The founders came from similar towns and understood the realities and challenges of these geographies. Their initial plan was to set up a chain of outpatient and daycare clinics in Tier II and Tier III cities that also offered day surgery. However, the founders soon realized that providing good quality in-patient services in these cities was a huge area of opportunity.
Targeting underserved areas
On their website Vaatsalya state, ‘While 70 percent of India is living in semi-urban and rural areas, 80 percent of India’s health-care facilities are located in urban/metro areas. Vaatsalya is bridging this gap by building and managing hospitals/clinics in semiurban and rural areas and bringing healthcare services where they are needed the most. Vaatsalya is India’s first hospital network focused on Tier II and Tier III towns. The customer base covers a wide part of the local population.
The organization has a focus on secondary and primary care and each hospital is designed to cater to 70 percent of the local population’s healthcare needs. The core services include mother and childcare, general surgery and internal medicine including dialysis. There are 50–70 beds per hospital, with each one seeing more than half a million patients per annum.
The service portfolio includes:
- Maternity and children
- Emergency care
- Selected hospitals also provide advance services like dialysis, pediatric surgery, diabetology and neurosurgery.
Management’s decision to provide advanced services at a hospital are based on three factors – people’s needs in the region, gap in health service provision and the availability of doctors, either locally or those who are willing to move to that geography.
The Vaatsalya advantage
This combination of targeting an underserved but large market focusing on common conditions, gives Vaatsalya a clear market niche and sufficient scale and focus to achieve cost savings – most of these are benefits from standardization, flow and specialization rather than economies of scale. They identify their sources of advantage as:
||Focused secondary care
||Reach and price |
- Standardized Systems
- Trained Staff
- Transparent pricing
- Multi doctor practice
- Multilocation advantage
- Better reach
- Affordable pricing
- Expertise in secondary care
- Smaller footprint
- Focus on secondary care
- Larger reach
- Exclusive tier II and III presence
- Affordable pricing
Some key elements that underpin this are a ‘frugal mindset’ in which all costs are critically examined:
- Partnership with existing small hospitals
- Investment in appropriate technology – ‘Not using the latest and greatest’
- Maximizing utilization
- No major real estate investments
- Use of lower cost locations
- Eliminate frills, including décor, ward kitchens, cafeteria
- Standardization – including design, equipment and procedures
- Centralized purchasing
- Flat management structure
The big advantage for patients is reduction in travel and lost wages as a result. Bringing doctors back to rural areas and reducing the brain drain are also important parts of the model.