Health Care on Tap
In general, medical practitioners are not tech-savvy, and are poor when it comes to managing their business," says Ranjani Rao, a dentist in Bangalore. But Rao, who has six doctors working for her in two clinics in Bangalore's Electronics City, is different. Each of her doctors is equipped with a tab to manage appointments and schedules. Stringing them together is a clinic management software called Practo Ray, which has reduced wait time for patients so much that her doctors give free consultation to patients if they have to wait beyond 10 minutes. Plus, subscription to the software has given Rao's clinics free listing on Practo Reach, an online search engine. "We are in that part of the city that doesn't inhabit local Bangaloreans, so people don't have family doctors," she says. "They largely rely on online searches for treatments. That's where Practo's search works for us."
The Indian health care market is opening up to a new opportunity for tech start-ups - people are getting in, money is flowing in, and the market potential is huge. A bunch of start-ups is not only arming doctors with the tools to manage their business efficiently, but also helping them spread their reach through online search tools and even private chat tools in the WhatsApp mould. Companies like Practo and HelpingDoc are present in online doctor search and building software for doctors. Ziffi is into online search and appointments. And Lybrate has a health care communication delivery platform, which is like a WhatsApp of health care, where patients can privately converse with doctors on their mobile apps.
LYBRATE, Faridabad
CEO AND CO-FOUNDER: Saurabh Arora
WHAT IT DOES: Lybrate's first product was clinic management software, but it later pivoted the model to focus on online consultation app
INVESTMENTS: $11.43 million
FUTURE PLANS: It has plans to scale up by adding more doctors to the platform
These companies have received healthy funding as well. This July, Faridabad-based Lybrate raised $10.2 million from Tiger Global Management, Ratan Tata and Nexus Venture Partners. Lybrate will use the funds to add new features to its product, expand its doctor base and take its employee base from about 90 now to over 130. In August, Practo received $90 million - the highest funding so far for an online health care start-up - from seven investors, including marquee names like Sequoia Capital, Matrix Partners and Russian billionaire Yuri Milner. The funding valued Practo at over Rs 3,300 crore. The company has so far raised $125 million since its launch in 2008. Ziffi had raised Rs 15 crore from Orios Venture Partners last year.
But why this sudden rush? "Around 25 per cent of the entire health care industry is expected to be powered by e-health care segment by 2017," says Sanjeev Gupta, Managing Director, Health & Public Services, and Government Relations, Accenture India. That is a lot, considering that the overall Indian health care market today is around $65 billion, according to Accenture India estimates. A study by Bain & Company found that over 80 per cent of the under-40 literate metro population in India had used online means to either consume or research a health care service. Reason enough for companies like Practo, Ziffi and Lybrate to jump in and try and garner a share of the burgeoning pie.
The Companies & Models
How do these companies make money? Broadly speaking, from three areas: clinic management software, online consultation and listing of ads. Practising doctors buy software to manage their appointments, billing, patient medical records, prescriptions, patient reminders, schedules, and schedules of other doctors working at the clinic. Practo claims to be the leader in this category. In addition, Practo has its own search engine to find doctors online. The monetisation is done through paid listings of clinics showing up along with the search results. In India, the law prohibits doctors to advertise, so only private clinics put in ads. In the online consultation business, a platform like Lybrate gets a cut from the doctors' fees.
PRACTO, Bangalore
FOUNDER & CEO: Shashank N D
WHAT IT DOES: The company started off with clinic management software product, but later diversified into online search for doctors
INVESTMENTS: $125 million
FUTURE PLANS: To expand the number of doctors listed on the platform. It is also acquiring other healthcare start-ups to fill gaps in its current product offering
Bangalore-based Practo claims to be the largest online health-care services firm with 90 per cent share in the practice management software market. It started off in 2008 with Practo Ray. In 2013, it launched the search engine Practo Reach. Shashank N.D., Founder and CEO of Practo, says that while a majority of its customers are clinics, doctors who practise as consultants have also bought its product. "For any health care establishment with less than 25 doctors, this product works well," he says.
Tarun Davda, Managing Director of Matrix Partners and an investor in Practo, says that solving the doctor discovery part is easy. "JustDial has already done that, but when it comes to something as critical as health care, putting up a directory of doctors online is not sufficient," he says. "Patients are looking for information like years of practice, reviews, ratings and specialty of the doctor." Matrix Partners gave seed funding to Practo in 2011 and subsequently invested more money this year - about $20 million in total.
Health care communication start-up Lybrate has an interesting origin. While working with Facebook as a data scientist in the US in 2013, Saurabh Arora, CEO and Co-founder of Lybrate would visit his mother in India once in six months. During one of his visits, he saw a chemist prescribing medicines to some people, which startled him. That's when he thought about an online consultation tool for doctors and patients.
However, when Lybrate started up, it first launched a cloud-based software - similar to Practo's Ray - that helped doctors manage appointments, patient medical records and expenses. Typically, building a product like Ray requires huge workforce, marketing push and money, and Lybrate was not ready for it.
