Narayana Health - A company to watch

In its website Narayana Health (NH) states it is ‘Amongst top 50 local dynamos of the world’ (http://www.narayanahealth.org/)

NH’s growth is phenomenal from 225 beds in 2000 in Bangalore to 7500 beds in 2014 in 29 hospitals across 17 cities. NH wants to grow to 30000 beds by 2018. NH has a project stated to be worth $2billion over 15 years in the Cayman Islands in association with an American non-profit partner for the purposes of medical tourism style of healthcare services.  (Cayman Island has a population of approximately 57000 with the financial services industry seemingly as its main economic activity and the world’s second most significant tax haven as per Wikipedia)

In percentage terms for the number of beds is 3333% growth in 14 years which is 238% growth each year.

With that kind of growth no wonder JP Morgan and Pinebridge invested $100million for a 25% stake in the company ( http://articles.economictimes.indiatimes.com/2013-05-24/news/39476325_1_heart-surgeon-elderly-patient-dr-devi-shetty  ). There are news reports that they are now looking to exit.

Narayana Hrudayalaya Private Limited (NHPL) is a company with a subscribed capital of Rs 3,000,000,000.00 ($48million) and a paid up capital of Rs 3,457,530.00 ($55000) according to their last balance sheet of 31/03/2014 filed with the Indian government. NHPL has ‘charge amount secured’ as charges registered in the MCA government of India website Rs 2,005,500,000.00 ($31million) to Indian financial companies. In other words it seems like NHPL has Rs 200crores of secured loans for Rs 34 lakhs worth of paid up capital. This company has many of its stakeholders’ representatives as directors.

There is also another private limited company called Narayana Hrudayalaya Surgical Hospital Private Limited (NHSHPL) with authorised capital 50,000,000.00; paid up capital of Rs 27,027,040.00; charge amount secured Rs 541,238,215.00 In other words Rs 54crores of secured loans for a paid up capital of Rs2.7crores.

Narayana Hrudayala’s quoted profit is about 8% which is decent but not probably good enough for some.  At a capex of Rs 17.5lakhs per bed their 7500 beds would result in assets of Rs 13,125,000,000 (about $211million). However, they have already stated they are trying an asset light model, where the asset belongs to someone else and Narayana Health provides operations.

The $100million private equity investment for the 25% stake of the company would put NHPL’s value at $400million. Perhaps there are other constructs/structures/vehicles that relates to these numbers quoted in the press.  However, the subscribed capital of the company is $48million. Narayana Health website in its disclaimer, terms and conditions and copyright all refers to Narayana Hrudayalaya Private Limited, so for the purposes of this write up I am assuming that they are indeed referring to NHPL. NHPL has a variety of stakeholders including private equity representatives on its board; NHSHPL has only Dr Shetty and a couple of others on the board. As an industry watcher, I am not interested in the nitty gritty of their financial architecture. I am interested in how successful they will be in the medium and longer term.

NH and Dr Devi Shetty are known for their low cost model of private healthcare, their large scale operations and mega ambition. They have not accessed the public with a share offering yet. Their models have also been criticised (http://blog.drmalpani.com/2012/06/how-sustainable-is-narayana-hrudayalaya.html ) There is definitely something exciting happening with NH, time will tell us whether that excitement is positive. Time will tell us whether their debt will negatively affect them, or if their assets will sustain them, or a share offering will boost them. Time will also tell if their model of innovation would be successful.

Irrespective of whether one is interested in finance, healthcare, innovation, politics, off-shore investments, medical tourism or any combination of these, Narayana Health is a company to watch.

©M HEMADRI 

Follow me on twitter @HemadriTweets

PS: Narayana Health and its growth fascinates me and reminds me of Apollo Hospitals in its rapid growth phase. The above information is gleaned and presented from internet searches. I will be happy to correct, amend or post additional information if that was necessary.

Increased Quality and Reduced Cost - Possible in India

I have a long held view that quality is inversely proportional to cost which means as for a given activity as the quality improves cost decreases. This is actually possible in India as well.

Let me share a clinical anecdote that may illustrate my point. It may be dated and trivial to many current readers but was very relevant to the patients and clinicians at that time.

In the late 1990s I was working as a surgeon in Sir Ivan Stedford Hospital, Ambattur, Chennai, India (http://www.ammfoundation.org/SirIvanStedefordHospital/index.html). This is a charitable hospital where we used to charge very small nominal amounts of money to provide services. A few rupees for out-patients, few tens of rupees for scans and so on. Being India, one of the commonest operations performed happened to be surgery for hydrocele. The way it was conventionally performed may be very familiar to many of you. The operation of course ended with a large bandage tightly applied to the scrotum with the purposes of avoiding problems like pain, infection, haematoma, oedema etc. These patients were also put on antibiotics for 10 days or more. Many of these patients used to come back with soiled dressings and the exact problems that doctors were trying to avoid. Doctors used to wonder what else could be done to improve the situation.

Not using a bandage was thought to remove an all important barrier that avoided exposure of the scrotal wound to the unhygienic toilet situation in India and despite using 10 days or more of antibiotics infections were happening. Barrier and antibiotics thought to be bulwarks against contamination and infections were not working.

I actually thought the tightness of the bandage caused oedema and increased pain. The presence of the bandage increased sweat and moisture in an already humid perineal area in a warm country. The bandage also easily became wet because of the toilet washing habits of the country and acted as a rich environment to create infections.

