Good Businesses 2013

The best of both worlds

At affordable prices, AyurVaid is treating the poor with its blend of ayurveda and allopathy practices

A frail looking Mini Shaji sits on a bed in the corner of the general ward of AyurVaid’s hospital in Bengaluru. Wearing a brick red nightgown, Shaji’s painfully thin frame looks devoid of all energy, but there is a glimmer of hope in her eyes. Six months back, the 36-year-old Shaji, who suffers from rheumatoid arthritis, could not move without the help of a walking stick. A friend directed her to the AyurVaid centre at Ramamurthy Nagar. After 10 days of in-patient treatment, Shaji can now walk slowly without a stick.

Though still weak, she’s now hopeful that the weight she lost because of her ailment will be regained too. Her doctor, Rashmi Johnson, says she suffers from rheumatoid arthritis, joint pain, swelling and deformity of joints. The doctors at AyurVaid have treated Shaji in the traditional ayurvedic way and she has discontinued her allopathic treatment of two years. The good news is that the pain has gone. Johnson says Shaji will need to repeat this treatment for 15 days every six months till she is cured. “She has started walking but we cannot cure the deformity once it is formed,” she says.

AyurVaid uses traditional methods of ayurveda, which translates into “life-knowledge”, to treat patients at its three hospitals in South India. It’s the first Ayurvedic hospital to get the National Accreditation Board for Hospitals & Healthcare Providers (NABH) certification, usually given to allopathic hospitals for conforming to prescribed standards of hygiene and operating processes. Interestingly, AyurVaid’s treatment methodology is a blend of ayurveda and allopathy. While it relies on classical ayurveda for treatment, its hospitals also use modern tools such as lab tests and scans, and sometimes refer cases to allopathy doctors, whenever required. 

Its founder Rajiv Vasudevan, 50, stumbled onto ayurveda by chance. A BTech in mechanical engineering from NIT Calicut, he began his career with ISRO, before proceeding to do an MBA from IIM Calcutta. Vasudevan worked in the corporate sector briefly before joining the Kerala government as CEO of Technopark, Thiruvananthapuram, where he was responsible for the formulation of Kerala’s IT policy.

In 2003, Vasudevan was appointed special officer with the Government of Kerala with a mandate to devise a road map for development of biotechnology in the state. This put him in charge of authenticating and validating ayurveda drugs. “Earlier, my impression of ayurveda was that it is full of grandma’s remedies and not scientific,” says Vasudevan, who began to realise the holistic healing potential of this ancient stream of medicine. 

Ayurveda has more relevance now than ever before, says Vasudevan, pointing out that the healthcare market today is dominated by acute tertiary and emergency care, with no concept of prevention. At most, there is primary prevention in the form of health check-ups. But, he says, the main requirement is secondary and tertiary prevention. “Say, somebody has the beginning of arthritis or asthma. How do I prevent it from becoming a full blown acute condition? This is where ayurveda can play a role.” 

Taking centrestage

Vasudevan started AyurVaid with ₹55 lakh, pooled from his own savings, along with friends and family. The first hospital opened in Kochi, in 2006, followed by two more in Bengaluru, one in Mumbai’s Dharavi, Asia’s largest slum, and one in Chennai. Dharavi was an attempt to develop an independent ultra low-cost yet viable model that would serve the healthcare needs of bottom-of-the-pyramid patients, but the 18-bed hospital closed in June last year after three years of operation. “The problem was we could not get enough patients because the poor usually go to a doctor only for emergency treatment, which ayurveda does not provide,” says Vasudevan. Its day-care centre in Chennai, too, closed down due to issues faced by its local partner. 

Ayurvaid now has three hospitals, two in Bengaluru and one in Kochi, with total 51 beds, 17 doctors, 24 nurses and a patient base of over 35,000. These cover all major specialities including orthopaedics, neurology, dermatology, gynaecology, ophthalmology, auto-immune disorders and gynaecology. Treatment is segmented into two groups — AyurVaid and AyurSeva — both offered in the same facility.

While the former is intended for middle and upper-middle class patients, AyurSeva is aimed at being affordable to the poor. “We follow a cross-subsidisation model,” says Vasudevan. An AyurVaid patient pays ₹300 per consultation, while an AyurSeva patient pays ₹100. The treatment cost for AyurSeva patients is 60% of what an AyurVaid patient will pay. AyurSeva patients are identified as those with a BPL card, or those who can prove that they can’t afford treatment. 

