Dr. Devi Shetty is setting his sights now on expanding abroad

In 1989, when Dr. Devi Shetty left England and returned to India, the cardiac surgeon had no plans of building a hospital empire. He was content working at established institutions. But he was troubled by one question: why was quality healthcare a privilege tied to wealth?

During Shetty’s early medical training, he had assumed that as a country grew richer, healthcare would naturally become more accessible. That was not the case. "I saw the richest country in the world, the United States, struggling to provide healthcare to its citizens. That meant that India’s becoming rich would not necessarily translate into affordable healthcare for everyone.”

That realisation turned into Shetty’s life’s mission. He wanted to build a system where healthcare was not a luxury but a right. “My only objective was to bring down the cost of heart care for the common man in the country,” says 71-year-old Shetty.

Shetty’s father-in-law, construction magnate Charmakki Narayana Shetty, offered to fund his first hospital. What started as a single hospital in Kolkata soon expanded to Bengaluru and beyond. But Shetty, Founder & Chairman of Narayana Health, never imagined that his venture would scale to its current level. “We thought we would build one or two hospitals and see how it goes,” he says. “Many factors came into play, and a lot of good people joined the mission. We reached this level mainly because the country was growing. When the sea level rises, big ships go up, and so do the small boats.”

Today, Narayana Health operates a network of 42 healthcare facilities in India, with 5,098 operational beds. And it is now looking to expand abroad.

A MODEST START

Shetty’s first hospital, Rabindranath Tagore International Institute of Cardiac Sciences in Kolkata, opened its doors in 2000. The project began with a modest investment of Rs 1.6 lakh. “It was a small beginning, but our goal was clear—we wanted to deliver world-class heart care at a fraction of the cost,” he recalls.

Encouraged by the response, Shetty established Narayana Health in 2001, starting with a 225-bed cardiac hospital in Bengaluru.

Narayana Health’s ability to reduce costs without compromising on quality set it apart. By performing a high volume of surgeries and streamlining operations, it slashed prices dramatically. For example, the cost of a heart surgery at Narayana Health is Rs 1.5-2 lakh, while the same procedure could cost up to Rs 30 lakh in the US.

This was backed by an aggressive investment in technology. “From day one, we knew that the future of healthcare was digital,” says Shetty. While other hospitals were still transitioning to digital records, Narayana Health built its own digital platform by investing Rs 600 crore. Today, the system is used internally and is being adopted by other hospitals. “When everyone developed digital healthcare solutions for desktops, we moved to the cloud. We were also the first to adopt a mobile-first approach,” says Shetty.

 

Another critical decision was to integrate robotics and AI-driven diagnostics to reduce dependency on high-cost specialists. “The biggest cost in a hospital is manpower, and AI can significantly enhance the efficiency of doctors,” he says.

HEALTH INSURANCE FORAY

As Narayana Health expanded, Shetty realised that the missing piece in healthcare was affordable health insurance. To bridge this gap, Narayana Health became the first hospital group in India to start an insurance company. On January 8, 2024, Narayana Health Insurance Ltd., a wholly-owned subsidiary, received a licence from the Insurance Regulatory and Development Authority of India to operate as a standalone health insurance company. The company plans to use technology and AI to simplify health insurance and offer personalised care plans, with an initial focus on Karnataka.

Shetty’s vision is to provide health coverage of up to Rs 10 lakh for surgical treatment and Rs 5 lakh for medical treatment at an annual premium of just Rs 10,000.

TRAINING THE NEXT GEN

Another key challenge in Indian healthcare is the severe shortage of trained professionals. Here too Narayana took the bootstrap approach, building its own training system.

“We are one of the largest institutions transforming MBBS doctors into specialists,” says Shetty. Narayana Health trains cardiac surgeons, cardiologists, anaesthetists, and intensivists. The group also runs nursing and paramedical colleges.

Despite Narayana Health’s progress, Shetty warns of a growing challenge: India’s dependence on imported medical equipment. “The rupee is depreciating at a rapid pace. Today, we spend much more than American or European hospitals on buying CT scanners, MRIs, implants, and disposables,” he says. This is unsustainable, and he believes India must focus on indigenising medical technology. Narayana Health is now collaborating with Indian start-ups and manufacturers to develop homegrown medical equipment.

The group is expanding overseas as well, particularly in the Caribbean, where it already operates. “We are predominantly looking at the Caribbean region, and we may consider other countries in the future,” says Dr. Shetty. The aim is to take Narayana Health’s affordable care model global, proving that quality healthcare need not come at a prohibitive cost.

STRONG FOUNDATION

Narayana Health’s expansion plans are underpinned by its strong financial performance. In financial year 2023-24, Narayana Health achieved its highest-ever revenue and profitability margins. Its consolidated revenue stood at Rs 5,018 crore, a 10.9% year-on-year increase. Earnings before interest, tax, depreciation, and amortisation reached Rs 1,228 crore, with a 24.5% margin, while profit after tax stood at Rs 790 crore, reflecting a 15.7% margin.

Analysts are upbeat about the company’s prospects. “The greater maturity mix in hospitals, steady performance of its flagship hospitals in India, and better profitability at new hospitals solidified the company’s position,” says a note by Himanshu Binani, Research Analyst, and Rohan Shukla, Research Associate, Anand Rathi Share and Stock Brokers Ltd. “The management iterated its capex plans and commitment to growing output in the next three-four years via de-bottlenecking and a better bed mix. Ahead, the company intends to add around 1,435 beds (greenfield and brownfield) in Bengaluru, Kolkata and Raipur,” they add.

Narayana Health has invested Rs 2,000 crore over the last three years, including Rs 900 crore in FY24, across India and the Cayman Islands. The company has also acquired land parcels in Bengaluru and Kolkata for greenfield expansion, with plans to develop over one million square feet of healthcare infrastructure in the next three-four years.

In recent years, Narayana Health has undertaken several strategic initiatives to expand its healthcare services and technological capabilities. In October 2023, its subsidiaries, ATHMA and Medha Analytics, partnered with ClearMedi Healthcare to implement advanced healthcare information systems and business intelligence analytics, aimed at improving patient care and operational efficiency.

Shetty insists that the work is far from over. “What we have done so far is nothing compared to what we can and should do,” he says. His ultimate vision is for India to show the world how to dissociate healthcare from wealth. 

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