Formal announcement of venture into new segment on Thursday; group’s entry timely, given the demand, say experts
The entry into health care by the Shiv Nadar-promoted HCL group, a big presence in information technology, has created a buzz. The company is to formally announce the project later this week.
The venture, started by taking an equity position in Bharat Family Clinic, is aimed to capture the wellness and preventive health care market, it is learnt. The chain might focus on value-added services like doctor-on-call at home, among others. Currently, Bharat Family Clinic, renamed HCL Avitas, runs two outpatient clinics in the National Capital Region, at Noida and Gurgaon. Experts say the development is timely because of demand.
While companies are opting for various delivery models, HCL’s entry into primary health care and wellness might have many takers, as this is a niche area. Of late, health care has emerged as a recession-free sector, with assured income. This has attracted the attention of many corporate groups with cash reserves.
Beside Nadar, investments have come from B K Modi’s Spice Global and from some private equity and venture capital funds. Spice Global has invested in Saket City Hospital (in Delhi). Many foreign entities have also entered the Indian market. These include Singapore-based Pacific Healthcare and Seattle-based hospital services company Columbia Asia Group.
The Kirloskar group, in a joint venture with Toyota Tsusho Corporation and Secon Hospitals, announced launch of a super speciality hospital in Bangalore last year. “There is a huge space in health care and investments are welcome in this sector. It is a great idea,” says Naresh Trehan, chief executive and managing director of Medanta — the Medicity, on HCL’s initiative.
According to Charu Sehgal, senior director at Deloitte Touche Tohmatsu India, the quality and commitment associated with the HCL brand will be a huge advantage for the venture.
“Health care continues to be of interest to investors because of the demand, as well as for the opportunities it provides,” said a senior consultant with Fortis’ Gurgaon hospital. For instance, in the luxury hospital model, there might not be volumes but the value is high, with industrialists and film stars demanding such facilities.
The domestic health care sector is poised to grow to $ 100 billion by 2015 and to $ 275.6 bn by 2020. It was estimated at $ 40 bn in 2010.
“From the point of view of health economics, investment in good quality primary health care makes sense, as that is the first point of contact with the system for patients. Efficient primary health care reduces the disease burden and expenditure on secondary and tertiary care,” says Sehgal.
Ajay Baxi, chief executive at Max Hospitals, agrees and notes there’s a big need for a scalable solution for primary health care.
Others bring up the challenges. “Entering health care is not the same as opening an automobile shop. It needs a clinical matrix, the right kind of people and resources. It is still easier to implement in a single compartment model because one can hire people and run the show but with multiple centres, it might get a little difficult to monitor,” according to Parvez Ahmed, founder of Urgent Care and former chief executive of Max Healthcare. Ahmed is also chairman of the medical and service committee of Modi’s Saket City Hospital.
Shikhar Malhotra, son-in-law of Shiv Nadar, will be the face of the venture for the group. He is a director and board member of HCL Corporation, holding company of the group. While HCL is going to make an announcement on its health care venture on Thursday, sector representatives say the project has been in the process for some time and the group had opted for a systematic entry.
In 2013, Bharat Family Clinic, which had already joined hands with one of America’s Johns Hopkins Medicine International to open around 100 clinics at an investment of Rs 250 crore, started inducting HCL board members and also allocated shares to HCL Healthcare, owned by Nadar’s family.