The Indian healthcare sector is one of the fastest growing industry sectors in the country. According to the Confederation of Indian Industry (CII), as stated on their website,

“In India as well, Healthcare has emerged as one of the largest service sectors with estimated revenue of around $ 30 billion constituting 5% of GDP and offering employment to around 4 million people. By 2025, Indian population will reach 1.4 billion with about 45% constituting urban adult (15 years+). To cater to this demographic change, the healthcare sector will have to be about $100 billion in size contributing nearly 8 to 10% of the then GDP. By then, the 10 large national healthcare networks would be able to absorb 30% of the market share. The leaders in the Indian healthcare sector will be benchmarked to international quality and efficiency standards.”

India Brand Equity Foundation (IBEF), a Trust established by the Department of Commerce, Ministry of Commerce and Industry, Government of India, suggests a ‘Road Ahead’ with the following pointers:

“The coming years will see great out-of-the-box thinking by the strategists in the field of healthcare, beginning with the way healthcare is delivered.

To begin with, a rise in retail clinics, single speciality, secondary and tertiary care centres are seen coming to the fore including the recent examples of NOVA day care, BEAMS and Apollo clinics.

The tier II/III cities have suddenly become attractive to the healthcare players, especially because of the tax sops and increasing disposable incomes among Indian families across the country and dearth of quality healthcare infrastructure in these locations.

Specially focused on medical tourism, health cities are being designed and executed and hospitals with bed strengths of 1500/2000 which were never heard in the private domain are now coming to light.

Technology will play a major role in bringing quality in healthcare, be it better nursing communication systems, patient monitoring devices or telemedicine to provide low cost diagnosis to remote patients, etc.

Companies like Blackberry, HCL and HP are already investing heavily in healthcare technology and Google trying to ambitiously woo the consumers for a centralised healthcare database. What is in store for the future of healthcare is limitless.”

Entrepreneurship in the Indian healthcare sector, however, has been slow; though, with a huge consumer base in India, opportunities have always existed. Now, there is a growing consciousness in the country and, in the past six years or so, with funding becoming available, the industry has seen an emergence of healthcare entrepreneurs. Recently, a Huffington Post article titled Investing in Private Health Care for All in India by David Bank, Editor, ImpactAlpha.com, explains this phenomenon as,

“The efforts by India’s new crop of health care entrepreneurs to sell medical services directly to the more than 1 billion medically underserved people at the base of the country’s economic pyramid.

Already, paying customers – individual patients and their families, rather than insurance companies or the government – control about 80 percent of health care spending in India. A report in December estimated health care spending in India will reach $158 billion in 2017, an annual growth rate of 15 percent.

The health care startups are driving down costs for eye care, dental care, preventive screenings and all manner of basic procedures in order to bring private health services to smaller cities and towns, and to the five-sixths of Indians with household income below 200,000 Indian rupees (INR), or about $3,325 a year.

“There will be hundreds of these businesses growing up in India,” says Will Poole, managing partner of Unitus Seed Fund, which has made three investments in early-stage Indian health care companies since last year and plans to invest in three or four additional health care companies this year. “They are meeting the needs of low-income consumers who currently have no other option for getting health care, other than embarking on travel to a major city.”

“Some of these businesses are going to be highly scalable, if they’re designed right and executed well, in which case they will be highly valuable,” Poole added.

Unitus’s newest investment is Smile Merchants, which operates four dental clinics around Bhiwandi, a city near Mumbai. Unitus reached out after it determined Smile Merchants’ hub-and-spoke system enabled it to deliver cost-effective services to so-called Tier 2 and Tier 3 cities, with populations of under 5 million and under 1 million, respectively, as well as to smaller towns and villages.”

We caught up with Vikas Verma, key advisor on the Smile Merchants project, and asked him some critical questions on Indian healthcare entrepreneurship and healthcare delivery in India. His answers were candid and, in spite of healthcare entrepreneurship being in a nascent stage, they gave us a feel of the optimism which is guiding entrepreneurship in the Indian healthcare sector.

YPP Advisors:  India seems to be witnessing a surge of entrepreneurship. How important is entrepreneurship for the wellbeing and growth of the healthcare sector in India?

Vikas Verma:  Entrepreneurship is especially important for growth of any economy and, especially so, in the context of the Indian healthcare sector. One often overlooked facet of entrepreneurism is the innovation and disruptive change it brings to a situation – newer and better ways of doing things. An entrepreneur will always challenge “status quo” and this is what sets him apart from a normal business person. Creating new healthcare delivery models, harnessing the power of technology to deliver remote healthcare and innovations in product and service delivery models have all been made possible only because of increased entrepreneurial activity within the healthcare sector

YPPA:  What does the term ‘healthcare entrepreneurship’ mean? How do you define or describe a ‘healthcare entrepreneur’?

VV:  Healthcare entrepreneurship relates to creation of new business practices, healthcare service delivery models, innovative products and using technology to enable businesses and service providers to improve the level and quality of healthcare in society. And a person who has the vision and pulls together all the required resources to make this happen is a healthcare entrepreneur. As an example, there is SughaVazhvu (http://www.sughavazhvu.co.in/), a rural primary healthcare service provider in Tamil Nadu.

YPPA:  Has entrepreneurship spread across the entire healthcare sector in India? Or, is it prospering only in specialised fields at the moment? Which healthcare fields or specialisations have experienced the biggest growths?

