Glocal has done very well is converting the founding team’s vision into an execution plan that can scale.”

Azim adds that Glocal’s unique selling proposition goes beyond the standardised treatments it plans to offer. It is building a carefully designed information and communication technology (ICT) platform to share data between hospitals. It is also looking at hiring support staff from the hospital neighbourhood and offer training and development services.

Glocal is currently ready to launch its first eight hospitals, all in Bengal. The first two are coming up in Bolpur in West Bengal and Roorkee in Uttarakhand. Both the founders and investors are clear that the first eight hospitals will help them roll out services and tweak the operating model as needed.

One big challenge Glocal will have to overcome is to gain acceptance from potential customers. Farias says, “The initial phase will focus on getting the offering right to a level where customers can see you as a primary source for healthcare. That relationship where customers are willing to pay for quality service has to be established.”

The financials

The funding for the first phase is from a combination of equity and debt. The company raised equity funding to the tune of Rs 15 crore for a minority stake from Elevar Equity and Sequoia Capital. This money will be used to fine-tune the model and complete the first phase of eight hospitals. Azim says the cost per hospital in the later stages will not exceed Rs 2.5 crore per location. Azim is convinced that the cost per bed will not exceed Rs 8 lakh to Rs. 10 lakh. To put this number in perspective, at large private hospitals in urban India, this number could be anywhere between Rs 16 lakh and Rs 20 lakh.

In addition to infrastructure costs, the other major consideration – both in terms of financials and quality – is the quality of doctors Glocal is able to attract. Azim says, “For our first two hospitals, we have got some very high quality doctors. Our salary levels are good and early indications suggest attracting doctors to work for Glocal should not be a problem.”

One of Glocal’s biggest advantages is its senior management team. The founders bring in years of grassroots-level experience to the table and that can turn out to be crucial in this space. Today, the biggest private hospital player in the country, Apollo Hospitals, is a chain of 54 hospitals with about 8,500 beds. In comparison, a  2,000-chain hospital with a minimum of 30 beds each will be seven times bigger. It is certainly a grand ambition and one that is noble at that. For the sake of India, we need ventures like Glocal to work to attract more such entrepreneurs to solve rural India’s problems – not only within the healthcare space, but also across the education, financial services and affordable housing sectors.

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