Max Healthcare chairman Abhay Soi says the economic downturn is an opportunity for expansion, smart acquisitions and for hiring talent. Soi, whose Radiant Life Care acquired a 49.7% stake in Max in December, is looking to expand the Max brand through a co-branding exercise with Dr. Balabhai Nanavati Hospital, Mumbai, and Delhi’s BLK Super Specialty Hospital. Edited excerpts from an interview:
How do you view the economic slowdown?
For any entrepreneur, this is the best time to build a business. During uncertainties and an economic slowdown, I see unprecedented opportunity.
We are witnessing a generational change in our economy, as well as in our industry. It is the best time to build businesses by reworking your value proposition, expand operations, acquire assets at reasonable prices, attract managerial and clinical talent and seed value for the future. I have not seen such an unprecedented opportunity in the last two decades. There is a little bit of chaos and uncertainty out there, which is temporary in nature, in my belief. It’s clearly the time for expansion. Because of the little bit of downturn that the economy is facing, it’s time to acquire businesses, land, and managerial talent at reasonable prices. During downturns, you stitch up the next generation of businesses.
What you are going to see 10 years down the line is getting made right now. It’s not going to last very long, and I am very confident about it. The whole focus is how I acquire talent, how I acquire hospitals, reasonably priced land, how do we get into joint ventures, and new relationships. This is the time you also look inwards in your businesses, you focus on processes, efficiencies.
What are your plans for Max Healthcare?
My aspiration is not to be the number one player in terms of either revenue or beds. My aspiration is to be the most well-regarded hospital, because we work in the social space. The business has high degree of social engagement and, therefore, to have sustainable profits you need to be well-regarded. Numbers really do not matter. What matters is geographically you must have a certain size and scale to be able to enjoy the synergies. It’s about large-scale quaternary care hospitals, which addresses domestic demand, and global health tourism.
You have run hospitals such as Nanavati and BLK Super Specialty. Considering that Max is a bigger brand, do you plan to rebrand those entities?
We have 14 (Max) and two (Nanavati and BLK) hospitals. If you look at the genesis of Max hospitals, these were made in the past two decades. The brand was built over the past two decades and they are largely based out of Delhi-NCR and North India. Whereas both BLK and Nanavati were inaugurated in 1953, they built a brand and reputation over the last six decades. They have long legacies now. For that matter, they have to be treated differently from that standpoint.
The Nanavati name is not prevalent in Delhi, while the Max brand is not prevalent in Bombay. Going forward, we will have a co-branding strategy. We don’t want to lose the advantage of the legacy of last six decades, but we may say it is managed by Max, or will say, Nanavati Max. We will have to do a whole branding exercise. But to do that we must have some target studies to figure out what (the faith and trust on the legacy and brand) you want to retain because they are also international names.
If you go to the Middle East, for instance, Nanavati is a big name because a lot of Hindi movies were shot there…We will have to figure that out. Right now, these are two separate companies—Radiant owns a 49.7% in Max. We will only be doing these things after the merger. We are in the process of merging the two companies and that should be done by March 2020.
How will you address the trust deficit of people in big hospitals?
We have the cheapest healthcare in the world in India. People from Saarc countries come to India because we have cheapest healthcare and the best value. In our hospital, 10% of the beds are totally free. Having said that, we are a poor country. Now that the government has started Ayushman Bharat, the hospitals sector will have to come up with models to provide healthcare for the cost the government is paying. The infrastructure has to be created. Over a period of time, trust deficit has crept in. We were a country where we used to treat our doctors like gods. Now, there is a bit of scepticism in healthcare, hospitals and doctors. It is incumbent upon to us to bridge that gap. There is no two ways about it.
Do hospitals set revenue targets for doctors?
I don’t think even a half-way decent or reasonable hospital would have targets for their doctors. Only 30% patients are cash-paying customers, others come through third-party administrators. And, they are not going to allow insurance companies to make losses and is not going to pay the money if it is not justified in the medical reports.