A Business Case for Branded Primary Healthcare Services In India

This winter Delhi has been smothered with fog or rather smog. While, I am one of those who enjoy the cold and love my walks in the neighbourhood park, pretty much like almost everyone else in this city I am not immune to the cough, cold and the respiratory track infections that that the damp and the cold brings.

I have been struggling with a bad cough for the last few days and have been wondering that it is perhaps about time I saw a family physician. Unfortunately, we do not have a regular family physician and I am not sure where to go. I also know if the problem worsens and a fever materialises I would go and see a specialist at Max Hospital and with a course of antibiotics I would be fine.

However, this is not the way it is meant to be. For something like this shouldn’t I be going to a neighbourhood clinic and getting the problem fixed before it became bad enough for me to see a specialist at a big hospital? And this brings me to the point that we need good quality and reliable primary healthcare in our neighboourhoods. There is a significant business opportunity here waiting to be tapped.

A Little bit of History

Apollo Hospitals tried setting up Apollo Clinics a few years ago. I was part of the founding team, which went into planning the clinics and the business around them. Apollo however was clear that it was not going to own or fund these clinics. They were supposed to be franchised with Apollo providing medical knowhow, its brand name, some of its doctors and IT support connecting the clinics with the hospitals. Ratan Jalan the than CEO had a vision of opening 200 clinics in 3 years. The clinics were supposed to provide outpatient services, namely consulting with doctors, diagnostic imaging services which included an X-Ray and an Ultrasound basic cardiology diagnostics like an ECG and a Treadmill test and a pathology sample collection centre. We sold some of these franchises and the Apollo Clinics started functioning with the first one commencing operations in Janakpuri in New Delhi. The owners were businessmen running a computer hardware store in Nehru Place and had no prior experience of healthcare. Similarly a few other clinics were also franchised and were set up in Delhi, Kolkata, Bangalore and elsewhere . However, it became apparent early on that Apollo was hardly serious about this business. They were keen on netting more patients for their large hospitals through this network and saw these as no more than referring centres and the support that was promised to the franchise owners never materialised. The smarter ones quickly realised that in this new business they were pretty much on their own, learnt the ropes of this new business fast and managed to survive. Many did, many shut shop. Apollo was hardly bothered with any of this.

Max Healthcare too experimented with Dr. Max Clinics in New Delhi. Two clinics were set up in South Delhi. Unlike Apollo, Max invested in the clinics and had no desire to franchise. This experiment unfortunately failed mainly because Max in those days was focussed on rolling out its large hospitals and these clinics did not get any management attention. They were just not worth the trouble in the larger scheme of things and were closed down after a few years of experimentation.

The Learnings

While Apollo and Max both tried to set up Primary Healthcare Clinics, they were hardly serious attempts at the business. Apollo did not want to invest and was keen on skimming profits at the cost of the hapless franchisees and Max was just not ready at that point in time for something like this.

Apollo Clinics had a large upfront investment of approx. Rs. 20MN in the venture and since they themselves were not investing, they allowed the costs to go up and with the franchisee not knowing any better, they got away with this. When we crunched the numbers at Max we realised that a fairly decent clinic can be set up for as much as INR 5-7 MN.

The biggest challenge really here was about getting quality doctors (Family Physicians, Paediatricians, Internal Medicine, Obs and Gynae and Cardiologists) to join the clinic. Since the clinic is a very local enterprise one would want to pull in local doctors. However, we discovered at Max that many of them were just not interested as they saw the clinic as serious competition. They were afraid that if they moved to a Dr. Max Clinic and asked their patients to come there, the patients in future might prefer the superior and more professional services of the clinic. We tried hard to convince the local doctors that we sought a win win partnership but it really did not go anywhere.

