At a time when its rivals are expanding their hospital chain network in double digits, setting up hospitals across the country, Max Healthcare is focussing on quality than quantity. The company is in the process of launching four new hospitals over the next year, which will take its total bed capacity from 1,100 to 1,900 beds. In comparison, Fortis has a capacity of 4,000 beds across 68 hospitals.

In an interview with Business Line , Max India's Managing Director, Mr Rahul Khosla, explains Max's strategy to grow in a controlled way in the healthcare space.

Max has so far built all its hospitals from scratch. Are you averse to acquisitions?

Theoretically we are open to everything, but when you have standards which are very high and you want to achieve those standards then building it yourself achieves it much better and quicker than changing something you have acquired. You can argue that this is asset-rich and capital-intensive way of doing it but on the other hand the valuation is not small either.

While your rivals are expanding all over the country, why has Max chosen to take it slow?

We want to take sure-footed steps. We are almost doubling capacity from 1,100 to 1,900 but we don't want to make it 7,000. You can't do that and still preserve unit quality. Every bed needs to have the same quality. So we are expanding in a controlled way.

So size and scale is not a factor in healthcare business?

Yes scale does matter. Size does matter but all I am saying is that size has many connotations. We want to build a quality business which has equal parts of good care, good profitability and good ethics. If you are running so fast that you can't pay attention to these three then you will compromise. We want to consolidate what we have, do it really well and grow again. That's the way we do it across all Max Group's businesses.

But aren't you missing out on the opportunity in tier 2-3 cities?

No, we are launching in Dehradun and Bhatinda. But at the end of the day we are a Delhi-based group. If you tell me that I don't have presence in the nearest town to Trichy then I don't know the culture of that place. Even if I do how much control will I have on the quality. Our Chairman goes around the hospitals and he gives suggestion on even how the lift has to be done and which plants have to be put. We take it very personally what we are doing.

Max had partnered with Nova Medical for day care centres. Are you looking at more such partnerships?

It's possible. It also depends on the city. The needs for Delhi are different from Chandigarh. We are looking at this model but there are challenges, it's not a slam dunk. Potential is there.

After the acquisition by South Africa's Life Healthcare, what have they brought on the table apart from the funding?

The deal is yet to be closed formally, which will happen in December. Operationally they haven't started to get involved yet. But we are confident that are very clear synergies and practices, like healthcare records, consumption control, controlling ERP etc which they are keen to share knowledge.

Are you looking an entering into allied areas like medical education?

We are certainly looking at it. We will talk about it when we are ready to talk about it but we absolutely believe that medical education is critical for healthcare.

Is your funding in place post the equity sale to Life Healthcare? How do you plan to retire your debt?

Funding is in place. Rights issue, which we had earlier planned was to raise Rs 150 crore, that's been more than replaced by the equity sale from which we got Rs 560 crore. We will retire some of our debts. What this does is it helps to improve the balance sheet for Max India and Max Healthcare.

The Government thinks that private hospitals are not doing enough to offer affordable healthcare to the masses. What's your take?

Max is compliant with the Government requirements. We have the beds available in the two places where we are obligated to do is in Pataparganj and in Saket. We put advertisements in local dailies informing everyone about the availability of these beds. If patients don't come I am not going to stand on the streets and say please come. At the end of the day the difference in supply and demand in healthcare is so big that there are gaps everywhere. We are not catering to super-rich and not those who don't have money. If we have invested upwards of Rs 600 crore in four hospitals and if you want me to give free service how will I make money. So you will have to balance. We will do our bit but we can't be expected to do everything.

tkt@thehindu.co.in

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