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Sep, 05 2016

How to win big in specialised healthcare industry?

With the contours of healthcare changing over the past few years, there is a growing demand for specialised healthcare treatments in the country. Let’s see what this sector has on offer as attractive business opportunities for investors.

Fifty-two-year-old Rajeev Mehta was first diagnosed with cataract and suggested to go under the knife when he visited a hospital in Gurgaon for an eye checkup. Since it was a matter of surgery, he preferred to get a second opinion. This time, he visited an exclusive eye-care center – which he feels was able to cater to him better as it has multiple doctors focussing on one particular area. Satisfied, Mehta underwent the surgery and is now cataract free.

With the contours of healthcare changing over the past few years, there is a growing demand for specialised healthcare treatments in the country. The model makes more financial sense as the payback period is far less than what it is in a tertiary hospital. In the case of specialty healthcare, it could be 2 to 3 years - depending on the business model and how much money was spent. While the time to get your money back in a tertiary hospital is about 3-5 years, say industry experts.
Besides, today, the ‘healthcare consumer’ can no longer be treated only as a patient. There has been a major shift in his attitude towards doctors and hospitals – he now looks for better healthcare, becomes less tolerant of poor healthcare interface, doesn’t want to go to a government hospital and wait for 10 hours.

For this new breed of patient, specialty healthcare providers are coming up with innovative solutions.
Amit Chopra, MD, Doctor Today Healthcare, states, “We came up with the idea of cashless OPD, not only for infertility but for all medical specialties. At our healthcare centers, we offer cashless OPD at Rs 10 per day. Our other services are home visit by doctor, home pick up and drop facility, home sample collection, video clinic facility - video chat with specialists, preventive check-up included all medical specialties under one roof.”

IVF boom
In India, IVF treatment is available at an affordable cost which is nearly one-quarter of the cost in developed nations. Fertility clinics in developed countries like UK and sAustralia are finding it more and more difficult to fulfil the demand for donor eggs and hence turning to India. Furthermore, India is also home to some of the finest international IVF centres and top-notch IVF doctors. Most of the major global IVF stakeholders have recognised the size of this opportunity, and some have already entered the market, shares Saarthak Bakshi, CEO, International Fertility Centre (IFC).

Why franchising?

More and more healthcare chains are taking franchise route for expansion. Talking about the same, Bakshi says, “Franchising will help us in expanding fast and in penetrating local markets. Additionally, it will help us replicate our already successful business model at several other locations and create a bigger brand.”

Talking about the support they provide to franchisees, Ashok Jain, MD & CEO, Oxygen Healthcare Communications, (runs Lifespan chain for diabetes), says, “In fertility sector, we hire a corporate trainer who provides on-site training as well as a franchisee standardised manual to help resolve timely queries. We also hold regular skype and online training, and all franchisees are kept abreast with any upgradation in services.”

“A technical team is present for any and all problems. We provide facilitate for business support through print and digital medium, local activities with camps and health surveys,” he adds.

Talking about the benefits to franchisee, Sangeeta Reddy, Managing Director, Apollo Health Street, says, “We have been in the business for twenty years, and have standardised systems and processes to such a degree that the franchisee doesn't have to waste time inventing the wheel.”

“We assist at market study, preparation of the detailed project report, site selection, mobilisation of financial resources, architecture and interior design, selection and procurement of medical equipment, project coordination, manpower selection and training, information technology, marketing strategy, commissioning and pre-launch activities,” she adds.

Satya K, President and CEO of Ventura Business Solutions, says, “We offer two sets of training and the main is the technical training. We train how to use the product, demonstrate to the potential customers, that is the one thing we give to the franchisee. We also provide business and marketing support to them. The events that are conducted in a franchisee specific area are carried on with the help of the franchisee present in that area. This gives them the visibility and exposure.”

Talking about their criteria for selecting franchisee, Satya says, “The criteria we follow should be from a medical background and the return of investment that the investor gets back and the profits that he makes maybe in a year of a particular time. Also, one looks into how the business grows in a set of time, all this defines as critical factor of how to get the prices and cost.”

“Apart from these, one must also look into the size of the business and the potential investor has to get a demo kit that is part of the commitment that they need to give, as they need to have an office and a good team size, which needs to be defined at the discussion table to become a franchisee,” he adds.

Challenges to overcome
The sector offers a huge potential for investors to spread their wings into healthcare, but it poses its own challenges.Sharing his experience, Bakshi says, “One of the main challenges in setting IFC centers is the technicalities of the subject, which is sensitive and has emotional and physiological effects. To overcome this, we have spent laborious months and years in research, understanding best practices prevalent across countries, travelled destinations to secure best infrastructure and hire a talent pool that commands in depth knowledge and experience in treating the subject.”

“Another challenge was scaling up. Each centre requires a minimum investment of one crore and with no external funding, it was a daunting task for me to think about replicating IFC centers in other locations. As a strategic move we started partnering with hospitals and widened out network,” Bakshi, adds.
Word of caution

Industry experts say, going forward the rapidly evolving specialty hospitals in India is likely to transform the facade of the healthcare sector.

For investors taking franchise route for expansion, Jain of Oxygen Healthcare Communications suggests, “In franchising, investor should have patience to develop in the business and also the ability to hold on.”

Lifespan - Franchise facts

§Investment: Rs 20 crore

§Existing outlets (company-owned + franchise): 33

  • §Area: 1,000 sq ft
  • §Return-on-investment: Depends on City/ Franchisee
  • §Break-even: 5 lakh clinic-level
  • §Target cities for expansion: Metros + Jaipur, Kanpur and Lucknow
  • §Preferred location: Easily reachable and good landmark
  • §Year of starting franchise operations: 2013
  • §Year of inception: 2013

Ventura Business Solutions – Franchise facts

  • Investment: 2 crore
  • Area: 500-1,000 sq ft
  • Return-on-investment: 2-8 lakh per month considering minimum sales of 2 units a month
  • Break-even: 3-6 months
  • Target cities: Pan India
  • Preferred location: State Capitals and major cities
  • Year of starting franchise operations: 2015
  • Year of inception: 2015
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