In the next three years, Manipal Health Enterprises is looking to touch revenues of Rs. 2,500 crore, by primarily expanding into the Tier-II and Tier-III regions of South India
Rajen Padukone, the CEO of Manipal Health Enterprises Pvt. Ltd. can be safely called the right man for the right job. Having been an integral part of the Manipal education and healthcare entity for over 15 years, his vision reflects the core value of the group, which is, to be a one-stop destination for acquiring quality medical services and medical education. “Our vision, since the time of inception has been to ensure that every hospital in our network is or becomes the most preferred hospital in the location that it operates in,” says Padukone.
Today, Manipal Health Enterprise’s network encompasses 10 corporate hospitals with 1,600 beds and five teaching hospitals with 3,300 beds, across Andhra Pradesh, Karnataka, Tamil Nadu and Goa. The employee strength across these regions is over 6, 000 nurses, doctors and other administrative staff.
The company recently raised private equity to the tune of US $180 million from India Value Fund, with the intention of channelising this towards strategic expansion. Over the next three years, the hospital expects to add around 3,000 beds to its network and triple its revenues from Rs. 700 crore to over Rs. 2,500 crore.
At the start
In the early 50s, Dr. T.M.A Pai founded the Manipal Group and set up the Kasturba Medical College and a network of hospitals, all of which were essentially teaching hospitals. In the 1980s, the group setup its first commercial hospital at Bengaluru and by 2006, it raised private equity to fund corporate expansions and consolidated all its commercial hospitals under the brand name of Manipal Health Enterprises.
During the initial phase, the group faced several challenges in ensuring a smooth transition and integration of the acquired hospitals into the network and in integrating and synergising doctor engagements, employee disparities and an amalgam of work cultures. Padukone, who was an integral part of the group during this transition phase, played an active role in obtaining new businesses, streamlining operations and building healthy bottom lines across the healthcare and education vertical. “We had to ensure a quick turnaround of these acquisitions, to contribute to the overall operations in the network and bring them into the black,” says Padukone.
Four ways to grow
The group’s strength lies in positioning itself as a multi-specialty tertiary care centre. “For instance, the Manipal Hospital at Bengaluru has over 50 medical disciplines under one roof. Similar formats are being followed or will be put into place at all other locations,” states Padukone. On the technology front, the group has recently invested in Robotic Assisted Surgery (RAS) and other medical technologies, procedures and techniques. “Our focus is on quality which drives all that we do through standardised processes and systems across the network. We use marketing to largely create awareness and build and maintain patient, corporate and doctor relationships and create confidence among our patients,” says Padukone.
Until today, the group’s expansion has been limited to Tier-II and Tier-III regions in South India, mainly because of acquisition and brown-field opportunities like unmet demand and rapid growth, which these markets offer. “Growth in India is going to take place in the Tier-II and Tier-III cities with an increasing portion of household expenditure being spent on healthcare. As a major provider of healthcare, we see significant opportunities for expansion of our hospital network in these regions,” says Padukone.
For the next phase of growth, the group has adopted a strategy that focuses on four thrust areas. Firstly, consolidation of operations in locations it is currently present in and building hospitals in existing locations to further strengthen its presence and reach, especially in Bangalore. Secondly, moving to new, contagious locations such as Orissa, Madhya Pradesh and Maharashtra through green and brown field hospitals. Thirdly, entering other parts of the country and acquiring a cluster of hospitals, which have a significant presence in the region and lastly, setting up hospitals in locations where it already has an educational presence.
Facing up to challenges
Padukone believes the healthcare sector will continue to face a demand-supply gap in availability of hospital beds, unless the private sector significantly invests in building capacity. He also feels the industry faces several challenges today, with respect to growing skill gaps in supply of doctors, nurses, paramedics, administrator and managers, low insurance penetration and poor awareness on preventive healthcare.
In addition to the huge skill deficit in the clinical areas, Padukone also indicates a dearth of good mid-level and senior administrators and managers in the healthcare sector in this country. Having foreseen this, three years ago, the group has embarked on an initiative to build this scale within its own system. “Today, we have a very strong recruitment programme of trainees to be developed as our future managers and leaders. At mid-senior levels, we also recruit capable managers from outside the healthcare industry,” he says.
On a positive note, Padukone sees a huge opportunity for medical tourism or ‘medical value travel’ in India. He attributes this change to the lack of affordable healthcare facilities in the countries that these international patients come from. “These patients find Indian healthcare attractive as it is much more affordable than going to the West. This segment of business will be one of our main focus areas for the future,” he adds.
With its core values of clinical excellence, patient centricity and ethical practices, Manipal Health Enterprises is all set to create a strong footprint in the non-urban markets and bring about a radical change in the quality of healthcare services offered to the underserviced segment.
Manipal Health Enterprises Pvt. Ltd.
Managing Director and CEO: Rajen Padukone
Investments: U.S. $180 million from India Value Fund
What’s your strongest belief?
I strongly believe that an idea is good only when it is successfully and properly executed and implemented. There should be attention to detail and pride taken in doing it right.
What will be your greatest achievement?
My greatest achievement will be if I can build a very strong cadre of motivated and passionate employees who take pride in doing things well.
- Over the next three years, plans to add around 3,000 beds to its network and treble its revenues from Rs. 700 crore to over Rs. 2,500 crore
- Plans to consolidate operations and build new hospitals in existing locations, to further strengthen its presence and reach
- Plans to expand reach in locations such as Orissa, Madhya Pradesh and Maharashtra, through green and brown field hospitals
- Plans to enter other parts of the country and acquire a cluster of hospitals, which have a significant presence in the region
- Set up hospitals in locations where it has an educational presence