The president & CEO, GE Healthcare South Asia, and managing director of Wipro GE Healthcare tells Darlington Jose Hector over a round of coffee, green tea and cookies, why the company is now into “market-making”.
Milan Rao is measured and assured in his ways, and my afternoon interaction with him, over some cappuccino and fine cookies, revealed his penchant for looking at an age-old business in a whole new way. Some of the challenges that he faces have been plaguing the industry for years—like penetrating the interiors of this vast country where healthcare standards have lagged for years and the need to scale fast.
GE has been flexing its muscles for over 25 years, trying to tackle some of India’s biggest health issues like cancer, cardiac ailments and maternal and infant care. It is not an easy task trying to offer affordable healthcare without dropping quality standards—something that GE Healthcare has been attempting to do all these years.
Prior to joining GE, Rao was the CEO of the enterprise business at Bharti Airtel. Previously, he held leadership positions at Morgan Stanley, Citibank and Seagram, and it is evident that GE has brought him in for a fresh perspective of the business, trying to take advantage of his 20 years of experience in driving business strategy, sales and marketing.
Rao walks in wearing a navy blue blazer and asks for green tea. Heading healthcare, one probably has to look for healthy beverage options, I think. The long drive to Whitefield from my office in the central business district of Bengaluru, meant that I needed a strong dose of coffee. Rao apologises for the slight delay in starting the meeting; he looks cheerful and full of beans though. Years of being in marketing probably helps you gather extra bits of energy while sitting with customers, and Rao is no different.
So why did he choose a company like GE Healthcare? “I had asked the same question to the company, as to why they wanted to look at me. I think there is a move within GE to have people who have a view of the outside world; how things are being done in multiple industries and applying some of those thoughts and learnings into this industry. And I think we have actually done some of that already and that is going to be a sort of pivot for our strategy. Obviously, we are in a position of market leadership; so, it is not that we have to change dramatically. But I think the time to focus on market leadership is over. I think it is the time for market-making,” Rao says.
“Market-making moves”—that sounds impressive. So, I question him further on that. “The matrix is telling us that we need a lot more from companies such as GE. Just look at the healthcare burden. About 600 million people in India do not have access to healthcare. That’s a shocker. It is as basic as nourishment. For me it is roti, kapda, makaan and then healthcare. If you look at oncology, a person dies of cancer every minute-and-half. That is a big burden.”
“We are already the diabetes capital of the world. Out of 50 million people who are suffering from cardiovascular diseases, not more than 1.5 million actually get proper treatment. Now, that is not a problem which is going to be solved by making sure the number of beds increases 40 times. That is not the answer. The answer has to lie in technology. The answer has to lie in early screening and diagnosis. Therefore, it is incumbent upon companies like us to make significant strides in providing avenues for better, faster and more distributed, if you will, screening,” he says, sipping his tea.
One of India’s biggest issues is access to healthcare, especially in tier-III cities. What works in tier-I cities cannot be replicated in smaller towns and cities simply because it is too expensive a proposition. Hence, GE Healthcare has helped start up a company called Genworks, that does not work with metros or tier-I cities, but focuses on tier-II, tier-III cities and beyond. So if someone reaches out to GE from Hubli and says he needs a particular healthcare equipment, the company figures out not only how to get it there, but also suggest to him what else he may require depending on the kind of work carried out there.
In many of the tier-II or tier-III cities, such thought processes do not exist, and as a result doctors may not be willing to go there. The challenge for companies has been to find a way to get to 700 cities from let’s say 70. Or even to 200 districts and then the next 200. So, Genworks concentrates on this mission as GE continues to cater to the bigger cities and metros.
Rao has a pragmatic view on this kind of a distribution model. Obviously, healthcare has a totally different model from, let’s say, FMCG. “There are a number of regulatory hurdles which come about when you are selling medical equipment. We have to be cognizant of absolute compliance—obviously, I am a little bit sensitive in terms of health care practitioners. We are an American company. So, we have to follow a lot of guidelines which are probably beyond what is required in India. Yet you have to make sure that the models scale up in the way that you wanted. How do you make sure that a dealer in Nagpur and a dealer in Bellary are selling similarly at the same level of understanding, knowledge, skill-sets that you need to have in order to run something like this? That’s the key.”
GE today is trying to arrive at a stage that promises awareness, access and affordability. I have always felt that India has been an affordable healthcare destination, but the past few years have seen a change. And not necessarily for the better, from a cost point of view. Rao did not quite agree with my line of thought. “I would push back on that. It is affordable from which perspective? It is affordable from the perspective that the cost of delivery of health care is the lowest in the world. But even at that cost of delivery are people able to afford health care, then the answer is no,” he says.
Let us say you are able to do a procedure done, let us say a bypass. You can get that done for $5000 in India, and for you to get a bypass done in the US, it will probably cost you a $100,000 or $75,000. So, India is economical. But then how many people here can afford even $5,000? That is a bigger question. One of the things that people like Dr Devi Shetty try to do is to create a model whereby procedures are subsidised for a certain set of people, or sometimes done for free, Rao says. And then probably charge some others $10,000 so that on an overall basis you still come to around $5,000.
As another example, Rao talks about CT scans. The question is how many healthcare centres can buy that at half a million dollars because in order to do that one has to have an inflow of 20 patients a day each willing to pay you $50, $70 or $100. That does not happen. “So, if I look at the most recent CT that we have launched, it has caused a revolution. It costs $100,000 for the base versions. Compared to the one that costs $500,000 there are some things that it cannot do, but what it can do is that it can detect most cases of trauma which are required in hospitals which are next to highways. They can do a scan for $20 or even a $10 CT one.”
A country like India is unique in the sense that while the population is large, the scale of the industry is not. While India has about 100-110 PET/CT scanners, the state of Florida in the US alone has 115. So, that’s a major gap that needs to be addressed. Plus, in most other countries the government tends to be a major player in the healthcare domain while in India it is largely a private market. And then the question is how does one make it a viable business model, when the patient is paying the lowest possible fee. Rao believes that if India is able to create a model for affordable healthcare, then the world would want to emulate us. That’s a big challenge and opportunity at the same time. That India’s priority is not healthcare is evident in the fact that only 1.4% of the GDP gets spent on health care, he says.
The need for PPP in healthcare needs to be highlighted better in the country. Since it may be not be practical to think that the government may increase healthcare spending in a large way, a PPP model has to get prominence. “I am confident that we can change a lot, and that includes persuading the government to be more involved. States like Gujarat and AP have enjoyed some success on this count. But the key is to scale fast.”