Forget multi-speciality hospitals. Niche is where patients are heading. Growing awareness and the emergence of a new breed of entrepreneurs are propelling the growth of boutique hospitals.

Innovation is sweeping India's health care sector. Take the example of Nova that focuses on short-stay patients. Those with gall bladder problems or frozen shoulders — surgeries that typically require three-day stays in other hospitals — return home the same day.

In the diabetic capital of the world, Renkare is building a chain of walk-in dialysis centres. Vaatsalya is tapping Tier II and III cities, building stripped-down versions of hospital chains.

With rising incomes, changing lifestyle and a growing awareness of health issues, hospital business is witnessing both investment and innovation boom in India. On the one hand, existing hospital chains — from Fortis to Apollo — are exploring new niches (like motherbaby care, dialysis centres) looking beyond the multi-speciality large hospitals. On the other, new entrepreneurs like Ashwini Naik (of Vaatsalya) or Suresh Soni (of Nova), backed by private equity, are innovating on new models.

After the 1990s, this is the second wave of private-sector investment in health care in India. Says Rana Mehta, executive director, PricewaterhouseCoopers India. "You will see niche centres of excellence emerge. The new chains will push for unbundling of the big onestop multi-speciality hospitals." Partly, it is driven by a demand surge. Take dialysis for example. India today is the diabetic capital of the world with a base of 64 million. Typically, 10% of diabetic patients need regular dialysis. So far done by big hospitals, a neighbourhood dialysis centre will be a boon for patients.

The other factor is the emergence of ambitious entrepreneurs and privateequity investors who are willing to take risks and build a scaleable business model. Matrix India has invested in Cloud Nine and Centre for Sight. "In India demand was never an issue. Just that entrepreneurs have now figured out a business model and Indians are willing to try them," says Bharti Jacob, founder, Seedfund. What attracts them to these niche businesses is that they are less capital intensive (a third of a typically multispeciality hospital) and achieve breakeven much faster (12-24 months as against 5-7 years for large hospitals), says Avnish Bajaj, MD, Matrix.

SURESH SONI | 50 | CHAIRMAN

NICHE: SHORT-STAY HOSPITALS

BUSINESS MODEL: About 90% of Nova's patients go home the same day. It focuses on surgeries that do not require overnight stay — which is about 75% of total surgeries done in India today. It also makes  business sense as large hospitals earn 75% of their revenue from operation theatres. In each, founder doctors are given 30% equity and get some profit share. A hernia operation — a day surgery — here would  typically cost 50,000, almost a third of what it would cost in a big multi-speciality hospital.

THE JOURNEY SO FAR: They have two models — day-care hospitals (10) and IVF centres (2). In the next 12 months they will add 10 more Nova centres in cities like Nagpur, Surat, Ahmedabad and Pune. It has done 10,000 surgeries so far.

NUMBERS GAME: A typical Nova centre would cost `10-12 crore to build on a leased land. On an average it achieves cash break-even in 12 months and investment break-even in 24 months.

VISION: To be a global surgical firm with presence in the Gulf and Southeast Asia and become a regional leader in India and West Asia doing 2,00,000 surgeries by 2014.

By Malini Goyal, Economic Times

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