Dr. Ashwin Naik and Dr. Veerendra Hiremath grew up in the town of Hubli, Karnataka, where their parents still live. And their experiences in Hubli brought to light the lack of top notch healthcare facilities in small towns across India. Adding to the duo’s list of woes was the lack of opportunities for the medical fraternity in such places when compared to the demand for specialised services in urban hospitals.

To address this gap, Naik and Hiremath co-founded Vaatsalya Healthcare (Vaatsalya) to cater to Tier-II and Tier-III cities and nearby rural areas. Quite naturally, the first healthcare facility was established in the outskirts of Hubli around 2005. Over the course of the next six years, Vaatsalya has established 13 such hospitals in Karnataka and Andhra Pradesh with the aim of providing affordable primary and secondary healthcare in Tier-II and Tier-III towns.

“Our intention is to create a healthcare company that not only provides good quality services in underserved areas, but also an organisation where our employees realise their full potential and take pride in doing something worthwhile and not see it as just another job.”

According to Naik, traditional healthcare companies have been built by large business houses in the urban cities and by trusts in semi-urban areas. Vaatsalya is a first-generation enterprise specifically focussed on an area which till date remains neglected. “Our intention is to create a healthcare company that not only provides good quality services in underserved areas, but also an organisation where our employees realise their full potential and take pride in doing something worthwhile and not see it as just another job,” he says. An engaged employee will in turn be more customer focussed and proactive in solving their needs, he adds.

A fair price

Vaatsalya has been for-profit since its inception and therefore the initial focus was on the basic specialties of paediatrics, gynaecology, general medicine and general surgery. The services had to be priced to suit the affordability of its core customers, who typically fell between the Rs. 6,000 – Rs. 20,000 monthly income bracket. “It is a tussle and we are constantly tweaking our rates,” admits Naik.

It took Vaatsalya three years to establish a loyal customer base, which gave it the platform to add specialised services in nephrology and set up a dialysis unit.

At present, one of the ways to keep its pricing reasonable has been to keep the diagnostics equipment basic and appropriate for its set up. Vaatsalya also works with local diagnostic centres for any high-end diagnosis. “There are several good ones already present in the areas we operate in, so we use them if required,” explains Naik. However, for most basic diagnosis, the doctor’s acumen and the fundamental equipment at the hospital are sufficient.

Among its other initiatives, Vaatsalya has taken the effort to tie up with government insurance schemes to offer third party insurance for its customers.

Financing its growth

Vaatsalya had difficulty attracting investments in the initial phase as its business model of providing limited services was considered risky for a hospital. This prompted the founders to turn to NRIs (non-residential Indians) with small town backgrounds, who understood the need for a healthcare facility such as theirs to receive funding. There was a value in this venture for their families as well, which acted as the lure.

Our intention is to create a healthcare company that not only provides good quality services in underserved areas, but also an organisation where our employees realise their full potential and take pride in doing something worthwhile.

Subsequently, Vaatsalya has raised three rounds of funding from Switzerland-based Bamboo Finance, Mumbai-based firms Seedfund and Aavishkaar and Bengaluru-based Aquarius to the tune of $17.5 million, cumulatively.

The third round of funding from Aquarius is expected to see the company through its expansion plans. Vaatsalya plans to add nine more facilities in Karnataka and four more in Andhra Pradesh this year. It is also targeting expansion beyond these two states and has identified Maharashtra and Tamil Nadu as its potential targets.

The personnel challenge

“One of the greatest challenges is the sourcing of both medical and non-medical staff,” says Naik. There is a huge demand – supply gap like in any other industry, but it’s greater when it comes to catering to the semi-urban areas of the country. As a result, scaling up becomes difficult. To help its case, Vaatsalya is partnering with educational institutions to provide training by extending its facilities and it also encourages continuing education.

There is clearly a demand for what Vaatsalya has to offer and looking at this, competitors have entered the fray. But the market demand is very huge and there are an equal number of underserved areas to allow room for all to thrive. Meanwhile, Vaatsalya is clear in its plans to keep adding centres, spreading its reach and catering to those who are in desperate need for quality healthcare services in the country.