Plug-and-play doesn’t work in affordable healthcare: Veerendra Hiremath

Vaatsalya Healthcare, the Bangalore-based startup that pioneered affordable and quality hospitals for small towns and semi-urban consumers, has a new mission in 2012. It wants to set up a residential training school for nursing and paramedical staff, at an initial investment of $1.5 million. This will help the company address the talent shortage problem that it currently faces. The school is critical given that this year Vaatsalya wants to expand operations beyond the states of Karnataka and Andhra Pradesh. The target is 36 hospitals (it runs 15 now) in three years across at least three more states. Veerendra Hiremath, the company’s co-founder and head of operations, spoke to StartupCentral about the upcoming training school, tweaking the business model to adapt to specific local needs and lessons from the last seven years. Edited excerpts:

How have you tackled the talent shortage issue so far?

At present, we provide on-the-job training. There is an absence of nursing schools and paramedical colleges in small towns. We did try relocation but that didn’t work so well. Not too many people want to relocate to Tier II and Tier III towns. All our issues have led us down a road where we are now looking to set up our own training school. We would like to identify youngsters in areas where we are opening or have opened hospitals – people who have a fire in them.  The plan is to train them in our methods and put them back in their towns. We would also train existing staff. Training would cover different areas of operation including hospital administration and emergency medical care.

“We would like to add value, not competition”

How is the training school project coming along?

We have received a lot of encouragement for the idea since the manpower issue is a common one and faced by everyone in the medical field. The existing nursing and hospital administration courses are very expensive and not necessarily designed for our needs. We are looking at a more need-based training solution. Training people in skills in emergency care for instance – our training school will address such specific needs. We have started work on the school. The concept and skeleton is ready and we are even organizing the money. We are engaging partners for training and should get it off the ground by June 2012. We hope to start a residential school and it will based be in Bangalore. We would like to use our existing set-ups and affiliations to better the curriculum.

You raised $10 million last year. Will you need more funding this year?

With the last round of funding, we are good for another two years. We are looking to add about 20 hospitals to the existing set of 15. We are looking to raise additional funds for the new training school. We might set it up as a subsidiary of Vaatsalya. The state governments also provide a lot of help for vocational institutes. So we might look at that avenue too. We need about $1.5 million as an initial investment.

What are your immediate priorities as far as your hospitals are concerned?

One of our primary initiatives in our way forward is to add trauma care to our existing network of hospitals. We are looking at doing this in the next three or four months. Adding trauma care will mean adding medical capabilities to the existing framework. We would like to add value, not competition. So, we have to check and gauge the existing facilities before adding on more. We want to do this in all our 15 hospitals. The hospital in Warangal in Andhra Pradesh, which was launched this month, is our 15^th hospital.  In that hospital we still have to figure out what is needed for trauma care. We have already completed this process in about ten of our hospitals.

“One big learning in the journey so far has been how operations in every state have to different.”

Can you give us some details on your growth so far?

We started scaling operations in late 2008-2009 with a target of 200 per cent growth. In the last two years, we have seen a growth of 500 per cent. It helps that we don’t have any real competition in our geography or area of expertise. This year we plan to enter some new markets. Maharashtra and Tamil Nadu will mostly be our immediate choices. Orissa is also an option. Andhra Pradesh was a huge learning experience because it was a different market (the company started up with operations in Bangalore). We are adjusting the model. A plug-and-play approach will not necessarily work. We may need to look at revenue sharing and other adjustments, which we will figure out as we go along.

What have been your other key learnings in the journey so far?

When Ashwin (co-founder and CEO Ashwin Naik) and I we started up in 2005, we kicked off with three hospitals in Hubli, Gadag and Karwar. All three worked on different models. One was an OPD services model, the other focused on day care and the third was a nursing home and surgery outfit. In about two and a half years, we realized that in smaller towns, a nursing home is the only workable model. We shut down the other two models and since then have built hospitals with between 50 and 75 beds. Our average is between 60 and 65 beds per hospital.

In 2008, we started a dialysis center in Bijapur. The response was phenomenal. India is the world’s diabetes capital and the need for such services is immense. We also think India will be the capital for renal failure going forward. Patients have been traveling from the hinterland to access these services. We even realized that they were spending as much on travel as they were on the treatment. This center has made a big difference because many patients are old or infirm.  We are now hoping to start five new dialysis centers.  Another service that seems deficient is neo-natal intensive care. We noticed the gap and accordingly included these services at some of our hospitals.

Another big learning has been how operations in every state have to different. We started out in Karnataka but could not readily apply those knowledge and skills in Andhra Pradesh. Our real estate cost, for instance, has increased in Andhra Pradesh. We will need to factor that in as we expand to other states.

Image credit: Vaatsalya