Nephrocare Health Services – Innovative Low Cost Business Model – FINALIST 2018

India’s largest network of dialysis centres with 135 sites in 85 cities and 18 states, it operates under the brand NephroPlus.

Nephrocare has managed to bring down the cost of dialysis from $30-$40 per session to $20-$25 per session in the private sector and $15 per session for the government. It has achieved this through a focus on process, effectively leveraging its scale for procurement, creating an in-house training centre and internal maintenance and quality teams.

Nephrocare Health Services Pvt Ltd (NephroPlus) was founded in 2009 by a dialysis patient Mr Kamal Shah and former McKinsey & Company consultant Mr Vikram Vuppala. In a short span of just 8 years, NephroPlus has grown to become the largest network of dialysis centres with 135 operations centres (as on Jan 31, 2018) spread across 85 cities in 18 states. With our motto of “Guest Care Comes First”, our topmost priority is to enable people on dialysis across the world lead long, happy and productive lives. We strive to provide the highest quality dialysis in an affordable setting. All our teammates undergo hours of rigorous training and certification before they are inducted to handle patients, who are referred to “Guests” in our ecosystem. We have also introduced for the first time in India, innovative concepts like “Holiday Dialysis” which help our patients lead enriching lives without any boundaries. As of 31st Jan 2018, NephroPlus has ~103 centres with Private Hospitals, ~29 centres with Government Hospitals and 3 Standalone centres with combined 1,450+ beds under operation. Some of India’s top hospitals including Max Group of Hospitals, Jehangir Hospital, Medica Hospitals, IVY Hospitals and Sahyadri Hospitals have partnered with us to provide quality dialysis service to their patients. NephroPlus is also the preferred dialysis partner for various Indian government agencies and state governments. In FY17, NephroPlus achieved its target of ~USD 15 MM in revenues and is enroute to cross USD 21 MM in FY18. NephroPlus currently has a staff strength of about 2,000 employees. In addition, more than 75 of leading Indian Nephrologists are our partners who help us develop the best quality protocols.

We are providing quality dialysis at a cost currently unmatched by any other dialysis players in India. The typical consumer is a person with Stage V CKD (Chronic Kidney Disease) and has been recommended maintenance / regular Dialysis by a nephrologist. We are providing quality dialysis at a cost currently unmatched by any other dialysis players in India. The typical consumer is a person with Stage V CKD (Chronic Kidney Disease) and has been recommended maintenance / regular Dialysis by a nephrologist. Till date we have served over 1,46,000 patients with nearly 11,000 active patients currently dialyzing with us. Each patient typically has 10-12 dialysis sessions in a month. NephroPlus is currently doing 3,300+ dialysis sessions per day.Dialysis services are provided by NephroPlus, through the dialysis units outsourced by Hospitals to NephroPlus. We have been able to achieve the low cost because of below mentioned factors:1. Cost effective sourcing of Consumables and equipment: This has been possible owing to the scale of operations of NephroPlus and focus of management on processes and negotiations to bring the cost down for such elements
2. Staff Costing:a. In-house training academy: Trained and qualified dialysis technicians and nurses are in short supply in the current market, leading to an increase in salaries demanded by these trained personnel. Having an in-house training academy ensures that we have a steady supply of low-cost, well-trained technicians who are adept at our quality protocols. This helps us to not only keep costs under control, but also to consistently deliver high quality dialysis across the network. b. Optimal Staff Mix and Ratio: Through our constant focus on process improvement, we have arrived at an optimal staff mix and ratio for smooth functioning of a center under any given conditions. Maintaining this optimal mix and ratio has helped us in controlling costs and delivering highest value at our centersc. Merit driven Growth Opportunities: Unlike the current structures in the market, we provide our clinical staff a growth ladder to move up from centers across all teams. This helps us in retaining our most experienced and best performing staff members, while giving us an ability to evaluate all staff members across centers3. In-house Maintenance & Quality teams: We maintain our own Biomedical and Quality teams who oversee clinical maintenance in terms of RO plant maintenance, dialyzer usage status, hemodialysis machine maintenance and other key critical clinical care aspects. This internal focus helps us in not only reducing maintenance cost, but also in longer life of machines thus reducing our capex, all the while maintaining highest standards of operations

Month : March
Year : 2010

2015 : USD 4.5 MM
2016 : USD 9.8 MM

25-30% over 2 years in terms of cost savings.

