New Delhi: Kirti Kumar is setting up a hospital in Uttar Pradesh’s (UP) Bijnoor district. Dr Kumar, 53, who has a degree in Ayurveda—India recognizes Ayurvedic doctors—wanted to set up the hospital for a few years given that there was no doctor within a 15km radius, but he didn’t know how to go about it. He knows now, thanks to a so-called social franchising initiative that will soon give UP the biggest private health care chain in India.
The chain will focus on maternal and child health—of utmost significance in a state with the highest maternal mortality rates and the third highest infant mortality rates in India. Developed by donation agency US Agency For International Development (USAID), the state government and a trust promoted by condom maker Hindustan Latex Ltd, the unique franchising model has generated so much interest that new licences are no longer being issued. “The buzz has caught on,” says Dr Kumar, adding that the nursing homes are beginning to feel the heat.
The public-private partnership, called Merrygold Health Network, envisages a network of 770 hospitals and clinics branded Merrygold over the next four years. Apart from Kumar’s hospital, seven other hospitals and 60 clinics in various parts of UP are now part of the initiative. And health care professionals and others associated with the business are beginning to claim the model can help India take health care to the masses.
All Merrygold hospitals and clinics offer services at half the rates private hospitals and clinics charge. And the Hindustan Latex Family Planning Promotion Trust (HLL Trust), the agency that is in charge of implementing the initiative, is close to finalizing deals with a diagnostic chain to set up pathological labs in Merrygold hospitals and United India Insurance to offer surgery-cover for pregnant women.
Prafull D. Sheth, vice-president of pharma think tank International Pharmaceutical Federation, terms Merrygold a “very interesting and beautiful concept.” The initiative covers both “primary” and “secondary” levels of care, he adds, referring to the services that will be provided by the clinics (basic health care) and hospitals (up to surgeries). UP is a good choice to check the robustness of any such model.
According to the third National Family Health Survey in 2005-06, in UP, almost half the women aged 15-45 and 74% of children aged 6-59 months suffer from anaemia. Only 23% of children in the 12-23-month group received all the basic vaccinations as compared with the national average of 43.5%. And 33.5% women receive no assistance from any sort of health worker, way above the national figure of 23%.
A recent survey found that 71.8% women who delivered babies successfully in the last five years outside of a health facility did so because they didn’t find it necessary. And 26.2% said it was too costly to go to a health facility.
Manoj Gopalakrishna, chief executive of the trust, says there was a big demand for essential services related to child birth, but the prices were 5-8 times higher than those in Hyderabad, Chennai and Kerala. “People are poor and prices are unsustainably high for them, so they end up with quacks,” he adds.
Over the next three years, Merrygold hopes to facilitate 80,000 safe deliveries.
The initiative works by identifying small private hospitals and young doctor entrepreneurs looking for financial and technical assistance to set up their own facilities. Then, much like a standard franchise agreement, it gives them access to the Merrygold brand and puts down a list of quality standards. The investment required from aid agencies is small and is shared by the franchisee.
USAID India’s mission director George Deikun terms the initiative “innovative.” He adds that the Merrygold chain will be a three-tiered structure, with the top layer providing emergency and basic obstetric care and the lowest tier having an army of community health workers who will interact with women and refer them to the upper two tiers.
The Merrygold initiative began in August 2007 and is scheduled to end in 2010; it has two “model, referral hospitals” at Agra and Kanpur that will serve as the training and orientation ground for all franchisees. “We want all hospitals to be the mirror images of these (hospitals), something like a quality benchmark for all,” explains Gopalakrishna. Then, there will be 70 Merrygold hospitals with 20-bed capacities, one in each district, that will have facilities for Caesarean deliveries, hysterectomy, neonatal care and complications during childbirth.
There will also be 700 ‘Merrysilver’ clinics that will undertake normal child deliveries, family planning services, the government’s tuberculosis programme, immunization, preventive care services and test for for malaria and pregnancy. The lowest layer will consist of 10,500 community health mobilizers called “Merry Tarangs” which will provide counselling on condoms, oral contraceptives, sanitary napkins, oral rehydration salts, iron tablets and other forms of social marketing on a door-to -door basis.
The trust will appoint franchisees, train the personnel, help them get soft loans— agreements are in place with State Bank of India and the Small Industrial Development Bank of India—as well as monitor their functioning. The trust will report to a state government unit, State Innovations in Family Planning Project Services Agency, with USAID providing technical expertise, supervision, international experience and some funding.
“The real challenge for the project will be to manage costs and sustain services at price levels they have promised. The second will be checking on quality in its franchisees across geographies,” says Sheth. HLL Trust says it is aware of these challenges and is hoping that profitability will come with volumes. The entire project will cost about Rs60-55 crore, estimates Gopalakrishna, of which Rs18 crore will be contributed by the state government and USAID.
The doctors setting up a greenfield hospital will have to pay Rs35 lakh each while a running hospital will have to pay Rs3 lakh to become part of the network. The HLL Trust will get 2.5%-3% of yearly revenues from each Merrygold hospital or clinic and money will be used to expand the network.