Vishal Bali, Executive Chairman, Asia Healthcare Holdings, and Vijayarathna V, CEO, Motherhood Hospitals, on pan India expansion and evolution of the MCH segment
Motherhood Hospitals was acquired by Asia Healthcare Holdings, the single speciality healthcare operating platform of leading global private equity fund TPG Growth, in 2016. From three centres in 2016 to 12 hospitals in 2020, Motherhood Hospitals has witnessed aggressive growth and has evolved into a dedicated women and children’s hospital network in India.
What drove the Asia Healthcare Holdings'
investment in Motherhood Hospitals?
Vishal: Globally women today make up 49.6% of the total population and the global economic burden for women’s health issues is currently more than $500 billion. For several decades, healthcare services have been designed, developed, and delivered without much attention to the fact that women have specific healthcare needs. With women constituting 48% of India’s population and seeking better healthcare, we saw a big opportunity to focus on creating an integrated approach to their gynaecology, maternal and reproductive health. In addition, India has the highest number of neonatal mortalities in the world and needs to increase its neonatal intensive care beds across the country.
Motherhood was an early stage company in the mother and child space and gave AHH the foundation on which it could build a very differentiated women and children’s hospital network.
What were the significant changes in Motherhood after the acquisition by AHH?
Vishal: AHH acquired a significant majority stake in the company with the three centres in Bengaluru with more than 75% of its revenues being contributed by birthing services. The journey after the takeover by AHH in FY17 can be divided into three distinct phases.
The first phase was to onboard a new management team and set up the systems and processes of the enterprise. Vijayarathna joined as the CEO of the company and brought on board his vast experience of running hospitals in the Wockhardt and Fortis systems. In addition, we onboarded new functional heads and the entire C suite of the organisation.
In the second phase, we focused on diversifying and strengthening the clinical services being offered at each centre and thus changing the clinical delivery model of the company. We did an intense exercise of strengthening the obstetrics, gynaecology, neonatology, paediatrics and IVF clinical teams and Motherhood was rechristened as ‘Women & Children’s Hospital network’. So from a boutique birthing centre, each location transitioned to an integrated women and child care hospital with 24x7 services across these clinical areas backed by highly specialised nursing and other paraclinical services.
In the third phase, on the back of all the learnings and expansion of clinical services at each of the hospitals, a new business model emerged in the company with a reoriented capex and opex plan changing all the unit economics to create long term sustainability of the model. Led by the new model, the company went through an accelerated expansion plan and added nine hospitals across seven cities in the country within 40 months. Our bed capacity has increased from 90 beds to 500 beds and NICU bed capacity has increased from 10 beds to 130 beds. And revenue has grown 5x in three years to $36mn.
Motherhood has expanded both in tier I and tier II cites. Has the integrated model worked well?
Vijay: Yes, our eight city network includes Bengaluru, Mumbai, Pune, Coimbatore, Delhi NCR, Indore, Chennai, Trichy. In Bengaluru, we have taken a deep micro market presence with five hospitals which also reflects that in this model, we can take multiple hospitals in each city. Across the network we are currently doing over 750 birthings, over 600 gynaecological surgeries and over 200 NICU admissions each month. We added seven hospitals in one year across multiple cities which demonstrates the intensity of execution on all fronts that has happened within the company.
Your outborn neonatal retrieval programme has become industry benchmark? What led to this success?
Vijay: The outborn retrieval programme is a true test of a good neonatology programme and NICU acumen. When we save in-born babies at our hospital, our doctors are well versed with the medical condition of the baby beforehand. But when we save outborn babies, it’s far more challenging and complex. Clinical co-morbidities are much higher in such babies. Recently, we saved a 600 gram baby from Bagalkot, which is 500 kilometres away from Bengaluru. Our NICU teams cover multiple districts through each of our hospitals.
The three key factors for success of an outborn retrieval programme are the right technology, a good clinical team and a good neonatal ambulance network. Every outborn retrieval ambulance of our Group is manned with senior neonatologist, two NICU nurses and one paramedic. The ambulance is equipped with a globe trotter, a transport incubator which helps babies maintain temperature and the ventilator gives breathing support while being transferred.
Our NICU has a step-down Special Care Baby Unit (SCBU) to take care of pre term babies. It is equipped with providing invasive and non-invasive ventilation, and we provide advanced ventilation in the form of HFOV (High-Frequency Oscillation Ventilation) INO (Inhale Nitric Oxide). The NICU has a servo-controlled machine with a water-filled cooling blanket where we keep the babies for monitoring. We are very proud of the many neonates that we are saving each day across the country.
Your hospital in Indira Nagar took time to show expected growth. What strategies did you adopt to turnaround the hospital?