India did not have any pure play dialysis provider prior to NephroPlus and majority of the patient either underwent dialysis at hospital owned centres or government run hospitals. According to a study by Mumbai Kidney Foundation, per session cost of dialysis in a large tertiary care hospital is approx. $30 – $40. With India’s per capita income at only ~$1600 per annum, such high cost of dialysis makes it unaffordable for majority of the patients. Government run hospitals provide affordable dialysis however quality of dialysis is often very poor with high instances of infections. NephroPlus with its focus of affordable care has been able to address both the issues. As of 31st Jan 2018, NephroPlus has ~103 centres with Private Hospitals, ~29 centres with Government Hospitals and 3 Standalone centres with combined 1,450+ beds under operation. In private sector, we have been able to bring down per session cost of dialysis to $20 – $25 whereas in government sector, we provide dialysis at only $15 while maintaining high quality levels. Our costs are in marked contrast with the USA where a single session of dialysis costs $300+.

What makes the service innovative: factor 1 : Constant Management focus on process improvement and quality improvement including focus on avoidance of cross infections has led to development of some unique services from NephroPlus. These services were pioneered by NephroPlus in Dialysis Market and we expect other competitors and even overall healthcare market to adopt these offerings. 1. Signature Zero Infection Point (ZIP) kit and 56 standardized Dialysis process steps helps in preventing cross Infection. Currently, in 7 years of operation we have had no cases of cross infection (Average in market is around 5%-10% of patients every year or 30% every 3 years) 2. Use of Buttonhole Needles for regular Dialysis process: This helps in keeping the treatment painless 3. Standardized and strictly followed protocols for disinfection of Haemodialysis machines and used dialyzers have helped us in avoidance of any kind of cross infections

What makes the service innovative: factor 2 : Our In-house training academy “Enpidia”, helps us bridge a very important gap in the value chain of dialysis market and helps us control costs. Under current market scenarios, there is a dearth of skilled technicians and nurses for Dialysis. Through our own training academy, we are able to meet our ever increasing requirement of skilled technicians and nurses. As the training curriculum is designed in-house too, we are able to maintain a high level of skill, quality and service required amongst our technicians. Enpidia has tied up with BONENT, the reputed certification agency for dialysis technicians and nurses in the US. Additionally, we are empanelled with Bharat Sevak Samaj, Chennai and offer dialysis courses in association with this Government-recognized University. We are also empanelled with Healthcare Sector Skill Council (HSSC) under the Government of India, which helps our students get certified according to a standardized skill framework developed by HSSC. This gives our student flexibility as a dialysis technician, to work across any organization outside of NephroPlus too. This coupled with job guarantee for eligible candidates has helped make ‘Enpidia’ a success. This in-house training house initiative has helped us in controlling our costs, increase retention of deserving candidates and maintain highest standard of quality in Dialysis. We have so far signed 15 franchise agreements. As of 31st January 2018, we have 7 operational training academies, with at least 8 more targeted to be operational in 2018.

Patient outcome is the highest priority area at NephroPlus, and each cost reduction initiative is tested for impact on outcomes before being rolled out within the company. Patient outcome has gradually improved over the years. Below is the table showing improvement of quality in patient outcome as tested Metrics Jan’15 July’15 Jan’16 July’16 Jan’17 July’17 Jan’18 % Kt/v in satisfactory range 72% 72% 79% 80% 80% 84% 86% %Kt/v in range demonstrates the effectiveness of Dialysis process. Our focus on quality of dialysis has helped us increase this factor significantly. Another key metric of quality is cross-infection (sero-conversion) rate, which is close to 0 for NephroPlus, with the market at around 30% sero-conversion over 3 years

NephroPlus currently has 135 operations centres (as on Jan 31, 2018) spread across 85 cities in 18 Indian states. We plan to grow to 300 centres by March 2022. Internationally we are planning to expand and set up operations in 3-4 countries by the March 2019. Our business model is stable for medium term. We aim to reach the next level of scale through partnership with greater number of private healthcare institutions as well as increasing our participation in Government PPP models.