Why healthcare startups could be dangerous for your health!

If you have ever gone to a startup dental or eye clinics chain, and operated by a young inexperienced doctor - God save you!

Operating a lean startup model in healthcare industry may not be a great idea. Usual startups in the tech, financial or agriculture sector try to save on resources to cut costs. 

But for a nursing home or hospital, skilled manpower is critical because there are lives at stake. Basic needs like experienced doctors who usually come at super high cost, are essential to patient's well being

Experienced doctors in most metro and even tier-II towns of the country are either employed by large healthcare setups or have turned entrepreneurs themselves. They generally avoid associating with a startup or small chains, some of whom later emerge as competition.

To overcome that challenge, often such startups engage junior doctors on a contract or on pay-roll. Of course, all big hospital chains were startups once. But the quality and experience of doctors in new chains is very low.

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VCs should treat healthcare differently

A VC should not treat or even compare investments in healthcare at par with tech or e-commerce.

That's because in a healthcare chain, the usual return and exchange policies of e-commerce firms do not hold. If an organ is damaged – it’s damaged forever.

Thus teething issues have to be zero when it comes to service delivery. The delivery has to be 100 percent right from day one. If it is a retinal surgery, there is no margin for error.

For patients, it’s always advisable to get treated from such startup healthcare chains after they have matured on their business life cycle curve. This is about 36 months for a normal business but for a healthcare startup it can be about 48 months.

Of course, VC funding can help a startup attract good doctors. But as the follow-on funding rounds get delayed or there is a huge market correction, the startup chains are pushed to cut costs.

They may be pushed to raise prices, which may make the whole brand uncompetitive. If prices remain stable, it may have to cut costs in terms of quality of equipment or doctors.

Healthcare startup run by techies could be dangerous

Healthcare startups are popping up everywhere in the country to take care of your eyes, teeth, liver, skin, kidneys, liver and even heart. But to have a healthcare startup and its early patients go through the same rigmarole of a normal business is dangerous.

And the internet review sites are full of reviews bad and good about the startup chains.

The problem can be even more severe, if that healthcare startup is being run by someone who doesn’t understand the sector or a patient’s needs.

A doctor only knows how critical that piece of equipment or resource can be for a patient. If the hospital is run by a cloth merchant, you could imagine the way things will be.

Healthcare in India needs disruption

So does that mean VCs should avoid healthcare sector in India? Not at all, there is dire need of disruption in our healthcare system which is not able to reach the poor.

I was recently in a small town in Uttar Pradesh and happened to pass by a government heart hospital. There was a huge queue of an estimated 200 patients outside. Upon enquiry, I got to know that only 2 doctors sit on duty for three hours each day. And this queue is usual.

Of course, the government health care services come almost free, but to have a heart patient stand in the heat and queue to see a doctor is, simply unacceptable

There are no queues in private hospitals but the cost of an angiogram can be 100 times costlier than a government hospital.

Healthcare startups need to create disruption in the market by offering healthcare services at affordable prices.

But to have a funded startup healthcare chain expand indiscriminately even before it has cracked the model for at least 24-36 months in a particular city or location, can be dangerous for patients.

Patients can’t be guinea pigs

A hair salon startup chain can expand indiscriminately and the worst a customer will get is a bad haircut.

But indiscriminate expansion of an inexperienced medical chain can be risky for its patients who will be the first guinea pigs for this startup.

It’s advisable for healthcare startups to have the best resources allocated to a neighbourhood clinic or hospital - become profitable - crack the model and only then expand to another location.

A healthcare startup can’t be compared to a taxi app company which has to be present in each city. Focus on quality more than quantity is – 100 percent critical in this sector.

Of course, the first 12-18 months can be used to create disruption through pricing of services, but the latter part can be used to up the prices when the brand is established.

VCs should also ideally back entrepreneurs with domain knowledge of healthcare than novices.

And it’s unlikely that the investor will visit or make his kin his own investee startup if he had a damaged liver, eye or even tooth.

Exits are a rarity in healthcare sector in India unlike in the technology world. Thus, a focus on profits should be the goal than survival on VC or PE monies in this sector, which eventually dry up someday.

Read the startup’s testimonials before getting operated

So, should patients completely avoid healthcare services by such startups? Of course, not.When a customer looks to buy a simple gadget like a mobile phone or laptop, a simple thing she does is to go and check the brand’s history and reviews by past customers.

Thus, patient testimonials are very important. If possible, request such startup for patient contacts whom you can speak to.

The most critical part is to check the doctor’s profile and past experience. Patients should ask for it and such startups are ready to comply.

If both the criterion do not meet a ‘yes’, then it’s best to avoid that startup to get your organ operated upon.

After all, you can return that mobile phone or laptop to an e-commerce startup.

But in healthcare, return and replacement of an organ damaged by an inexperienced doctor is simply not possible!

harsimran.julka@network18online.com