While AyurSeva patients are admitted in the general ward, AyurVaid patients have the option of either opting for a general ward or private rooms. Nursing and doctors charges too are subsidised, although there is no change in method of treatment. 

For now, there are more AyurVaid patients walking in, helping offset the hit on margins due to AyurSeva. The average price of treatment for an outpatient is currently about ₹1,500 per day.  

Making a case

While lifestyle diseases is commonly associated with those living in urban pockets, Vasudevan believes the poor are equally susceptible to such chronic diseases. “The moment the poor get some money in their hands, that goes into food. They end up having rich oily food from the street, which leads to ‘lifestyle disease’. When they fall ill, they are unable to work, leading to poorer food choices,” he says, adding that this is a vicious cycle and it is important to extend ayurveda treatment to the poor.

Though government-run hospitals have made their presence felt, Vasudevan points to the generally poor conditions in such hospitals as a reason why healthcare needs better models like his. “What is really free is a question in government hospitals. For the money you pay unofficially to people, you don’t get quality treatment. There is no reliability and accountability,” he says. 

However, the absence of medical insurance has been a deterrent. Though IRDA formally notified that insurance companies may cover ayurveda care provided in government or NABH accredited ayurveda hospitals, Rashtriya Swasthya Bima Yojna (RSBY), a government-run health insurance scheme for the poor, which provides for cashless insurance for hospitalisation in public and private hospitals, does not include ayurveda treatment.

Vasudevan feels that RSBY is critical to help ayurvedic treatments reach the poor, given that over 35 million BPL citizens are already covered under the scheme and the poor will have a very good option to consider for their chronic diseases. “Take sciatica or osteoarthritis for example. Without ayurveda coverage, a person may be compelled to go in for surgery [IVDP surgery or TKR] by an allopathy specialist. Surgery can be obviated in such cases through ayurveda, at a significantly cheaper cost, faster recovery and superior medium to long term outcomes,” he says. 

Though challenges abound, for now there seem to be takers for Vasudevan’s business model. Acumen Fund, a non-profit venture philanthropy fund that invests in social enterprises in South Asia and Africa, has invested ₹6 crore in AyurVaid in phases since 2008. According to Sachindra Rudra, director, Acumen Fund India, the investment was to help the firm expand its cross-subsidy model for treatment of chronic medical conditions using an appropriate integration of ayurveda and allopathy in a patient-centric, quality conscious and process-oriented approach.

As of FY13, revenues were ₹3 crore, with pharmacy sales accounting for 20-25%, consultation income for 10% and the rest coming from in-patient and out-patient service fees. In the healthcare industry, where break even typically happens in six-seven years, AyurVaid broke even in three years. Vasudevan attributes this to the low capital investments needed in ayurvedic hospitals. In a regular allopathic hospital, each bed costs ₹75 lakh to ₹1.5 crore, while an ayurveda hospital bed costs ₹3-8 lakh. “We hope to be profitable as a company in four or five months,” adds Vasudevan.

Vasudevan plans to use the hub-and-spoke model to expand — one hospital with in-patient facilities in the city, supported by four day-care hospitals. “We want to start with the Bengaluru cluster and set up four more in-patient hospitals and 12-16 satellite day-care centres,” he says. The idea is to have hospitals everywhere, instead of having one large hospital in one part of the city. Though with 14.2 million people living below the poverty line, Karnataka itself is a huge market, over the next 18-24 months AyurVaid plans to replicate the Bengaluru model across Mumbai, Delhi and Chennai, and is looking to raise around $5-10 million in a second round of funding. 

Yet another opportunity that AyurVaid is looking to tap into is to become a ‘diabetes specialist’ with focus on prevention, reversal and management of diabetes and diabetic complications. “With India emerging as the diabetes capital of the world, with over 70 million diabetics, and many undiagnosed/emerging diabetics, AyurVaid with its root cause management approach has clear advantages to offer,” says Vasudevan. But he will need a proactive government on his side to achieve what he has set out to. Whether that happens or not remains the million-dollar question.