Access to high-quality, low-cost healthcare services is a big challenge in many African countries. There are few public hospitals in most areas and those available are often under-staffed, under-funded and lack basic facilities. Low-income earners and people residing in rural areas face even greater difficulties accessing the most basic care.
Entrepreneurs are increasingly investing in the healthcare sector to bridge the gap, but they face a myriad of hurdles in delivering quality services as well as value to shareholders, and have to challenge accepted approaches.
As Africa’s population increases and incomes rise, the demand for wider access to high-quality and affordable healthcare is expected to climb. A report by professional services firm KPMG, titled ‘Delivering high-quality, low-cost care at scale’, highlights case studies of successful hospital chains in India that African businesses can learn from.
Here are the success stories of three hospitals started by entrepreneurs in India and the strategies they have deployed to scale their operations and be commercially successful.
Targeting under-served areas
The Vaatsalya chain of hospitals, founded in 2005 by two doctors Ashwin Naik and Veerendra Hiremath, targets clients in semi-urban and rural areas who have limited or no access to healthcare facilities.
Key components of the business model include bringing doctors back to rural areas and reducing the brain drain, making no major real estate investments and eliminating frills such as decor, ward kitchens and cafeterias.
Every year its 50-70 bed capacity hospitals each serve more than half a million patients, offering core services that include mother and child care, general surgery, diagnostics and emergency care.
The chain expands its hospital network based on people’s needs in a particular region, the gap in health service provision, and the availability of doctors either locally or those who are willing to move to that geography.
“This combination of targeting an under-served but large market focusing on common conditions, gives Vaatsalya a clear market niche and sufficient scale and focus to achieve cost savings – most of these are benefits from standardisation, flow and specialisation rather than economies of scale,” says KPMG.
Innovative cost-cutting measures
CARE Hospitals was founded by a group of physicians with a 100-bed single facility focusing on cardiac care. Today CARE is a multi-specialty hospital chain comprising of 1,600 beds across 12 hospitals targeting middle and lower-income customers. KPMG attributes the hospital’s success to an entrepreneurial approach based on a pricing strategy that enables the hospital to address the healthcare needs of every strata of society, thereby maximising accessibility while focusing on quality and affordability.
The hospital’s management has also adopted innovative ways to contain costs and optimise utilisation of resources. Through a task shifting process called “de-skilling”, CARE deploys many functions of higher-level personnel to less-trained individuals deemed to be appropriate for the job, thereby allowing highly-skilled staff to spend more energy on complex tasks.
To further cut costs, CARE uses leased space instead of acquiring property.
“The hospitals follow an evidence-based medical practice with emphasis on accurate diagnoses to minimise costs. It has developed its clinical processes to mitigate unnecessary expensive invasive procedures,” notes the report.
Use of technology
Glocal Healthcare was founded in June 2010 by entrepreneur Sabahat Azim with the aim of providing quality and low-cost healthcare to the needy. Today it runs five hospitals in rural West Bengal, each having 75-100 beds. Owing to the strength of its business model and stellar financial record, Glocal has periodically received private equity interest.
The hospitals use a standardised medical diagnosis and management system (MDMS), an artificial intelligence system that helps in diagnosis and choosing medication, thereby eliminating prescription of unnecessary medicines, pathological tests and procedures. Although doctors can exercise their judgement, the system ensures that the entire process of diagnosis and management is fully transparent and documented.
The hospitals have also invested in telemedicine, teleconsultation and video conferencing facilities and are fully computerised and 100% paperless.