Beginning journey in abroad is not that simple

He is looking at higher margins than the scenario he painted since the price of dialysis in Asia would be 2 to 2.5 times that of India. In the Middle East, these prices are up to 4-5 times higher than in India. Vuppala plans to create 20 centres in these two regions over the next two years. Following this, he, too, has his eyes on Africa. In all of these expansions, Nephroplus will enter into joint ventures with local businesses. Unlike some others who are going international, however, Nephroplus’ Indian expansion will continue.

The need to go abroad is also being nudged along by foreign governments, who aren’t just inviting Indian hospitals to set up abroad but actively hampering medical tourism to India. Vineet Arora, a medical doctor who was a senior manager in the international business division of Apollo until he resigned in July this year, explains this phenomenon.

While the majority of corporate hospitals focus on getting international patients to India, the practice of medical value travel is becoming increasingly difficult, he says. A few countries in Africa have enforced regulations to make it difficult for medical value travel facilitators to get patients to India.

For instance, Tanzania, Zambia and Mozambique used to sponsor people travelling abroad to get treatments that were not available locally until a couple of years ago. They are now cutting down aid for such patients, he says. (The Ken could not independently verify this). Other countries like Kenya, he says, are cracking down on these facilitators and asking hospitals to develop capacities locally.

As such, Arora says, Indian hospitals are realising that medical value travel is not sustainable. Even though not all high-end surgeries can be done overseas, at least secondary care can be done there.

Risky business

Theoretically, Indian hospitals have what it takes to succeed in regions like Africa, feels Raghuvanshi. But there are more than a few challenges. “Simply because there is a need for healthcare does not mean it will be easy to create a viable business model,” says Raghuvanshi. For starters, he points out, the workforce is not readily available in African countries. He hopes the situation will change as medical schools are growing in the continent.

For now, though, hospitals will have to pay a premium to take Indian doctors overseas. This is vital, at least in the initial stages, and can be gradually reduced as hospitals train local talent. Currently, Africa has a worrying shortage of doctors—about one for every 5,000 people. While India also faces a shortage—at about one doctor for 1,000 people—Indian doctors have plenty of hospitals to train in. Africa’s shortfall of hospitals, however, leaves African doctors starved of opportunities to train. Raghuvanshi believes that Indian hospitals will take about five years to train and onboard local talent.

But till NH trains local manpower, it will have to fly Indian doctors and nurses to Africa, who will charge double abroad than what they do in India.

Apart from these challenges, there’s also the precedent set by Fortis Healthcare, which tried and failed at multinational expansion. Fortis attempted to expand by acquiring companies across the globe but quickly found that this was a Herculean task. “They thought capital is everything. Fortis did not realise that a hospital has a very local dynamic. Doctors’ behaviour is different, some countries are insurance-driven and some have a large government role,” says a senior executive with a Delhi-based hospital chain which has decided against foreign expansion.

The peculiarities of each country’s health market led to Fortis’ failure. It is also why there is no truly multinational healthcare provider. Malaysia headquartered IHH Healthcare, which has hospitals in four countries, is the closest example. It is not likely if you are successful in the US that you will be successful in Britain, says the senior executive.

Businesses like Nephroplus, meanwhile, have an easier task ahead, according to the senior executive. As simple single-process businesses, they can be replicated everywhere unlike multi-specialty hospitals, he believes. That is why most Indian hospitals have limited their international presence to outpatient consultations, patient information centres, and tie-ups. The basic aim is to get people back to India while not deploying capital, he explains.

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