VV:  A number of segments within the healthcare sector are seeing entrepreneurial activity at various levels. The entrepreneurial activity in the initial days was centred around diagnostic services but has now grown to include diabetes management clinics, eye care clinics, dental health services, primary healthcare centres, online search for specialists, online and remote consulting services, doctor appointment booking services apart from a number of innovations in the product area such as medical devices, vitals monitoring products etc.

YPPA:  Why have certain healthcare specialisations attracted growth while others haven’t? What ‘key success factors’ drive healthcare entrepreneurship in India?

VV:  Lately, there has been enough activity in dental care, eye care, diabetic care, diagnostics and even product and technology enablers that help deliver better medical care. Some specific specialisations such as cardiac care, cancer and renal care, etc may not have seen much activity because these require much higher degree of skills and typically will be slow to attract entrepreneurs.

However, on the keys success factors that are important for a healthcare entrepreneur to keep in mind are basically: (a) Technology and how can it be leveraged in different ways to create a long term sustainable delivery model for your business; (b) Innovations that consistently and constantly add value to your service delivery to the patient; and (c) People and how the entrepreneur can create an ownership model for its people that allows the business to grow through high quality delivery of service through its people.

YPPA:  What has been your involvement in healthcare entrepreneurship? Can you tell us about one or two projects under your advisory which have adopted successful/promising models of healthcare entrepreneurship from which others can learn?

VV:  I have been associated with a healthcare startup company called “Smile Merchants” (http://www.smilemerchants.in/). Smile Merchants is a chain of dental clinics focused on providing quality dental care to underserved populations in rural and small town India. I have worked with them in the area of business strategy, helping them refine their business model, raise funding and put in place their operating processes. They operate a hub and spoke model for their clinics which enables them to expand their reach to really small towns and villages in rural Maharashtra. They currently operate 6 clinics in villages and towns in Thane district

YPPA:  Has the adoption of technology made it easier for Indian healthcare entrepreneurs to design and implement their business models? Are most healthcare startups these days technology based?

VV:  Technology certainly is a great enabler for delivery of healthcare services in India. Even Smile Merchants is experimenting with using internet and web technology to deliver primary relief to dental patients. While most healthcare startups may not necessarily be technology based, they do use technology in some form or the other and those who are able to integrate it with their service delivery model well, gain a distinctive competitive advantage.

YPPA:  Healthcare delivery has always been a challenge – even in developed countries. Are Indian healthcare entrepreneurs and startups able to overcome the challenges of healthcare delivery and offer quality products/services to Indian consumers?

VV:  Quality healthcare delivery is definitely a challenge in whichever sector or market you are operating in. Indian entrepreneurs in the healthcare sector have been working and experimenting with various delivery models to ensure quality delivery of service and learning on the fly. The biggest challenge they all face is on the human resource front, whether operating in an urban environment or rural environment. Despite the so-called large youth dividend that India enjoys, the ground reality is that entrepreneurs often face a shortage of skilled or willing or skilled AND willing manpower to operate their businesses. A number of businesses have innovated with business models using technology to overcome the manpower and other challenges; however the jury’s still out on whether any of them has succeeded.

YPPA:  How important is human resources management for Indian healthcare entrepreneurs? Is the Indian healthcare sector geared to address the human resources issue to help Indian healthcare entrepreneurs succeed?

VV:  It is quite obvious that the success of a healthcare venture is made or marred by the quality of its team. As I said before, it is possibly the biggest challenge facing healthcare entrepreneurs in India today. While we have a large number of medical and nursing colleges in the country, there are huge lacunae in the primary healthcare infrastructure of the country, be it government run or in the private sector. There is no para medical structure existing in the country and primary on-the-spot immediate medical assistance is sorely lacking. Support services even as basic as a good ambulance network is not geared up to meet the challenge of healthcare in India. This puts a lot of pressure and stress on the business models of healthcare entrepreneurs in India.

YPPA:  Media reports criticise the Indian healthcare sector as too urban-centric, thereby neglecting the majority of India’s population which lives in small towns and villages. Is this true? Are Indian healthcare startups prepared to service India’s small towns and villages?

VV:  Entrepreneurs recognise that the large opportunity in healthcare in India exists in rural areas and a number of new ventures are targeting the  underserved Indian rural population. There are, however, significant challenges they face in tapping the rural market, ranging from lack of doctors and trained medical staff willing to work in remote areas, to poor or non-existent infrastructure apart from the population’s inability to pay for quality healthcare, making it tougher to have a viable business model that is scalable. One of the reasons why there is a preponderance of more social and not-for-profit business models in this target market than elsewhere.

YPPA:  Thanks, Vikas, for the interview.

Citation: Vikas Verma is currently a senior advisor to X-PM, a benchmark player in Transition Management services. He serves on the board of Smile Merchants, a rural healthcare company that he has helped with business strategy, raise funds and scale up. He is also the Managing Partner of Beneffect, a brand & business consultancy. He has to his credit the conception and launch of a number of successful consumer brands and businesses, and his core area of expertise is Entrepreneurship, Business Strategy and Start-ups.

He is also a charter member of TiE Mumbai, a member of the Stern Fisher angel network & Lead Angels. He is especially avid about working on innovative entrepreneurial projects and coaching & mentoring young entrepreneurs. He is also an executive coach and teaches at various management institutes.