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March 2009  
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Home - Market - Article

In Focus

Friendly Venture

Kolhapur's Aadhar Group is coming up with a slew of corporate hospitals across southern and western Maharashtra in association with DM Healthcare, informs Rita Dutta

Current Bed Strength: 80
Where: Kolhapur
Future Plans: 500 beds
Where: Southern and Western Maharashtra

The seven doctor promoters

Dr Azad Moopen, Chairman, DM Healthcare with Dr Ulhas Damale, MD, Adhaar on the occasion of signing the JV

An artistic impression of the upcoming hospital in Kolhapur

In today's times when not many professional friendships come with expiry date, it's heartening to know that a group of medicos who are childhood buddies have not only established Kolhapur's largest hospital Aadhar but is now chalking out aggressive growth plans across Maharashtra.

The Genesis

A group of seven medicos, who grew up in the same locality and studied either in same school (Vidya Pith High School) or medical college (Government Medical College, Miraj at Sangli for graduation and post graduation), decided to take their personal friendship to a professional level.

In 1990, the year after post graduation in medicine/surgery, they all started out by practicing in various nursing homes, clinics and hospitals. But by 1993, they decided to join hands to build a much-needed state-of-the-art healthcare set-up in Kolhapur. Thus, the then 40-bed Aadhar Nursing Home at Manglwar Peth in the heart of Kolhapur city, with 10,000 square feet area was commissioned in September 1998. The hospital then offered the departments of medicine, surgery obstretics and gynaecology, ENT and orthopaedics.

Informs Dr Ulhas Damale, Managing Director, Aadhar, "The cost of the project was Rs 1.5 crore, including cost of the land, equipment and building. A sum of Rs 50 lakh was contributed by us and Rs 1 crore was taken as a loan from Pune Janta Sahkari Bank."

In 2001, an adjoining plot was bought and the hospital building was expanded to add 10,000 more square feet. Reveals Dr Shailendra Navare, orthopaedician and one of the doctor-promoters, "At that time, another 40 beds were also added, besides starting NICU, PICU and ophthalmology. Thus, the 80-bed hospital has become the largest private hospital in the district. With an average of 100 new OPD patients per day and 400 admissions per month, the hospital is now generating a turnover of Rs 7crore."

Spreading Wings

Today, the success of the hospital and the need for good medical care in and around Kolhapur have spurred the group chalk out mega expansion plans. It has drawn a plan to launch a slew of mid-sized corporate hospitals of around 50 to 100 beds each. The hunt is on for projects in the districts of Ratnagiri, Sangli, Satara, Solapur, Pune and Raighad- situated in Southern and Western Maharashtra. The route for expansion would be a mix of brown field projects and acquisition. "It can be by JVs or acquisition," says Dr Damale.

Power of Seven
The seven doctor-promoters are:
Dr Ajay Keni- Physician
Dr Ajit Kulkarni- Intensivist
Dr Umesh Joshi- ENT surgeon
Dr Amol Kodolikar- Anaesthetist
Dr Ulhas Damale- Gynaecologist and obstretician
Dr Shailendra Navare- Orthopaedician
Dr Sanjay Deshpande-Surgeon and Urologist

Strategic Investment

"With the help of the JV, we plan to have 500 beds within next five years either by JVs
and acquisition"

- Dr Ulhas Damale
Managing Director

"We are investing in Adhaar as it has corporate governance and is financially

- Anupam Verma
DM Healthcare

The expansion plans would be fuelled by equity from DM Healthcare, with whom Aadhar Group has inked a JV in the beginning of this year. DM Healthcare, a joint venture of India Value Funded Advisor and Dr Moopen's Group of Dubai, was formed last year to fund healthcare projects in India and GCC countries. DM Healthcare is playing the role of strategic investor for this mega project. "Through this JV, we plan to have 500 beds within next five years in Kolhapur and its adjoining areas," says Dr Damale.

Market Dynamics

The penetration plans are backed by market dynamics which indicates an under-served market in the region. For a population of 35 lakh in Kolhapur, the number of beds are only around 2,000.

The healthcare market in Kolhapur is a virgin market for investment with the absence of any investment by a corporate hospital chain. So far, it has been a highly fragmented market- flooded with standalone centres run by individual doctors. Around 90 per cent of the hospitals in the city are standalone centres (around 20-50 beds) managed by two or three doctors.

Informs Anupam Verma, CEO, DM Healthcare "With 60 per cent of the hospitals in Kolhapur having less than 15 beds, there is a possible indication of consolidation in the market in the next two to three years." Studies also indicate that patients who otherwise go to Pune for high-end treatment are willing to stay back in Kolhapur if high-end treatments are offered in the city. With a high per capita income, the residents are more than willing to welcome a corporate hospital.

