ITC to enter hospital segment in India and the irony is not lost on us

“And Brutus is a honorable man” William Shakespeare, Julius Caesar The irony was not lost to many when

“And Brutus is a honorable man”

William Shakespeare, Julius Caesar

The irony was not lost to many when ITC Chairman Yogi Deveshwar made this announcement after the quarterly results announcement last week. Speaking after the meeting the ITC Chairman went to to clarify that this was not just any other kind of corporate hospital. Here the doctors would have the incentive to look after the patient and not just bring in more revenue. I assume by this he means a model like some trusts and community hospitals in the US. Where the physician pay is determined by the health parameters of the community they serve and not by the number of patients that they are able to draw into the hospitals.

ITC has been diversifying for a while. They have entered related businesses like Agri product, Paper boards, paper and packaging and other unrelated businesses like Hotels, FMCG, Health Products. This is a way is to off set the eventual decline in the cigarettes business given the health concerns in India and Asia. Today their non – Cigarette business is much higher, and in areas like Argi products and paper/packaging they have been doing rather well. So in a way they manufacture what puts many people in the hospital, in a way now they will be curing some of those folks along the way.

Though there are not many details on the healthcare foray by ITC, it is not a bad idea considering the growth in healthcare. It is estimated that the industry is set to grow at 25% CAGR for the last 5 years across to estimates by FICCI. And this wont be the first such venture. In 2007 Apollo Tyres set up Artermis Hospitals with a similar strategy. Havell’s acquired stake in a multi specialty hospital in Faridabad some time ago.

How this works out for ITC is anyone’s guess, but knowing their capability in running a successful conglomerate We are sure they will build a world class hospital. But what would be interesting is to see how they implement the Chairman’s vision of building the hospital on KPI’s like improvement in the heath of the community.

(Image Source: Photo by Daan Stevens on Unsplash)

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