Counting on supportive healthcare

Speak with any start-up veteran and they will tell you that when you’re starting on your own, it’s even more important to know what not to do than it is to know what to do. Luckily, for A Arvindkumar and V Ramakrishnan, that’s what they learnt even before setting up their own company. Their earlier experience in the healthcare technology and software space had convinced the two software geeks that there were cheaper, faster and simpler ways of providing similar services. So, when they launched their company in 2008, that’s exactly what they kept in mind. “We knew there were better ways to do this than what was being done,” says Arvindkumar, the 35-year-old CEO of Attune Technologies. And what’s “this”? It is providing healthcare IT products to manage patient data and workflow — something the Singapore-headquartered company does on the cloud for hospitals, diagnostic labs and imaging centres, dialysis centres and clinics in India and abroad, logging in over 2 million patient records so far and bringing in $2.5 million in revenue last year.

Humble beginnings

Arvindkumar and Ramakrishnan first met in early 2000, when they both joined the erstwhile DSQ Software. A few years later, they were at iSoft when work started on the British National Health Service’s Connecting for Health (CFH) project. One of the largest civilian IT projects, CFH was an initiative started in 2005 to create a single electronic record for patients in the UK, connecting thousands of practitioners and hundreds of hospitals. “The idea was good but there were several issues with the technology, not to mention the time and cost overruns,” recalls Arvindkumar, who quit the company in 2007 to pursue his MBA from IIM Calcutta.

On graduation, he decided to start his own company based on the same idea but built on the cloud. With Ramakrishnan and school friend Mohanaraj, who came on board as the first investor, he teamed up with Anand Gnanaraj, a cardiologist who provided the domain expertise, and launched Attune Technologies with an initial investment of Rs 50 lakh from their combined savings. Parthasarathy, a friend from his DSQ days, joined them soon after in 2009 to head the sales and marketing function. Attune got off to a good start — it had two clients already signed on before the first version of the product was up and running in May 2009. 

What did the company do? When it started, the founders wanted to position Attune Technologies as a firm that would maintain electronic medical records for hospitals. But when they took the first prototype to clients, they discovered that many hospitals didn’t have even a basic IT system in place, so it was back to the drawing board to create a product in line with Indian healthcare industry needs. 

 The result is a technology platform that offers a cloud-based solution for hospitals (Attune Health Kernel), laboratories (Attune Lab Kernel) and clinics (Attune Clinic Kernel). The clients invest in the PCs and internet connection, while the rest of the IT infrastructure and software is managed on the cloud by Attune. The company has around 120 employees, more than half of whom work at the product development centre in Chennai, while others are scattered over offices in Singapore, Indonesia, Malaysia, Philippines, Vietnam and West Asia. Attune isn’t the only company offering healthcare IT solutions. It has several competitors in the healthcare IT space, from big players such as TCS and Wipro who also pitch to large hospitals, to companies such as Insta Health when reaching out to smaller hospitals. The difference is that Attune is more focused on the cloud-based model, getting two-thirds of its revenue from this. 

All under one umbrella

About two-thirds of Attune Technologies’ revenue comes from its cloud-based services

Attune’s hospital information system (HIS) integrates all the departments, including billing, purchasing and inventory, and different branches of a hospital across the country. This is in contrast to existing healthcare IT systems that have different systems for billing, scheduling, laboratory and radiology and are built in silos with hospitals having to deal with different vendors and integration capabilities. Clients can either choose a product installation, which requires a licence fee, or pay a monthly rent for using the services on the Attune cloud, depending on existing infrastructure and needs. Switching to a cloud-based system can help hospital and diagnostic chains save up to 60% of their IT costs, according to the company. “This way, clients don’t have to put in place an entire IT infrastructure. They have to pay neither hefty licence fees upfront, nor upgradation fees for every product upgrade,” points out Ramakrishnan, CTO, Attune Technologies. 

Similarly, Attune offers diagnostic chains the ability to track samples from the point of collection to storage through its lab information systems (LIS), as well as generate customised reports. It started looking at diagnostic labs as an opportunity in 2009, when a hospital client asked whether it would be possible to replicate the system for diagnostic labs. The team decided to study the market: a survey of 200 independent labs found most labs were struggling to make money. “We knew multi-centre diagnostic chains were the future. We knew standalone diagnostic labs either had to become part of a larger chain or shut down. So we decided to build a product for multi-centre labs,” says Arvindkumar.

Now, hospitals and diagnostic chains contribute equally to the revenue and two of the largest diagnostic lab chains in India, Metropolis and Medall, are Attune’s clients, in addition to over 100 healthcare institutions across seven countries. In India, several small and medium hospitals, including Kamatchi Memorial and Kurinji hospitals, Nationwide (a chain of primary health clinics) and ASG Hospital (a super-specialty eye hospital), use Attune products. Quite a change from the initial days.

Mid-life crisis

Certainly, it hasn’t been a smooth journey all through for Attune. The first couple of years were particularly tough, especially 2009, when a promised investment of Rs 40 lakh fell through at the last minute, leaving Kumar and Co with not enough money to pay salaries. While friends and family pitched in to help tide over this money crunch, the management went without pay for six months during the second half of 2009. “At no point of time did we think of throwing in the towel. We knew we had gotten the business model and product fit right. It was only a matter of time before it was validated,” says Ramakrishnan.

The validation happened in January 2010, when Attune got its first angel investment from Ravindran Govindan. When the Singapore-based angel investor met the management at a prospective client’s office, he asked why Attune wasn’t scaling up, given that its product had potential, and was told about the lack of funds. On returning to Singapore, Govindan sent Attune a cheque for Rs 1 crore. Later the same year, he and some friends invested a further $1 million in Attune. 

Two years later, the founders’ faith in their company was further endorsed when Attune raised $6 million in series A funding from Norwest Venture Partners to scale up its business across geographies. “We were looking to invest in companies that use next-generation technology to solve problems in India,” says Mohan Kumar, executive director, Norwest Venture Partners, India. “What works to Attune’s advantage is that not only does it have a large core market in India for its product, it also has similar markets in South East Asia, Africa and Middle East, where it can scale up presence.” 

Certainly, the market opportunity is huge, given how healthcare delivery is changing. With more hospitals and labs turning into multi-centre facilities and the increasing penetration of insurance, there is greater need for standardisation, compelling hospitals and labs to invest in technology. The adoption of the cloud-based model is thus bound to increase. There are over 100,000 hospitals and 70,000 standalone diagnostic labs in India and even as they consolidate, Attune has a large playing field. Achieving its target of doubling revenue to $5 million in another two years, then, looks eminently doable. 

“The spend on technology in Indian healthcare is less than 1%, giving ample headroom for growth for companies such as Attune. As healthcare spend increases as a percentage of GDP, hospitals and labs will make larger bets on technology, which will bode well for healthcare technology companies,” confirms Kumar.

Ramakrishnan believes that next-generation companies such as Attune have a distinct advantage over traditional companies in the IT space, given their cloud-based model. “With the pay-as-you-go model, you pay only for the resources that you use and can scale up quickly when you expand, without large incremental costs,” he points out.

Going forward, Attune hopes to use this advantage to emerge as a global product made in India. “What China did for manufacturing and Japan and Korea did for cars, I think India can do for IT products,” says Arvindkumar, who believes that once outpatient treatment comes under the ambit of insurance coverage in India, as is expected in the next couple of years, there will be no looking back for the company. “That will lead to greater technology adoption by GP clinics, which will open up a new market for us.”