According to market reports, there is an acute need to add more critical beds. "Eight per cent beds in hospitals of Kolhapur are reported to be critical care beds, with NICU beds included it is 11 per cent. This is significantly lower than optimal 20 per cent mark for critical care beds in a hospital set up. NICU beds are reported to be three per cent of the total beds in city which is lower than optimal numbers to be present to meet the demand of the city," adds Verma.

The overall prevalence of total cancer patients seen in Kolhapur is as follows, oral and head and neck cancer is 40 per cent, cervical cancer is 20 per cent, breast cancer is 15 to 20 per cent and prostate cancer and others is 10 per cent.

"Kolhapur has ample surgical expertise to treat these cancer patients. But unfortunately all these above mentioned malignancies also require radiation therapy which is not available in Kolhapur. Making availability of these concurrent departments like radiation oncology, medical oncology and nuclear medicine in near future will certainly help in treating these commonest malignancies here," informs Dr Damale.

Friends Forever

Some interesting points about the promoters:

  • The medicos, from different specialities, were all born in 1963, except Dr Kodolikar who was born in 1964.
  • All the friends have equal stake in the project and take home the same salary.
  • The friends take turn in heading various departments by rotation. Thus the portfolios get changed after every year.
  • The wives of the medicos also work in the hospital either as a doctor or as an administrator.
  • The friends meet every Thursday evening.
  • The friends never go on vacation or tour at the same time. This is to ensure that somebody is in charge of the hospital at all times.
  • The friends unanimously decided not to practice outside the hospital, once Aadhar was commissioned.
  • The friends insist that they never have had any major friction between them. "We all remember that the institute is bigger than us," says Dr Umesh Joshi- ENT surgeon.

Another Hospital in Kolhapur

Filling the gulf in the healthcare market, would be the upcoming 150-bed corporate hospital at Pratibha Nagar in the heart of growing Kolhapur. This green-field project is the first hospital as a part of the JV. This Rs-50-crore project would have a built-up area of more than one lakh square feet.

Having 30 ICU beds and five OTs, the hospital would be a multi-specialty hospital with focus on cardiology and oncology. The hospital, likely to be commissioned by June 2010, would have around 500 employees and full-time doctors. Support services like laundry, security and house-keeping would be outsourced.

"Our legal advisor informed us about this 2.5 acre land in Kolhapur, which we thought was a good site for a hospital. Thus, we acquired it and would be starting construction soon," says Dr Damale. Another 75-100 beds would be added in the next phase.

The current 80-bed hospital in Manglwar Peth would later be upgraded and transformed into a mother and child centre with some support service for the Pratibha Nagar Hospital. It would offer high-end obstetric care along with IVF and latest treatment in gynaecology. "Kolhapur does not have a decent birthing centre so far. So, we want to start a birthing centre here," adds Dr Damale.

Healthcare in Kolhapur
  • More than 90 per cent of hospital beds in Kolhapur are under private management.
  • 17 per cent of the hospitals are general hospitals.
  • A staggering 57 per cent of hospitals in the city are projected as single specialty hospital- generally obstetrics and gynaecology.
  • Around 50 per cent of the hospitals in Kolhapur are run on family business concept.
  • General Medicine, orthopaedics, obstetrics & gynaecology (IVF) are well developed in Kolhapur.
  • There exists a potential gap in Non-invasive cardiac diagnostic services in the city.
  • Neuro diagnostic like EEG and EMG also exhibit potential gap.

Terms of Agreement

Besides providing required equity against an undisclosed stake in Adhaar, DM Healthcare would enhance performance, plan facility and equipment and operations, quality assurance, manpower planning and help the group tie-up with insurance and work out deals for purchasing cheaper equipment by buying them in bulk.

Speaking about the larger plans, Verma said, "Under this venture, a common brand would be launched which would start hospitals through various routes. The name of the brand would be declared by June, this year." When asked about the cost of the expansion plans, Verma says, "DM Healthcare has a substantial corpus, so there is no limit."

Asked why DM Healthcare chose to invest in Aadhar, Verma says, "We were looking for institutes which have key attributes like cohesiveness of team, corporate governance and is financially sanitised. Since we found all these qualities in Aadhar, we decided to tie-up with them." The due diligence of Aadhar was conducted by KPMG.

Asked when DM Healthcare would quit from the company, Verma says, "There's no question of quitting as this is a JV between healthcare companies."

According to analysts, getting trained technicians, nurses and paramedics is a bottleneck for running healthcare facilities in virgin markets. But branding of the hospital, good training and remuneration package can help overcome such hurdles.



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