The solution thus lies in forging a relationship with the local prominent doctors, which safeguards their economic interests. This can be achieved by asking them to invest in the venture. Thus 50% of the ownership of the clinic can reside with the lead consultants in the clinic. Thus let us say a sum of INR 2.5-3.5MN can be invested by the doctors and the balance by the entrepreneur, who sets up the business. A city like Delhi can easily absorb at least 100 such clinics and the model can be scaled up and rolled out across the country.

The clinics can than be established as a chain and can be marketed under a single brand name, 50% owned by an entrepreneur and 50% by local doctors. The clinics can all be connected under an IT backbone and data can be shared seamlessly. This can also open up enormous revenue possibilities from scientific research and allied work. Costs can be driven down by centralised purchasing and efficient supply chain management. Superior and unique customer experiences can be delivered through processes integrations and people training. I personally believe time has come for these clinics to emerge and claim their rightful place under the sun.

Finally, will this mean the McDonaldisation of primary healthcare in India? Well, may be yes, but than don’t we all love the neighbourhood McDonalds.

Pic Courtesy http://theapolloclinic.com/CorMainArticle.asp?Id=3

The Silly Question of RoI in Healthcare Marketing

The other day I was with Dr. Jadhav who heads the Marketing function at the well known Narayan Hrudayalaya in Bangalore. Dr. Jadhav was keen to use radio for his hospital’s communication needs and I was hoping to persuade him to advertise with Fever 104, the radio station owned by The Hindustan Times, my current employers. Narayan Hrudayalaya, which is a well-known cardiac hospital thanks to the famous Dr. Devi Shetty and his pioneering initiatives, has recently started a Cancer Centre as well as a Multi Speciality hospital and wanted to promote these. The aim of the communication was to tell the citizens of Bangalore about these services available at Narayan Hrudayalaya and to drive ‘footfalls’.

While I discussed the plans with Dr. Jadhav, I could not help but notice his concern about the RoI on his marketing spends. Dr. Jadhav was very clear that if he spent Rs. 100, he needed 3 times the sum in revenue, which could be directly attributed to this activity. I could easily relate to this because this is exactly the kind of expectations the management teams had of me, when I headed the Marketing function at Max Healthcare and Artemis Health Institute.

I wish calculating RoI on healthcare spends was this easy. While there are many websites, which help one calculate RoI on marketing spends using complex formulae and spreadsheets involving the lifetime value of a customer, the cost of capital and what have you, I believe quite often the best way forward is a subjective gut feel and patience.

Measuring the success of a healthcare marketing campaign by merely counting the number of queries/walk ins generated in the hospital OPD is a great folly. The hospital business is unlike any other business and one must remember that exciting marketing communication alone will not lead to people walking in to check out the services of the hospital. This can happen for a new restaurant or a movie theatre, but for someone to visit a hospital he must have a pressing need.

Tactical communication involving discounts, freebies and the like should be handled with care. I am not sure I would prefer to go to hospital for cardiac surgery because there is a discount being offered on the surgery, or I would like to go under the knife at a particular time just because the hospital is offering a deal. Come to think of it, I would be downright suspicious of the hospital if it tries to hustle me into a medical procedure by making a commercial offer.

Marketing spends in a hospital must be looked upon as an investment in the hospital brand and the values it stands for. The customers should be informed about the services of the hospital, the experience and training of its doctors, the robustness of its systems and processes and above all the promise of the experience the hospital hopes to deliver to its customers. It can highlight its ease of access, competitive pricing vis-a-vis other hospitals and superior services. The hospital must showcase medical excellence, send out stories of success against great odds and constantly remind its customers what it truly stands for. It needs to communicate all or some of these over time before it should even attempt to measure the RoI.

A hospital’s brand equity is built over many years and much as hospital marketers would like to hurry this up, there are just no shortcuts. A hospital must set aside a small sum of money (7% of sales in the first years tapering to 2-3% in later years) year on year to spend on connecting with its patients and the local communities it hopes to serve. It should diligently spend this money informing, educating and reinforcing its brand values.