Having worked in England where the scrotal bandage was not routinely used after scrotal surgery, I took the bold step of not using scrotal bandages to hydrocelectomy patients much against the advise of my friends and colleagues. Of course, I suggested the use of the proper scrotal support clinical hosiery which was either not available or when available was very expensive. An alternative had to be found. I simply asked my patients to buy 7 of the cheapest 'A' or 'Y' front underpants from the shops opposite the hospital otherwise I would not operate on them. I used these normal commercially sold underpants over a couple of pieces of sterile gauze placed on the scar, changed once a day by the patients themselves, in the place of scrotal bandages for my patients changed by clinical people. Most of my patients found this very amusing. Some were resistant, perhaps hesitant, because the had not worn such a type of undergarment before. My colleagues were of course greatly humoured by what they thought was my naivety and enthusiasm.

In a few weeks, post operative follow up clinics were showing that my patients were walking in and walking out in super speed and for the rest of the surgical team there remained the usual levels of post op problems with pain, oedema, infections. Having eliminated the scrotal bandage which I thought was causing the problems, I then moved to single dose prophylactic antibiotic as I used to do in Britain.

Word of mouth and social observations in a local context those days was of course as fast as twitter or facebook now. The talk was about how patients spent less money on changing bandages and buying antibiotics while getting good results. Soon my colleagues avoided scrotal bandages, used undergarments as I recommended and moved to a shorter course of antibiotics often just 3 doses (instead of the usual 10 days).

Of course the people who charged for the change of dressings and the people who sold antibiotics were not happy. But I can tell you who were happy, the guys who sold the undergarments. They were really happy. 7 undergarments per hydrocelectomy patient in a hospital that did hundreds of hydrocelectomies, they must have been ecstatic. Well, I know they were, as one of them approached me and offered a commission to me (his bloody nerve) if I could recommend patients to buy the undergarments specifically from his shop – no different from the drug store chap then!

Clinical complications reduced – i.e. quality improved. Cost reduced.

Okay, this example is not about whole systems, scientific proof, published evidence and other high & mighty things. It is one little example. What I cared and what our patients cared is that we had lesser clinical problems and we achieved it by doing/using/costing less. Perhaps hydrocele surgeons in India are no longer using scrotal bandages and 10 days antibiotics - that is why this anecdote may be very dated but the general lessons are in my view still valid.

Increasing quality while decreasing costs can be achieved in India as well. Perhaps due to the large number of people who are around the poverty line this concept becomes even more relevant to India. We must remember that though the GDP is high the per-capita money is very low in India. Individual doctors are not dealing with the mighty high GDP India; individual doctors deal with the individual patients of low per-capita India. That is why low cost high quality care becomes essential.

©M HEMADRI 

Follow me on twitter @HemadriTweets

No mosquitoes in UK so our healthcare is costly

No Mosquitoes in Great Britain, hence our healthcare is costly

A groin hernia is surgically repaired by placing a synthetic mesh on the weakness and fixing it in place. In UK the mesh currently costs from £20 to more than £100.

This is obviously a significant cost which the rural areas in the developing and poor countries cannot afford. The doctors face an ethical dilemma. Should they refuse to operate since the mesh is unaffordable? Should they do a non-mesh repair which is generally thought to have a many times the recurrence rate of the hernia compared to mesh repair?

Tongaonkar and Reddy, doctors from two small towns in India innovated by cutting mosquito net cloth to shape, sterilised it by autoclave and used it on patients (http://www.bioline.org.br/request?is03018). They had very good results that compare well with standard international/western results for groin hernia repair. They also had the mosquito net cloth mesh analysed by labs which generally showed it to compare well with commercially manufactured meshes like the ones we use in UK. 

The mesh costs a few pennies; it was 3688 times cheaper than the commercial mesh.

Of course surgeons in India accused the Indian Journal of Surgery of blasphemy for publishing Tongaonkar's paper.

Now here is the good news, a UK surgeon Prof Andrew Kingsnorth uses the mosquito cloth net mesh for hernia repair. The not so good news is that he does not use it in the UK, he uses it in a hernia charity in Ghana which he leads/supports www.operationhernia.org.uk  

One of my friends who has interacted with this blog wrote to Andrew Kingsnorth and the conclusion was that red tape will prevent us from using it in UK. I have discussed this with a number of people, at the very end of the discussion we always wondered why we in UK would not take this up even if we save money. Groin hernia mesh is only a £5million market with already many fingers in the pie. £5 million for the NHS is possibly small change. Our discussions normally end at that point.

We are a developed, rich economy, it may well be that our development and our wealth which prevents us from taking up innovations that save money. You would have never guessed that the lack of mosquitoes in UK was one of the reasons for our healthcare being costly!

Hemadri

Personalise your cuisine in this restaurant

Personalise your cuisine in this restaurant. Where can you get truly personalised healthcare?

There is a very unique restaurant in Hull that works on amazingly innovative concepts. Its purely vegetarian which in itself is a rare thing for a native British restaurant, it is open only when they have enough bookings, serve only buffet, the first person to book for the day gets to choose the buffet menu, the menu can be from anywhere in the world and many more extraordinary features. Recommend that you checkout their website: http://www.hitchcocksrestaurant.co.uk/

 

I have been there, it is certainly not the greatest place on earth in terms of decor, service or food. But I still hold that their concepts are unique, praiseworthy and successful.

Wonder what is the lesson from this to healthcare? How can I learn from this? How can I personalise the care I provide to the patients I deal with in a way that is determined by the patients at a very low price, close to home, be profitable, while at the same time having my individuality stamped on it?

I have no personal interest of any sort in this restaurant. I am just amazed by their fabulous and exclusive concepts.