Vijay: The demographics of the population in Indira Nagar needed more focus on gynaecology services besides maternal care. So we strengthened our laparoscopic gynaecological surgical services and expanded our team of full-time gynaecologists. This location also became the pilot of our NICU programme. We strengthened the NICU set-up of the hospital to a 16-bed level III NICU, which was backed by a dedicated team of full time neonatologists who would manage both inborn and outborn babies.
We invested in state-of-the-art technology and infrastructure backed by highly talented nurses and the ambulance network. On the back of this pilot in Indiranagar, we now have 70 NICU beds across the city of Bengaluru- making us a very credible player in this speciality.
There are talks that Motherhood Fertility East is merging with Nova IVF, where AHH has majority stake.
Vishal: In 2018, Motherhood created a joint venture with renowned IVF specialist Dr Rohit Gutgutia’s Papilio Healthcare to launch a network of IVF centres in eastern India. That company was christened Motherhood Fertility East and has now become a leading IVF network across Kolkata, Siliguri, Patna, Ranchi and Dhaka.
Since Nova IVF already has presence in the East, we did not want to create a conflict situation between two AHH companies- in the same speciality and have merged both entities under Nova IVF.
So, would all cases of Motherhood
requiring fertility treatment be referred
to Nova IVF?
Vishal: No, this amalgamation is happening only in the East, since these were standalone IVF centres. There are multiple Motherhood Hospitals across the country where IVF services are being offered as in - hospital IVF services, they will continue under Motherhood. Wherever there are opportunities for both the companies to work together they will collectively take a decision.
It is believed that Motherhood Hospitals in Pune and Mumbai had a slower growth trajectory. Was the choice of the location, like Kharagar in Mumbai, a major deterrent?
Vijay: Each market responds differently and micro markets in each geography also respond differently. As a new entrant in each city, we have realised that consumers have different criteria to select their healthcare providers. In these two geographies, it did take us more time than the other cities to establish our credentials but now both the units are ramping up well and showing consistent growth. Despite being IT hubs, Pune and Bengaluru are very different from a consumer standpoint. Motherhood is not an exception, most healthcare provider groups have experienced longer gestation time in these geographies.
What about expansion in the coming years?
Vijay: We have expanded aggressively in the last year, opening nine new hospitals. We have grown over 75% over the last three years and FY21 will be a consolidation year. We are very focused on unit economics and organic growth. Our older centres are clocking organic growth of 20-25% on a y-o-y basis and we want to maintain that trajectory. We see possibilities of consolidating our presence further in some of our existing cities and the next phase of expansion would follow that track besides adding new cities.
Doctor retention is extremely good with Motherhood and the doctors who have been there since the beginning of the enterprise are still there. What are the strategies used for doctor engagement?
Vijay: We have fostered an eco-system at Motherhood where clinical acumen is given utmost respect. We believe that success of the enterprise is a function of unison between the management and clinical teams. We engage at different levels and work together on all patient-related activities. Our clinicians have seen the tremendous growth of the enterprise in comparison to some of our peers who have been there for a much longer period of time. They have seen us expand not just in number of beds but wider clinical offering in our hospitals. We have attracted the right clinical talent in each of our new cities and most of them have been through references of our current clinicians. We mostly follow the practice of full-timers, and have a 400-strong doctor team.
In the west, paediatrics is given equal importance in MCH hospitals. But in India most MCH hospitals focus mainly on obstretics and gynaecology. Do you see that changing in the near future?
Vijay: Motherhood is the best example of being the trendsetter in that! Today, we are an integrated women and child care hospital. We see the child as an extension of a mother and you can’t run a MCH hospital without focusing on paediatrics.
But what about paediatric surgical services in MCH hospitals? Why standalone MCH hospitals are not too keen on that? And do you see that changing?
Vijay: The infrastructure and capex required for setting up a paediatric hospital is same as that of a multi specialty hospital. That is not possible in a small format MCH hospital
How different is the single specialty hospital vs multi specialty business model?
Vishal: In multi specialty hospitals, a combination of specialties support the growth of the institution and each of them may have different growth curves. In a single specialty model, there is no head room to change since the levers are finite. The business model has to get executed with high accuracy and cost structures have to be correct from the beginning. Capex has to be optimised for achieving the right ROIC’s. So, there is intense focus required on staying true to the model. The distinct advantage with single specialty hospitals is the replication and scalability that can be achieved in a shorter time frame. Motherhood has built and launched nine hospitals in less than two years, and this is unthinkable in a multi speciality chain.
At AHH, we have built the largest mother and child platform in the country in three years through a well-crafted strategy that involved the ground up growth at Motherhood and the acquisition of Nova IVF.