In an exclusive Economic Times interview it has been revealed that multi-speciality hospital chain Narayana Hospitals under the able and watchful guidance of Dr. Devi Shetty is going public. The enterprise will be looking to balance its social agenda and outreach while being a ‘for profit’ organization answerable to investors.

Why an IPO

NH treats more than 2 lakh in-patients and around 15 lakh out-patients annually, most of them from rural and underprivileged backgrounds. This was Shetty’s vision when he established NH, then Narayana Hrudayalaya, in the year 2000 -to create a space for accessible, affordable healthcare.

Yes, NH was the world’s largest low-cost hospital. “But did you know that India needs 20 lakh heart surgeries a year, but is capable of doing only around 1.2 lakh?” “Mothers ask how much a surgery for their child will cost. I quote an amount.If they don’t have that much, they won’t get the operation. That’s what I do ­ that’s what all Indian doctors do ­ every day: put a price on a child’s life,“ he said.The IPO will help NH build more hospitals to do more such surgeries cheaper.Shetty’s son and senior vice-president Viren Shetty puts it pithily: “The IPO will enable us to be more us.

In 2003, NH and the Karnataka government have pioneered the microhealth-insurance scheme for poor cooperative farmers in 2003 . The Bengaluru hospital performs 49 surgeries a day, using specialists, high volume and technology to drastically reduce the time and cost of treatments. “How do we stay low-cost?“ asked Shetty. “Because we’re big. Because we’re big, we can roll out the innovation across the hospitals. We can dictate terms in our purchases, we can maximise the use of expensive clinical equipment.“

While most hospitals use their infrastructure for around 8 hours, NH claims to use it for 12-14 hours a day. The average number of CT scans per machine in India is a maximum seven while in NH, Shetty said it is about 30. Since NH implants the largest number of heart valves in the world, valve manufacturing companies can sell their products at a lower cost to the hospital.Also, given that NH currently has 6655 beds and aims to acheive 30,000 beds by 2020, the IPO venture makes absolute sense.

Mission Focused

At NH the focus is providing world class healthcare and treatment options at affordable prices to those who cannot afford it. Detractors of NH say it is Dr. Shetty’s ‘charm’ and ‘persona’ that win him support from political connections across states and not the hospital’s model itself. These connections give NH access to cheap land, trimming a large component of building a hospital.

It has helped NH grow not only in Karnataka and Gujarat, but also Maharashtra, West Bengal, and Assam. Public-private partnerships like microhealth insurance and low-cost care centres also help displace the cost by getting the state, instead of the patient or NH, to foot part of the bill.

NH’s success has also inspired many other healthcare startups to scale up and aim higher! These are now funded by a growing cluster of impactful investors ­who invest in companies with social goals. The average investment in healthcare by private equity funding increased from US$5-15 million to US$ 20-30 million, most of it in diagnostic centres and hospital chains.a It is significant why NH chose an IPO e at this juncture. In closing Dr. Shetty confidently says, “Who says a for-profit hospital cannot achieve social impact, and do it for 20, 30, 40 years?”

Original Article: The Economic Times; Infographics: The Economic Times

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