Doctors no longer gods, patient trust has to be rebuilt: Radiant Life head

In a Q&A, the man who bought the Max Hospital chain recently, dwells on his plans to take his health care institutions to the next level of excellence in patient care

Around Christmas time last year, there was a big-bang development in the healthcare space, when Radiant Life and KKR took a majority stake in Analjit Singh's Max Healthcare, in a largely below-the-radar merger deal valued at a staggering Rs 7,242 crore. 

Abhay Soi, Chairman and Managing Director of Radiant Life Care, who comes from a consulting background, tells Business Standard in an interview, that his relatively recent entry into healthcare was more by accident than design. Excerpts: 

What is your background and how did you get into healthcare? 

I have been into turnarounds and restructuring -- corporate, financial, organisational and operational. I've worked in paperboards, stock brokerage companies, textiles and specialty chemicals. It was functional, sector-agnostic expertise, which I would take across to Arthur Anderson, E&Y and KPMG. 

At one point, I started a special situations fund that dealt with turn ups and turnarounds. Subsequently I got an opportunity to restructure a company, Integrated Health and Healthcare Services, that had management control over BLK Hospital. We eventually bought IHHS in 2011 for Rs 202 crore.

We didn't see ourselves as a me-too set up and wanted to enter very high-end quaternary care, such as heart, liver, cadaver and bone marrow transplants. 

Once I got down to understanding the business, I found success, though it was somewhat delayed. I realised we were operating at better efficiencies and growth rates, so we started looking for an encore. Then, Nanavati Hospital came up in 2015. That's when we looked for an investor and raised private equity in 2017. We realised we could pick up a distressed asset and turn it around. BLK wasn't a one-off. 

Both hospitals (BLK and Nanavati) are metro-centric. So we treat the doctors in both the same way, the value proposition for patients is the same, the affordability index matches and dealings with international patients and their expectations are similar. This commonality cannot be found between, say, one hospital in Delhi and another in Mohali. 

We wanted to define ourselves as we grew. We were chasing a bigger dream, and believed Max would help us realise it. Clinical excellence should be a given in a hospital. We wanted to go beyond that and focus on patient service. When you do that, you have the right ethos.

What can we expect in the healthcare space going ahead?

The first generation of private hospitals -- Apollo, Max, Fortis -- came sometime back. The second wave with Medanta and BLK came around 2009-2010. These hospitals had an advantage because there was a template that could be followed. Except for Fortis’s buyout of Wockhardt and Escorts, ownership didn't really change hands, though there was some private equity. But today, the sector is mature and ready for consolidation, with newer players coming in. 

The first hospitals were about identifying territories, setting up clinical practices, standards, processes and such like. Now is the time to grow the business and take it to the next level. 

How did you work on the growth plans of the two hospitals?

The tried-and-tested way was to get star doctors, particularly in cardiac, ortho and neuro, and then commission the hospital. 

Getting the stars was critical to starting the programme. But I was neither a big corporate nor a doctor. I was an unheard of commodity, and people didn't know how long I'd last. Both doctors and executives were apprehensive about joining me -- at least the stars wouldn't join. What I got was the number twos and the number threes in the specialties. They were greatly skilled, and were doing most of the surgeries but weren't marketable faces. Likewise in management, I wouldn't, for instance, get the CFO I wanted and would have to make do with juniors across positions. But I did get a younger and greatly motivated team. 

On the clinical side, since we couldn't start with stars, we got into specialities like bone marrow and spine transplants, and organ-specific oncology, which were upcoming. 

Since we didn't have known faces among doctors, we began looking at the international market because the competition there isn't so intense and all doctors were unknown. At least that was a level-playing field. Most hospitals groups apart from Apollo had parity in terms of recognition. 

Since we saw ourselves as disruptors, our marketing had to be stronger, patient experience better and the processes had to be stronger as well. So we started working on all those things to set us apart from the competition. 

Currently we run the world's fourth-largest bone marrow transplant programme. What MD Anderson does for $300,000, we do for $35,000. Our doctor costs and marketing cost are much lower. Once we went full-throttle on marketing, we began attracting more doctors who brought along their businesses, and also augmented their own practices due to their association with us. Eventually all the ships came home.

We're a flat organisation with autonomy for all and no bureaucracy. Our efficiencies are higher, we are the best in class in fixed cost management. We have a start-up culture that we keep close to our hearts.

How do you see technology impacting the growth of healthcare?

We see artificial intelligence and healthcare converging and are positioning ourselves to meet the new opportunities this will throw up. The optimum benefits will be seen five years down the line, but we have to be prepared.

What is the investment in research?

We are better than the European hospitals in both, processes and clinical care. We are JCI accredited. 

That is the highest among American standards. That said, I think in India we need to introduce post-care hospitality such as pain management or patient care. That is important.

As far as academics is concerned, I am reminded of Dr Farrukh Godwadia's statement: "You cannot approach the temple of medicine with the heart of the moneylender.” That philosophy must be inculcated in every single employee in healthcare. 

