Playing for scale

Dr Devi Shetty is an iconic figure in Indian business. Not only did he dare to dream of a world where access to healthcare is delinked from affluence, a quest in which most developed nations have failed, he also created a sustainable model to serve those who need but cannot afford cardiac surgery. Today, he is a role model for the thousands of social entrepreneurs in the country who are trying to build a sustainable business to cater to consumers that the late CK Prahlad referred to as bottom-of-the-pyramid. How Dr Shetty intends to expand and make high-end healthcare even more affordable is the subject of this issue’s cover story Big Heart, Better Mind.

Today, there are many investors who fancy the demographic story that India offers. Often, this growth story is taken for granted, more so in healthcare. But specialty healthcare in itself is a challenging business, especially because it is hugely skill- and capital-intensive. Narayana Healthcare has played it smart so far by increasing capacity through an asset-light model. Its only constraint — and one that it has taken up as a challenge willingly — is allowing varying amounts of discounts to accommodate poor patients. 

This naturally depresses overall return and that is why when Narayana Healthcare launches its initial public offering sometime later this year, it will be observed quite keenly. The biggest listed hospital chain (Apollo) has turned in a decent return compared with other sectors and there might be pressure to price the issue to allow for a return acceptable to private equity investors, who have supported the expansion thus far. Dr Shetty’s final test will be to manage investor expectations while staying on course with his belief and objective of making healthcare truly affordable for a larger section of society. While appetite is expected to be high given its pedigree, Narayana Healthcare will blaze a trail for all other companies with a similar business bent. 

Among other stories, we also have a feature on TVF-ONE, which has quite a following among the youth because of its online videos. The company’s quest is to hold the attention of its audience in an age of fickle taste. To read more, see The New Kings Of Satire.