A few years later, the hospital will find itself buzzing with patients and no one would really be interested in the RoI on marketing spends.

The PR Story

A few weeks ago, as I wearily settled into the cramped seat of a Spicejet flight to Mumbai, I pulled out the Metro Nation a tabloid format newspaper and started flipping through the pages. Suddenly an image of my former colleague Dr. Deep Goel, the head of Laparoscopic and Bariatric Surgery at Artemis Health Institute, Gurgaon caught my attention. Dr. Goel was featured in the story along with a 200 kg Canadian patient, whom he had successfully operated upon (performing sleeve gastrectomy) and discharged from the hospital with in 24 hours. The story albeit poorly written (the journalist appears to be totally ignorant about medicine, medical procedures, surgeries et al), did manage to inform the readers about Dr. Goel's superlative skills and about the Bariatric Surgery at Artemis.

The week before that I had come across the story of a successful heart transplant in Chennai, when the donor was in Bangalore a team of surgeons from Chennai successfully harvested a heart in Bangaloreand transplanted it in a policeman in Chennai. Stories about Pakistani children being successfully treated for congenital heart diseases at Narayan Hridyalaya in Bangalore and undergoing liver transplants at Apollo Hospital in Delhi have routinely appeared in national media. Celebrities being treated at Leelawati and Breach Candy hospitals in Mumbai are also commonplace.  

Hospitals of all hues recognise the need for using media by sharing interesting medicalcases with them. They realise that a media story in well known publications is a great endorsement of the hospitalas well as the surgeon/promoters of the hospital. The media understands that its readers enjoy health stories and often feature these on its health pages. Most employ a few journalists, who are assigned the healthcare beat and these are the people, who are actively wooed by the hospitals.

Using PR effectively is vital for a hospital. Most of them these days hire PR agencies whose job is really to keep the journalists well informed about the activities in the hospital. They interact with the doctors and hospital administrators to cull out interesting stories and then try and interest healthcarejournalists into writing about them. They prepare dossiers and write press releases, coordinate interviews with the doctors, arrange for photo shoots, escort journalists for meetings with doctors and hospital bigwigs and in general ensure that the hospital continues to be seen and heard in the media. PR agencies also handle press conferences and other media events where hospitals make big announcements be it expansion, business strategy, hiring of a star doctor or a really mindblowing surgery. 

In the business of healthcare, where consumers look upon hospitaladvertising with a bit of suspicion PR assumes tremendous importance. It helps create the buzz around the hospital, showcases the skills of its surgeons, highlights its technical capabilities and often helps project it as a great centre of excellence. PR unlike advertising enjoys the highest degree of credibility with the consumers and most importantly costs nothing.

This to many a hospital may seem like manna from heaven. However, a good PR strategy is one, which is built around caution. Bombarding media with inane stories packaged as 'path breaking surgeries' is foolish. A smart marketer must realise that media would essentially feature stories, which in its estimation are of interest to its readers. It should carefully research all facts about a story, which it plans to 'pitch' to a journalist, check the veracity of the claims being made by the doctors, gather all relevant and as far as possible factual information and than only approach a journalist. The temptation to be seen in the pages of a newspaper as often as possible should be avoided as this will lead to an erosion of credibility both of the hospital as well as the publication.

Finally a comment on the unseemly side of PR, something, which is never written or acknowledged. In my experience I have come across organisations trying to woo journalists through means, which would clearly be unethical. These include junkets abroad in the guise of medical conferences, making them undergo fancy Preventive Health Checks, offering them huge discounts on hospital services and sometimes brazenly offering other gratification in cash or kind. While at hospitals where I have worked we never resorted to such practices during my tenure, I know of organisations and journalists who can be swayed by such inducements. This is utterly wrong and a self defeating exercise and one must steer clear from it.  

Media's is a powerful voice. A hospital can successfully harness its power to its advantage by being honest, circumspect and absolutely transparent.

Pic courtesy www.flickr.com