The B2C of Diagnostics

The B2C of Diagnostics

Backed by Sequoia Capital, Suburban Diagnostics is carving a niche for itself in the private, B2C diagnostics space by focusing on customer centricity, maintaining quality standards in healthcare delivery and infusing global technology into its processes. With presence in Mumbai, Pune and Goa, the company has clocked revenues of over Rs. 120 crore in the current fiscal and is targeting a 40 per cent yearly growth in the next three years

Dr. Sanjay Arora, Managing Director, Suburban Diagnostics

Despite wanting to pursue a career in sports or engineering, an admission in Grant Medical College (Bombay University), and his family’s inclination towards the field of healthcare set the tone for Dr. Sanjay Arora’s journey in India’s diagnostics space.

What’s atypical about Dr. Arora and his entrepreneurial journey with Suburban Diagnostics is that, unlike many healthcare professionals, he rolled out his venture with no prior experience (at a healthcare institution or under a senior doctor) in pathology. His anchor into the field was merely based on his education in the field of pathology; with a special training in cytology at Tata Memorial Hospital, Henry Ford Hospital and Johns Hopkins Hospital. It is this approach too, to entrepreneurship, which became the biggest learning curve for Dr. Arora. “Right from housekeeping and registrations to meeting doctors, scheduling home visits, conducting tests and distributing reports, I had to do it all by myself,” he remembers. In fact, when Dr. Arora founded the company in 1994, his only other employee was his co-founder, wife and current director of finance and operations, Anju Arora. “This pretty much sums up the first 10 years of the business. It was all about establishing my reputation as a pathologist,” he admits.

We’ve franchised only our collection centres but testing still remains within our control. In fact, we have a six-member quality assurance team, within which, a portion of them specifically audit our franchisees

Setting The Foundation

With a Rs. 24 lakh loan from the Maharashtra State Finance Corporation, Suburban Diagnostics began as a small, 850 sq ft office space in Andheri West, at a time when the term ‘credible diagnostic centres’ was largely associated with hospitals and healthcare institutions. Despite that, the company relied on its ethos and capitalisation of gaps in the diagnostics market to leverage its growth. For example, on the market front, Dr. Arora saw some clear opportunities Suburban Diagnostics could build on; a fragmented market with private diagnostic centres still being an indistinct term, dearth of quality standards in service delivery and the lack of a customer-centric approach to doing business, particularly in the B2C space. “These in turn became our key focus areas. In fact, the tagline associated with our first black and white logo was; creating higher standards in healthcare,” recounts Dr. Arora.

On the ethos front, the company installed state-of-the-art equipment at its centre, and constructed the lab with a glass enclosure, illustrating its focus on transparency in operations. “The operating and testing room was exposed to patients. They could see the kind of work taking place inside the room,” adds he. Additionally, Dr. Arora ensured that he was available 12 hours a day, six days a week to interact with his customers. In fact this, he calls, the company’s key value proposition; the ability to communicate clearly, and communicate often with customers. “This is what we call, exceeding the brief,” he chips in.

The Next Steps

It was seven years after founding, in 2001, that the company went on to setup its second establishment; a collection centre in a 250 sq ft space, one that till date remains its flagship centre. 2004, however, turned out a landmark year for Suburban Diagnostics when it setup its first end-to-end diagnostics centre in Kandivali, Mumbai. “We began offering a range of services such as pathology, X-ray, sonography, stress test, ECG and more. Setting up a centre in this region gave us the confidence that we can replicate this model in more places in future,” states Dr. Arora.

Around this same period, between 2004 and 2005, the company also took a crucial decision to go for an NABL accreditation. “We took this call when we realised the need to have systems and processes in place,” adds he. Incidentally, the certification was not for management-level audits alone but for functional audits as well. “NABL teaches and guides you into documenting everything you do. We took this approach early in the venture so it can be replicated across more centres, as we build them,” opines Dr. Arora.

Today, 23 years into the market, Suburban Diagnostics operates across five geographies; Mumbai, Navi Mumbai, Thane, Pune and Goa. It collectively operates on up to 60,000 sq ft of real estate, with a network of 13 labs, 15 diagnostic centres, 40 company-owned collection centres and 30 franchise collection centres. “We’ve franchised only our collection centres but testing still remains within our control. In fact, we have a six-member quality assurance team, within which, a portion of them specifically audit our franchisees. There have been cases where we’ve shut down franchise centres due to non-compliance too,” he explains.

With private equity infusion of Rs. 40 crore from Sequoia Capital in 2012 (with the venture fund acquiring a 30 per cent stake in the company), Suburban Diagnostics has seen its revenues spike, with numbers growing from Rs. 28 crore in 2012 to north of Rs. 120 crore in the current financial year.

Carving A Niche

Despite larger players such as Dr. Lal Path Labs, Thyrocare and Metropolis continuing to build a pan-India presence in the diagnostics space, Dr. Arora prefers to expand the business tentacles within the current geographies where it has an established presence, and allied regions such as Gujarat and Karnataka, in future. To reinstate its model, he explains that Suburban Diagnostics was built on three pillars; investments in best technology which meet global standards, investments in training its employees to deliver good quality healthcare to customers, and investing in building a customer-centric business. “Most of these players operate in the B2B space, whereas we are B2C. For us, customer interactions are much higher, and giving them that winning experience is what makes us different,” he notes.

Marketing, for Suburban Diagnostics, is focussed on catering to the doctors on one hand, and its patients on the other. For example, the company builds a relationship with doctors by appraising them of new technologies in the testing space through medical education programs all year round and its medico marketing pieces. Similarly it builds customer base and loyalty by acquiring new customers through its doctors’ channel and using data to continuously engage with customers (on reports and feedback). “We also have a corporate sales team which targets companies which focus on employee health. We offer annual health checkups, wellness programs and more,” Dr. Arora adds. Lastly, Suburban Diagnostics has accreditation from the College of American Pathology (CAP), which enables it to work with clinical research organisations and undertake their lab testing requirements.

Looking Ahead

With a team of 900 employees and 100 outsourced workers, Suburban Diagnostics, today, offers a range of services such as pathology, diagnostics, home healthcare, corporate wellness and health checkups. Ask Dr. Arora what his game plan for the next three years is, and he states, “This is a great time to build a business. We will be looking at expanding into nearby markets and also explore acquisitions and Greenfield opportunities to setup smaller labs. In terms of growth, we’re targeting 40 per cent year-on-year.”

What Next?

  • Explore acquisitions and Greenfield opportunities to setup smaller labs
  • Expand into nearby markets such as Gujarat and Karnataka
  • Target 40 per cent growth year-on-year

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