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Destination Pune

The healthcare market in Pune is undergoing an interesting metamorphosis with healthcare players foraying into this city and major hospitals slated for expansion. Express Healthcare profiles this dynamic city.

Popularly known as the Oxford of the East, Pune is not just about education and IT anymore. Even healthcare is making its presence felt strongly. Major corporate giants like Apollo, Wockhardt have their eyes set on this city and the ones that are already established in the city are slated for major expansion.

Pune is one of the fastest growing cities in India. "The potential for growth in Pune city and the places surrounding it like Talegaon and Chakan is tremendous. That's precisely the reason we are currently focusing all our expansion plans only in this city and its nearby areas," says Bomi Bhote, CEO, Ruby Hall Clinic.

The major strength of this city is its hugely expanding population base. Agrees Dr Charudutt Apte, Chairman, Sahyadri Hospitals Limited (SHL). "The opportunities in Pune city as a healthcare market is fantastic. Pune is becoming a metro. In fact, it is fast pacing up with Mumbai. It has a huge population base of 10 million, mostly comprising of industrial workers from the BPO, IT and education industry." Apart from the demand-supply issue Pune scores in various other areas as well. Says Sandeep Sinha, Deputy Director, Healthcare Practice, Frost & Sullivan, "If you compare Pune with Mumbai, the latter is a very mature market. On the other hand Pune is still an open market. There is a huge demand and supply gap in this city. But apart from this very obvious fact of demand-supply gap, today, healthcare has become region focused. If patients coming from areas like Sangli, Aurangabad or Nagpur in Maharashtra are given a choice between the two cities, they will definitely prefer Pune because the cost of living is less, there are better traveling and traffic conditions."

Apart from the cost of living and cost of treatment, experts opine that as far as quality healthcare delivery goes, Pune is at par with Mumbai. Agrees Sinha, "There is no big difference between the two cities in terms of quality of healthcare provided. The prime advantage (of Pune) is convenience and good clinical support in terms of manpower."

Undoubtedly, with so many advantages Pune is becoming a preferred healthcare destination. Ruby Hall Clinic and Sahayadri Hospital are expanding at a very rapid pace at various places in Maharashtra. Sahayadri Hospital has set up a specialised tertiary care centre in Pune. They are setting up secondary care centers in all tier II and III cities through their hub and spoke model.

Ruby Hall Clinic

This 550 bedded charitable trust Hospital is planning to start four new hospitals in and around Pune. "Over the next five years we shall have one hospital getting functional each year," states Bhote.

Projects: The Hospital plans to have a uniform size of 150 beds for all the upcoming Hospitals. "This bed strength is an optimum mix from the point of view of size of operations, break-even and capital investments all put together," says Bhote. In this scheduled plan, the first one to be inaugurated would be a Hospital in Wanowari in November 2009. In the following year it will start a facility in Amanora Park, Hadapsar in Pune. Next in line would a Hospital at Hinjewadi, Pune. Hinjewadi is an area wherein most of the BPOs and software firms are situated.

Another advantage of building Hospitals close to each other is that all of them will share a lot of common facilities. For instance, it is setting up a common laundry, maintenance, and biomedical departments for all four hospitals which will save on duplication in the long run. "All major equipment like the MRI, PET scans that involve heavy investments will be located in the main Hospital. For all the new hospitals we shall purchase equipment below Rs 2 crore. This will reduce the duplication of heavy investment and control capital expenditure," explains Bhote.

International Affair: Ruby Hall leased a 100-bedded multi-specialty general hospital, Al-Hayatt in Bahrain, Qatar, two years ago, but it underwent legal complications with local Bahrain authorities. "We shall start this facility as soon as the matter settles. Hopefully, the legal complications will be over by the end of this financial year, as the hospital is fully equipped and ready to go," states Bhote. The Hospital was looking for an outlet in the Gulf since a long time, as this area is characterised by highly inadequate healthcare facilities. "The advantage today is that there is a direct flight from Pune to Gulf which has made things convenient for us as the destination can be reached in only three hours by our consultants," informs Bhote. All the start-up facilities planned by the Hospital are greenfield projects except for the one it has acquired in Bahrain.

Investment: The budget earmarked for the overall expansion is Rs 250 crore. "The funding will be mostly through self accumulation and bank loans," says Bhote. The Hospital is aiming for a mix of both tertiary and secondary care for all the upcoming hospitals. But its main focus would be high-end tertiary care. "Mostly critical cases come to us. Hence, we are operating in a niche segment. The referrals that come to us are from other hospitals which are inadequately equipped and can't handle serious complications. Therefore, we have to be at the upper segment of medical care. We have 130 ICU beds which are always full," explains Bhote.

Sahayadri Hospitals Limited

"The prime advantage of Pune is convenience and good clinical support in terms of manpower" - Sandeep Sinha Deputy Director Healthcare Practice Frost & Sullivan

"The potential for growth in Pune city tremendous. That's precisely the reason we are currently focusing all our expansion plans only in this city and its nearby areas" - Bomi Bhote CEO Ruby Hall Clinic

SHL has successfully managed to attract funds from ICICI Venture Capital and will expand throughout the state before going for a pan-India presence in the near future. ICICI Venture has invested around $36 million for an undisclosed stake, through its holding company IVEN Medicare in SHL. The Group is promoted by renowned neurosurgeon Dr Charudutt Apte.

