Vikram Vuppala: Mission International
A focus on new business models and workforce management has helped Vikram Vuppala to bring NephroPlus, from an early stage firm to a dominant position and on course to scale new heights.
When Vikram Vuppala moved back to India in 2010, the Indian healthcare industry was undergoing a massive churn. Several hospitals in India used to non-questioning patients were grappling with the questioning and educated Indian patient. Patients were no longer willing to pay big bills to hospitals, without questioning about the quality of care.
Born and brought up in Hyderabad, Vuppala had no connection to the Indian healthcare industry. His father was an electrical engineer who worked in a government office. “I am a first-generation entrepreneur, and when I started NephroPlus, relatives asked what’s wrong with me since I was quitting a highly paid McKinsey job in the US. Even today, the majority of family members limit their career choices to medicine and engineering. However, I always wanted to build a new company from scratch,” he adds.
Creating Hygenic and Well Planned Spacious Centres
Vikram, a chemical engineering graduate from IIT Kharagpur, and an MBA from Booth School of Business at the University of Chicago has almost two decades of experience in the healthcare sector. His US work experience came in handy when he decided to come back to India in 2009 to set up a healthcare venture. He zeroed in on dialysis as there was no organised player present in the market at that time. While researching the dialysis market, he came across Kamal Shah’s blogs and ended up meeting him. “The decision was cemented by meeting Kamal Shah, who has been undergoing dialysis for more than two decades, from the age of 21. It was then that I realised that system was broken and the dialysis units were so unhygienic that one couldn’t stand there for even few minutes,” he adds. Vuppala and his two co-founders started NephroPlus, a chain of dialysis centres in 2010 to provide superior dialysis services for Indian patients.
Vuppala didn’t regret taking the plunge. Today NephroPlus clocks a revenue of Rs 200 crore. Its workforce has increased to 2800 and has 184 centres in 100 Indian cities. “The reason for my success is also my co-founders. It is always good to work with co-founders who bring different skill sets to the table. I brought the Angel network and the business model strategy, Sandeep brought business development skills and Kamal, patient insights,” he tells Healthcare Executive over a call.
The 42-year-old-CEO of NephroPlus, says today he is undaunted by the change and claims that challenges offer opportunities which makes the journey more exciting.
Sustainable Business Model
However, it was not an easy journey for NephroPlus, which started as a chain of stand-alone dialysis centres. “Our first two centres were stand-alone centres. We thought, patients, doctors and government would love us. However, we were not able to create high volume. So, unfortunately, dialysis is all about huge volumes. It was around this time that few hospitals approached us for tie-ups, as they didn’t have the expertise nor the workforce to manage the dialysis units well in their hospitals. This new growth model helped us get the approval of insurance companies and turn the tables. Today out of the 184 centres, only 9 are standalone centres, the rest are inside hospitals. The scale also helps us provide treatments at 30-40% cheaper rates than corporate set-ups,” he explains.
NephroPlus also tied up with AP government to run their dialysis programme. The government paid Rs 1100 for treatment, and the patient received treatment for free at the government hospital. “That was another massive project that we took up with the government. However, we have not been able to scale that model,” he adds.
According to Vuppala, more than Capex, hiring technicians and nurses is a more significant challenge for running a dialysis centre. “ A dialysis centre costs approximately a crore. Dialysis is not a priority for tertiary care hospitals. They don’t have the scale to source technicians effectively. We have 12 training centres called Enpidia, within the country to train them and place them within the dialysis unit. A hospital cannot procure various consumables and workforce at the price point that we can, as they are focused on other specialities. It is not a major source of revenue for any hospital across the world; hence they don’t focus their energies there and rely on pure play focused dialysis networks like us to run the dialysis program” he explains.
More M&As in 2019
2018 was a big year for NephroPlus. For the first time, the company crossed 100,000 treatments per month milestone. In the dialysis world, the number of procedures per month is the key operational metric. So, what’s next for NephroPlus? “When we started, we used to do 5000 treatments per month, and one lakh looked like a huge number. Now, we do 1.2 lakh treatment per month, including Davita India asset volume. It is not common that an Indian company acquires a global one. Having the M&A muscle is important. We will look for more M&As in the sector,” he adds.
Business plans are never foolproof as NephroPlus have learnt from its journey. Vuppala says that resilience is the key trait to survive in the Indian healthcare market. “It was tough during the initial years to connect with Nephrologists and hospital CXOs as nobody had even heard about Booth School of Business or McKinsey, so I had to use my IIT card. McKinsey colleagues helped me to connect with senior leaders and then they would spend some time with me. There have been instances when I had to wait for four hours to meet a CEO, now I can meet anyone anytime” he adds.
The calculated risks have paid off for Vuppala. Of course, none of this would have been possible without funding. The company raised one crore in first Angel round and two crores in second angel round. The company has also raised 22.5 crores in Series A funding in 2011, that’s when they started scaling up, in Karnataka and Tamil Nadu.
Culture Reinforcement for Operational Excellence
Dialysis is definitely not an easy business. Also, the biggest question in anyone’s head is how do they maintain quality standards at all the centres? “The biggest challenge for us is culture. As a company, we want to fulfil our promise to patients. We want to be like a Starbucks in the dialysis space. Irrespective of wherever you go, you still get the same Quality of coffee, whether it’s in Chicago, Manila or Hyderabad. In order, to bring in that culture, communication is critical. We do conduct many exercises within the company, which requires time and funds. Some employees get it, and some don’t,” Vuppala tells HE.
Currently, there are several other players in the market like Fresenius Medical Care, Rahi Care, Apex Kidney Care, 7 Med, DMed and DCDC Kidney care. NephroPlus can’t afford to drop the ball with other players also pushing ahead with Industry 4.0 plans. However, Vuppala is a confident man. He says that players like NephroPlus have an advantage over tertiary care hospitals. “Fortis did set up 12 centres called RenKare, but they had to shut it down. Apollo had an alliance with Trivitron; they still have only five centres in the last ten years. Hospitals should get into a tie-up with a pure player to offer such services in an efficient win-win manner. That’s the reason why hospitals, like Max, Medanta, Medica Synergie, Sahyadri, and Ruby Hall Clinic have tied up with us,” he concludes. Also, with a 184centres in India and an aspiration to go global, Vuppala never looked better.