Centre for Sight (CFS), the super speciality eye care chain, was born in 1996 out of an idea that came to Mahipal S Sachdev seven years earlier, when he was doing his fellowship in Georgetown in the US. The private health care space was booming in the US and Sachdev realised that a similar opportunity was there in India as well.
At that time most of the bigger private hospitals were run by charitable trusts. Then there were small nursing homes owned and run by doctors. “The healthcare business was more in the NGO space, especially in southern India. In the north, everyone was doing single-doctor practice,” says Sachdev, chairman and medical director at CFS.
Since 1996, Sachdev hasn’t looked back. CFS is strongly present in the north, north-west and the central region with 51 centres in 30 cities. In 2014-15, it posted revenues of Rs 151.12 crore, growing at a compounded annual growth rate of 37.48% since 2010-11. Its margins, measured as the earnings before interest, tax, depreciation and amortisation, have grown 45% to Rs 28 crore.
Now, Sachdev wants to expand to other parts of India, for which he is raising Rs 115 crore through an initial public offering. The Securities and Exchange Board of India has given its go-ahead. A lot of the money raised will go into creating more “hubs”, which means a central hospital that will feed into a cluster of eye care centres — that is Sachdev’s business model.
Doctor or Businessman? Or both?
Independent speciality chains are on the rise in India. One such is in the field of dental care. Clove Dental, run by Amar Singh, is the fastest-growing dental clinic chain in the country. It has opened 60 clinics since 2011, and plans to have 600 by 2020. “We wanted to set up a multiple centre neighbourhood dental chain, but at the same time we saw that there is a need to standardise sterilisation and hygiene, which is pretty bad in India,” says Singh.
Chains like Clove, Singh says, have a certain level of benchmarking — the same look and feel at all clinics, good doctors, good equipment, robust processes and a higher level of technology. Without all this, it is difficult to attain scale. Singh is an entrepreneur and has a doctor to run his operations.
Sachdev, on the other hand, became a doctor first — he spent 20 years at AIIMS — but has beliefs similar to Singh’s. He too believes in building specialised operations like quick-service restaurants — Dominos specialises in pizzas, McDonald’s in burgers, KFC in fried chicken. Just the same, CFS specialises in eye care, and Clove in dentistry.
Whenever a chain is created, it is important to move away from the “one doctor” name and, instead, have a name like CFSs or Clove. “Generally doctors don’t prefer to work in the name of some other doctor,” says Sachdev, who has built a team of 145 doctors.
Analysts say the healthcare industry is unbundling itself. “We are witnessing an unbundling of hospital space, especially in eye care, mother and child care, and oncology,” says Rana Mehta, leader, healthcare at PwC India.
Competition and CFS
The eye care space has other players like Vasan Eyecare, Arvind Eye hospital and Agarwal’s Eye Hospital. Some of them are even looking at the international market. Chennai-based Agarwal’s Eye Hospital has 46 centres. Of these 14 are in Africa and one is in Cambodia. It has announced a Rs 600-crore expansion plan. “We are going to focus more on secondary and tertiary care. We are also looking to double the number of centres, including in India,” says Adil Agarwal, director of Agarwal’s Eye Hospital. It also has set up an innovation lab tying up with some startups as well to design and produce equipment.
Sachdev, on the other hand, is more focused on taking a particular city and going deeper into it, which he explains helps building his business. “A hub is where every service is available, which would have a 10,000 sq ft-plus space. A spoke would have 3,000-5,000 sq ft, and would not have advanced retinal procedure, and super specialties,” he says.
For example, there are three hubs in Delhi that serve 13 spokes. This allows better utilisation of the men and the machines. The spokes have doctors, but super specialists are not available on all days. The doctors allocate their time across the hospitals in the cluster.
In 2015 alone CFS, handled 600,000 patients, and is now looking to expand. But analyst say there is a risk with that. “But while companies do face problems, it is important to understand the micro environment,” says Mehta.