We are building institutions whose bedrock is academics. We have DNB (Diplomate National Board, a three-year programme) and fellowships. We are leaning on an academic approach to healthcare and delivery. We can’t go forward with a commercial approach.

There are concerns healthcare will be commercialised with increasing PE investments... 

I believe, as an entrepreneur, that if you chase money, you'll never make it. You chase reputation, excellence, build integrity and success will follow. I want my business to be the most reputed hospital chain -- not the largest, or fastest growing, or most profitable, but one that's respected. 

I say, bring in the efficiencies, profitability will follow. It is a long-term investment for me, this business to me has the soul of a social enterprise.

The moment you build trust, you will attract the right academics and doctors, and a profitable business will be created. Our partners see merit in this belief. Both are clear that it's a long-term play, not a one- or two-year flip. Our sector lacks trust. Doctors were once gods, not anymore. We have to build reputation and bring back care in order to eliminate trust deficit.

How do you that?

Firstly each and every patient will be given a cost estimate. You cannot be off by 15 per cent without a sign-off from the patient. 

Everything is online for administrative purposes. Data and statistics throw up deviations in things like quantity of blood used during surgery or guaze used to indicate a botch up. We do not permit aberrations. 

Every patient is financially counselled upfront by the doctor and the hospital. We give an estimate and conduct an inquiry whenever there is a variation beyond 10-15 per cent. The systems and the AI throw up the story in numbers. 

We have 135 standards of care, including nursing call time, among others, that we measure for efficiency. For example, if it takes more than three minutes 44 seconds for an ambulance to leave, that's inefficiency. Bedsores, ulcers, are all indicators of care. 

A patient has access to as many as 156 touch points, such as each of which will be driven by a person, process or product. The patient's journey has to be comfortable, all else will get taken care. 

We have our processes, Max has its own practices and we have to marry the two. 

What is the agenda going forward?

We are putting synergies in place for franchising the brand and are also starting newer projects and joint ventures. Besides, there is immense brownfield potential in Delhi and Mumbai. And since we have a cluster of hospitals in NCR, we can operate at higher margins as compared to a single hospital. 

Nanavati has 350 beds currently, and will grow to thousand beds within three years. We will focus on international marketing, high-end quaternary care, and oncology. Our organ transplant programmes will have best-in-class technology that is viable only in metros. Cyber knife makes sense in Delhi or Mumbai, not just about everywhere. 

Medical tourism makes up 30 per cent of BLK's total business. At Max, the numbers will be higher.

How do you plan to integrate Max Healthcare?

When we acquired Max, we insisted on keeping the name for its brand recall. We look forward to expanding with more brownfield projects. We can also engage with developers and builders in other cities and can leverage assets. 

From a managerial pool standpoint, healthcare isn't a very deep sector. There are very few players and finding good professional managers is difficult -- you see that in the cost structure as well. There is a dearth of good people, and we  don’t necessarily have bench strength at Radiant. I don’t think Max has either, so we will have to augment the structure instead of reducing it. 

Rather than looking at geographies, we look at locations with the best value propositions. Metros are more standardised. The overall viability and resource allocation work differently in a metro as compared to a small town, where healthcare services will typically be dominated by standalone specialty hospitals. But sophisticated value-generating surgeries, such as a heart transplant, usually happen in large cities like Mumbai and Delhi, where the best doctors are available. Technology investment becomes viable because of affordability in a city. 

We want to be players with high quality assets in top locations. In NCR, the best location is south and west Delhi. In Mumbai, we have access to four-and-a-half acres (at Nanavati) in the middle of Juhu. 

Though the hospitals are independent, there will be synergies in procurement, marketing, clinical programmes and education. We can cover significantly more patients, domestic as well as and international. 

Our aim is to bring down fixed costs. We will take the best practices from both groups in terms of cost structures, efficiencies and processes and marry the two players, who are in similar markets with similar ethos.

What happens to the new lines of business Max has been investing in?

My belief is that at some stage home healthcare and laboratories require a different focus and management. 

They have achieved some critical mass. It may be time to spin them off as subsidiaries or divisions because the business requires a retail mindset, instead of getting lost in the larger space of the hospital, which is a here-and-now business. 

We will need a separate CEO and a separate marketing push so we will move it away and give it space to grow.

The BLK and Nanavati stories in brief

Both BLK or B L Kapoor Multispeciality Hospital and Nanavati are run by not-for-profit trusts. Over time, 

both turned into a loss making entities. Their doctors had moved to better opportunities, investment in technology fried up and the patient flow gradually waned. 

Healthcare in the past decade and a half has seen the mushrooming of for-profit corporate hospitals, even though they are managed by trusts. During this time IHHS, which Abhay Soi bought over in 2011, got an opportunity to work in the hospital segment. 

The model of operating and managing an asset-light model, where running cost are an investment by the operator was successfully demonstrated. In 2015, Soi was able to replicate this model successfully at Mumbai's Nanavati Hospital. 

Both hospitals continue to be owned by their respective trusts, but are run by Radiant Life Care.