Bangalore: Global investment banks American International Group Inc. (AIG) and JPMorgan have taken a 25% stake in the Bangalore-based hospital group Narayana Hrudayalaya Pvt. Ltd (NHPL) for Rs400 crore. The two leading individual promoters of NHPL are Narayana Hrudayalaya founder Dr Devi Shetty and Biocon Ltd chairman and managing director Kiran Mazumdar-Shaw.
Announcing the investment on Wednesday, Dr Shetty said the funds, Rs200 crore each from AIG and JPMorgan, would be used by NHPL to build a nationwide chain of so-called health cities in the state capitals. “We will create 5,000-bed hospitals in most state capitals, reaching 20,000 beds within five years,” said Dr Shetty, a cardiac surgeon himself at Narayana Hrudayalaya, the flagship hospital of the group which currently owns three hospitals across Bangalore and Kolkata with a total bed capacity of 2,500.
Reaching out: Dr Devi Shetty (left), Narayana Hrudayalaya founder, with promoter Kiran Mazumdar-Shaw. (Photo: Hemant Mishra/ Mint)
“In terms of affordability and reach, our hospitals will fall in between corporate and government hospitals, and will cater to the working class and poor people,” said Dr Shetty, adding 75% of the beds will be in general wards. Echoing Dr Shetty’s vision, Mazumdar-Shaw, who has invested her personal wealth in this venture, said this is an attempt to “dissociate affluence from quality health care”.
The first health city is already being built at Bangalore, with specialities including cardiac, cancer, orthopaedics, eye care, neurology, and child- and women care. The group has started construction of a 1,000-bed cardiac hospital on a 40-acre plot in Jaipur, and has been offered 37 acres in Ahmedabad by the Gujarat government and 25 acres by a private builder in Delhi. It is ramping up its Kolkata facility with a new 25-acre campus with 5,000 additional beds.
The Tata Trust in Jamshedpur has offered an existing hospital to build a 5,000-bed health city.
By initiating Yeshashwini, a microhealth insurance programme for cooperative farmers in Karnataka in 2003, NHPL proved that if linked with good hospitals, health insurance for the “poorest of poor” is not a pipe dream. And now, in NHPL’s expansion plan, all the new state hospitals will have an in built health insurance scheme.
“Many would say it’s not possible to build such huge hospitals but that’s the need of the country,” said Dr Shetty. A strong proponent of “Wal-martization of health care”, he says he believes only large hospitals can bring down the average cost of health care.
The World Health Organization estimates that India needs 80,000 hospital beds every year for the next five years. “We are not even adding 1,000 beds annually,” Dr Shetty said.
According to him, NHPL hospitals perform about 9,000 cardiac surgeries annually, which is 8-12% of the total heart surgeries performed in the country, and the group intends to take that share to 30% so that the average cost of heart surgeries in NHPL health cities is brought down from the present Rs60,000 to Rs40,000.
The group is looking at around a 10-fold larger investment in the next few months. “We have offers from several global investors and even governments including an agreement with the UAE for building a large health-care infrastructure,” said Dr Shetty.