Says an official from IVEN, "SHL's efficient business model and growth plan attracted us to invest in them. An IVEN Medicare senior team will work closely with SHL's management team to achieve their robust growth plan. ICICI Venture sees itself as a 'catalyst' and it is our endeavour to partner with people/ organisations who have a strong, clear vision blueprint to bring about concrete, positive change."

The investment, accomplished in two phases of 18 months each will be used to build a network of tertiary care hospitals, secondary care hospitals, centers of excellence, specialty spokes, and boutique hospitals across Maharashtra. Over the next one to two years, SHL would have a network of around 20 hospitals. States Dr Apte, "We realised that even in tier II and tier III towns which serve as nuclei to hundreds of satellite villages and hamlets, specialty medical aid is unheard of. We want to take world class medical aid there. We also realised that not only local doctors, but local business groups, industrialists, wealthy citizens, social groups and organisations who would love to help in or invest in opening good hospitals but do not know whom to approach. SHL will attempt to work with such people to truly integrate itself into the interiors of Maharashtra."

Projects: In the next three years SHL would have a total of around 20 hospitals out of which seven to eight will be tertiary hospitals and rest of them will be secondary hospitals. "We are putting up seven community hospitals across Pune city with a total bed-strength of almost 1200. Other hospitals like the one in Nasik, we shall start by this year-end," informs Dr Apte. Along the Mumbai-Pune highway, SHL is starting a hospital in Navi Mumbai at Nerul in about four months. Then, it is further planning three hospitals in the Konkan area alongside the Mumbai-Goa highway. It is also coming up with a hospital in Kolhapur and Karadh. "We hope that by year 2009 end we achieve a target of total bed-strength of 3000 beds," informs Dr Apte.

Complement not Compete: The Group believes in 'complementing and not competing' with the existing medical infrastructure of cities, towns or villages. "If a particular town has an excellent orthopaedic hospital, we will not go and build another to compete, rather we will partner with the management of that hospital to start may be a state-of-the-art pediatrics or heart hospital so that particular town or district gets one more medical facility," says Dr Apte. The Hospital therefore will use the available medical infrastructure and tie-up with local physicians to fuel its expansion plans.

By and large, when the group moves into a city like Nasik, it won't repeat facilities which a small nursing home can adequately give, for example, standard obstetrics care. "When you start a small nursing home you are not equipped, both professionally as well as financially, to deal with serious cases. But as a doctor, as an orthopaedic surgeon you have a passion to do joint replacement. Any young doctor who has a small nursing home can bring his patient, he will be assisted by senior doctors in case he needs help. It is pretty much the policy of 'live and let live' that we shall follow."

The bed-strength of the Hospitals shall vary from 30 to 250 beds depending on the available demand. The Hospital is also having plans for Gujarat. SHL is also planning a hospital in Cambodia that will be operational by next year. All the projects of SHL are greenfield projects with tie-ups from local partners.

The three As: The Hospital shall run on the principle of three 'As' - available, accessible and affordable. As the Group's focus would be high-end healthcare and that too at a cheaper cost, to make its model sustainable and profitable it shall rely on the volumes generated. "If the cost goes down, automatically the volume goes up. We also have many innovative insurance schemes to make healthcare affordable," states Dr Apte.

Logistics is another factor that the management kept in mind while expanding. It has set up many small community hospitals with bed-strengths as small as 30. Says Dr Apte, "In our pilot project, we have built community hospitals in Pune spread across an area of 8000 sq feet and bed-strength of 30. It has received a good response amongst the residents because it is just next door. Hence, the logistics are very important. In case of a critical case like heart attack, the person is taken to the main hospital and he is back to the original hospital within 48 hours without any hassle. This seamless integration is what people appreciate."

Pan-India Presence: In the next three to four SHL years will consolidate its position in Maharashtra and Gujarat. Its ultimate aim is then to have a pan-India presence. "I am sure a lot of financial institutions especially private equity would be watching us very carefully. We have a fair amount of exposure because of support from groups like ICICI. If we perform I am sure we will be given the opportunity and we will expand beyond the present confines," says Dr Apte.

Pune Calling

Whilst all groups have started foraying into tier-II cities, here is one tier-I city that is not yet tapped to its maximum potential, which is why it is attracting many big players. Says Sinha, "Apollo Group is already in Pune in a joint venture with Jehangir Apollo. On the other hand Columbia Asia has plans to come up with a Hospital while Fortis is looking out for property in this city. Pune will be utilised as a hub for all these Groups. Hospitals will be setting up tertiary care centers in Pune, trying to reach various geographies in and around the city."

Thus, Pune as a city is pushing the boundaries of its current confines and the rays of this sunrise industry are finally shining bright on this city.

healthcare@expressindia.com