Big opportunity for Franchise Model
Big opportunity for Franchise Model
Trends suggest that joint replacement surgery is likely to become the next big thing in Indian healthcare industry. Consider this, US with a population of 320 million (32 crore) performs nearly 2 million joint replacement surgeries annually while in India we do less than 10% of these numbers despite the fact that our population is four times larger, and Indians are 15 times more prone to Osteoarthritis (disease of bone joints that is treated by Joint Replacement). We are on our path to become Osteoarthritis Capital of the world with disease burden of 60 million active cases. The CAGR (compounded annual growth rate) of last 25 years for total knee replacement surgery in India is an impressive 32%. The approximate number of knee replacement surgeries in India in 1994 was a mere 300. This figure increased to approximately 6000 in 2000 and further to 54000 in 2010. It jumped three fold to approximately 1,75,000 in 2017. It is estimated that in coming years, with increasing awareness, sedentary lifestyle higher incomes, healthcare scheme etc. India will do nearly 1.5 million joint replacement surgeries annually.
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As we all know, joint replacement surgery is just one segment of orthopedics, which comprises of a wide array of services like treatment for fractures, ligament injuries, tennis elbow, nerve compression, osteoporosis, inflammation, etc. No wonder, it is projected that orthopedics segment will see big growth in India.
However, the question is “Will our multispecialty hospitals with their high set up and running costs be able to meet the demand for this?” Experts think otherwise, “Large multispecialty hospitals are highly capital intensive with an establishment cost of about 1 crore a bed. This implies that to set up a 200 bedded hospital the capital required would touch about Rs. 200 crore, not including the land cost. Add to this the running cost, and setting up a large multispecialty hospital is not an easy proposition.”, says Mr. Sunil Mehta, Senior Vice President, Shalby Hospitals. Then how will the country meet this demand? The answer lies in setting up smaller facility orthopedics hospitals. The initial setting up cost of an orthopedics hospital is about one fourth than a large multispecialty hospital. Thus, to set up such facility the cost would be ranging between 20 to 25 lakh per bed excluding land and building. Compare this with Rs. 200 crore excluding land cost of approximately 1,00,000 sq ft. for a multispecialty hospital and setting up a small orthopedic hospital looks not only a viable but also an attractive business proposition.
In such a scenario it appears franchise model of orthopedic hospitals will be the big driver for the projected growth in orthopedic services in the country. One major player in orthopedic field in the country that is convinced about this is Ahmedabad headquartered Shalby Hospitals. Shalby was founded by Dr. Vikram Shah, one of the most renowned joint replacement surgeons of India who is credited with the innovation of ‘ZERO TECHNIQUE’, that was instrumental in reducing the knee replacement surgery time from hours to 8-10 minutes with added advantages of minimal blood loss, speedy recovery and near to nil infection rates. Shalby performs more than 10,000 joint replacement surgeries annually and commands 15% of the total share of the organized private market in India, It is a listed entity with 11 multispecialty hospitals across India. Under Dr. Shah’s leadership, Shalby is foraying into franchise model of orthopedics treatment. He says, “We are convinced that franchise model of smaller specialty orthopedics hospitals has a bright future and are planning to set up 100 such hospitals with the brand name SOCE (Shalby Orthopedics Centre of Excellence) across India with franchisee partners. This will be a win-win situation both for the patients as well as the franchisee as patients will get best of orthopedic care even in non-metro cities, and the franchisee will have a constant flow of patients. Besides, the setting up and operating cost will be lower.”
Shalby has devised two models of Shalby Orthopedics Centre of Excellence(SOCE) franchise business. One is franchise owned and franchise managed, and the other is franchise owned Shalby managed. The setting up cost for a 20 to 40 bedded hospital is approximately 5 to 10 crore excluding the land. In both the models, Shalby will be fully involved with the franchisee partner in establishing the hospital set up as well as in recruitment of doctors, key management staff, constant guidance, training etc. This franchise model by Shalby Hospitals can be a good business investment in the recession-proof healthcare sector for orthopedic surgeons, hospital owners as well as for businessmen with interest in or knowledge of healthcare sector.
For more information on SOCE and for franchise enquiry contact:
Mr. Susanta Tripathy
DGM - Franchise Business, Shalby Hospitals
9512003960
Website: https://www.shalby.org/soce-franchise/
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