Rockland plans R1,200-crore, five-layered healthcare model

Written by Soma Das | New Delhi | Updated: Jul 20 2012, 09:13am hrs
With an investment of over R1,200 crore, the Delhi-based healthcare group Rockland is in the process of implementing an ambitious five-layered alternative healthcare delivery model by tapping into a network of 5 lakh health workers that includes the governments army of ASHAs (Accredited Social Health Activists).

The first leg of this 5/5/5 project is the creation of a corridor of five superspeciality hospitals along the Noida-Delhi-Dwarka-Manesar region. While some of these hospitals are already functioning in independent capacity, the full corridor which has attracted an investment of $22 million from IFC, a World Bank investment arm, would be up and running by 2014, according to Rockland Group promoter and chairman Rajesh Srivastava. Exclusive of the land cost, Rockland is investing almost R800 crore in the five superspeciality hospitals.

In the second leg of the project, Rockland plans to set up a network of 4,000 general physicians, 200 nursing homes, and 85 small hospitals spread across 400 districts of northern and north eastern India. Most interestingly, it plans to use close to 5 lakh health workers who according to Rocklands model would be trained by the healthcare group and paid on a per patient basis. This basically translates into an ecosystem of 10 general physicians (GPs) per district, one nursing home in every five districts, and one hospital for every 10 districts for the selected states.

We have been already implementing a successful pilot involving 200 doctors for the same in Delhi in 2010. We would soon be rolling out larger trials across the geography we have chosen for expansion, Srivastava said.

While some of these may be owned by Rockland, a large part would be through tie-ups with existing clinics and standalone hospitals. For instance, if a nursing home becomes part of Rockland network, the group would invest in a pharmacy, pathlab and diagnostic and imaging facility around it. Similarly for GP it could mean a pathlab collection centre right away. The patient referral system would flow upwards from the GP to nursing home to small hospital and super specialty facilities depending on the need. Information on patient inflows, sales of medicines and revenue accruing from imaging of entire ecosystem would be managed by a central server which would maintain an electronic medical record of every patient who walks into a Rockland system.

The scale would allow us to negotiate in bulk procurement of medicines which could help us pass it on at a discounted price to patients at our pharmacies and still keep decent margins. We are also in talks with medical technology players to be part of the venture, said Srivastava. He added that his medical team has worked around standardised packages for 85 diseases which could significantly reduce costs for patients in therapeutic areas.

In terms of revenue model, for each practice, nursing home, hospital that Rockland brings into its umbrella through a financial analysis, it would commit to the player a quantified increase in its topline and bottomline. Both players are then expected to arrive at a revenue sharing formula for the incremental revenue and profit gains. Separately, all these smaller players would be paying a fee running into a few thousand rupees monthly on account of three services for using the Rockland brand, for using the software services which would be integrated across the five layers and finally for the empanelment services of insurance firms, corporate firms and public sector enterprises. Presently there are over 55 insurance firms and third party administrators and over 130 corporate entities on the Rockland panel, a facility it intends to extend across its network. Building this asset light network is estimated to cost Rockland around R400-450 crore.

Theoretically speaking, this plan which combines primary, secondary and tertiary healthcare sounds great and is the need of the hour. But it would require tremendous financial and execution skills to pull it off, said Arvind Singhal, chairman, Technopak Advisors.