For decades, people in India, are being deprived of clean and safe drinking water and this perennial problem has been increasing exponentially both in urban as well as rural parts of the country. Try and digest this statistic: nearly 60% (76 million) of people in India do not have access to safe drinking water due to rising pollutants in the existing water sources, lack of effective methods of purifying water (both at the source and household level) and poor storage infrastructure. Regular spillage of heavy industrial waste and agricultural activities into the river and groundwater has led to the influx of high amount of toxic materials into the drinking sources of water. There is not even a single Indian city which can provide clean water that can be consumed from the tap on a 24×7 basis. According to the recent statistics published by the World Bank, over 75% of the communicable diseases in India are water related. There are no concrete solutions at the central or state levels to manage water quality, and no adoption of cost-effective technologies to provide clean drinking water.
“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.
Yes that’s not a typo, Havells India the manufacturers of electrical equipment are all set to enter the tertiary healthcare sector in India.
The Havells brand is owned by QRG enterprises and they already run a tertiary care center in Faridabad. So they have some experience in the running of a hospital.
In the next 2-3 years we would see 5-6 hospitals set up by QRG in the NCR region in northern part of India. The company plans to raise debt to fund this diversification and fund the balance with internal cash reserves.
QRG enterprises plans to set up the chain under the name ‘QRG’ and plans to invest more than Rs 1000 crores into this push. It will start with the Rs 250 crore 450 bed super specialty hospital in Faridabad called ‘QRG Health City’.
Now this is not the first time that a business has ventured into Healthcare.
Apollo Tyres entered the Healthcare business under the brand Artemis and has a healthcare set up in NCR. There have been other examples of such diversification.
There are many reasons why businesses like to enter healthcare
Firstly the healthcare business is recession proof.
Secondly the Indian healthcare sector is set to expand to Rs 280 crores in 2020 with a CAGR of 12%. There are very few sectors that will have double digit growth.
Thirdly the demand for healthcare is going to expand rapidly and the revenue cycles are faster as most of healthcare is paid for by patients from their pockets. So the revenue realization is much faster for this sector in India.
but is this a viable option for businesses to take? Enter Healthcare at your own peril is my take on the matter, but what do you think about it? Please do let us know…