Online consultation engagements are of two types: people with serious problems that require super-specialists such as nephrologists, neurologists, cardiologists where mostly people want to take a second opinion. The more common consultation is based around personal issues related to dermatologists, gynaecologists, psychiatrists and urologists. Experts say most of such queries emerge from smaller towns.
Sarang Deo, Assistant Professor (Operations Management) at Indian School of Business (ISB) says that they have very similar business models, which will in the end boil down to who has the most listings. Both customers and providers would want to go there. "Unless the models are substantially distinct, I don't see how there can be more than one or two players in this space that are really big," says Deo.
Not an Easy Do
The challenges faced by these start-ups are daunting, not the least being to get doctors of high quality on their platforms. "The real challenge is not merely in getting the numbers, but in actually getting the high quality and more-sought-after doctors on these platforms," says Parijat Ghosh, India Health care Practice Head at Bain & Company. The star doctors of large hospital chains are not directly listed because, in most cases, the hospitals have restricted them from going on such platforms, and they also don't have the time to explore the new medium.
Finding a doctor online also requires behavioural changes from the customer point of view. The service is more useful for working professionals who move into a new town. People who live in the same town for years generally know their way around their health care needs. The change in behaviour can only happen if the information provided about provider quality is meaty, substantial and technically correct.
In the case of Lybrate, remote consultation is a new concept for both doctors and patients. It's hard for patients to trust doctors remotely, so there could be issues with adoption. On the doctor side, these services need to deliver on the economic advantage and, even more importantly, be easy to adopt without affecting their current workflows too much.
THE OPPORTUNITY
$65 billion: Size of Indian health care market
15 lakh: Number of medical practitioners in India
1:1,700: Doctor-patient ratio in India
The other big problem is revenues, which are pretty low, and profits of course are non-existent. Practo's revenues have grown from around Rs 8 lakh in 2009/10 to Rs 2.3 crore in 2013/14, while its losses have widened from Rs 5 lakh in 2009/10 to Rs 9.9 crore in 2013/14, as per data from the Ministry of Corporate Affairs. Data on Lybrate is not available.
Game of Scale
At this point, though, the companies are all focused on growing their listings and reach. Practo claims the most doctors and clinics - 200,000 doctors and 10,000 hospitals - on its platform. Its rival in the doctor discovery business - Ziffi - has a network of 28,000 doctors. And Lybrate, thus far, has engaged 95,000 doctors on its platform.
Lybrate plans to scale up the number of doctors to about 300,000 in six to eight months.
Practo has plans to expand its reach, too. It is present in 50 cities (about 35 in India) across 15 countries. By next year, it will be present in 100 Indian cities, and set up operations in Southeast Asia, Middle East, Latin America and Eastern Europe regions. It has entered new geographies - Indonesia, the Philippines and Singapore - with its existing products that will reduce its dependence on the Indian market. Very recently, it also tied up with ride-hailing company Uber across India, Indonesia, Philippines and Singapore, to make it easier for patients to access doctors. How this works is: if you have set up an appointment with a doctor on Practo's app, you get a reminder at an appropriate time. And with the reminder, you also get an opportunity to book the closest Uber cab available to meet that appointment.
Practo has also made some strategic acquisitions - Qikwell, Insta Health Solutions, Fitho and Genii - to plug the gaps in its current offering. The acquisition of Qikwell and Insta Health has given Practo access to large hospitals, a big piece that was missing until recently. Qikwell, for instance, provides live information on doctors' availability and online appointment booking. The users can also view doctors availability live, book appointments instantly, view appointment status and get alerts in case of delays. Qikwell claims to be present in 250 hospitals, including Manipal Hospitals, Fortis and Narayana Health. Insta Health, which provides cloud-based hospital information management solution to hospitals in 15 countries, has clients like Cloudnine, Deepam Hospitals, MyDentist in India, and DaVita in India and Malaysia.
Given that over 90 per cent of the health care market in India is fragmented - most doctors practise through their own clinics or nursing homes - the ability of online players to grow is huge. Practo's Shashank says that he is just scratching the surface: "We are constantly adding multiple new functionalities to products and, as a result, the monetisation value is also going up."
Analysts say this is just the beginning of the digital era in Indian health care. In the US, digital health funding was about $5.4 billion last year, so there is huge headroom to grow in India. Even in China, the online health care space has seen tremendous growth. The e-commerce giant Alibaba has made huge investments in the health-care services space and Guahao.com, an online appointment platform, raised over $100 million last year.
For the Indian companies, growth will be anything but easy. "Not all models will succeed and, in some cases, the adoption will take time to pick up as behaviour takes time to change," says Bain & Co's Ghosh. Experts aver that while gaining early adopters might be easy for these companies, incremental growth will have to come by converting increasingly reluctant physicians, which can slow down the expansion process. It will also mean investing in analytics to show the doctors they are benefitting from using their products.
There's a long way to go yet.
