NephroPlus – Innovative Low Cost Business Model FINALIST – 2017

Nephrocare Health Services Pvt Ltd (NephroPlus) is the largest network of dialysis centres in India with 97 operations centres (as on Jan 31, 2017) spread across 63 cities in 16 Indian states. Some of India’s top hospitals including Max Group of Hospitals, Jehangir Hospital, Medica Hospitals and Sahyadri Hospitals have partnered with us to provide quality dialysis service to their patients. At NephroPlus, our topmost priority is to provide quality clinical care and to ensure an incident- free dialysis session. 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 as guests in our ecosystem. In FY16 (Apr’15-Mar’16), NephroPlus clocked ~USD 10 MM in revenues and is en route to cross USD 15MM in FY17 (Apr’16-Mar’17). NephroPlus currently has a staff strength of more than 1,500 employees.

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 89,000 guests with more than 7,000 guests currently dialysing with us. Each guest typically has 10-12 dialysis sessions in a month. We are currently doing 2,000+ 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 this 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. We currently have 3 operational training academies, with at least 5 more targeted for 2017.

b. Optimal Staff Mix and Ratio: Through our constant focus on process improvement, we have arrived at an optimal staff mix and ratio for the smooth functioning of a centre under any given conditions. Maintaining this optimal mix and ratio has helped us in controlling costs and delivering highest value at our centres.

c. Merit-driven Growth Opportunities: Unlike the current structures in the market, we provide our clinical staff with a growth ladder to move up from centres 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 centres

3. 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: Janaury
Year: 2010

2015: CY 2015 – INR 53.3 Cr (USD 8.1m)
2016: CY 2016 – INR 84.8 Cr (USD 12.8m)

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

While actual data is not available, we have noticed that the dialysis costs for NephroPlus are at least 25%-30% lesser than large tertiary-care hospitals. We have also consistently seen quality metrics (lab compliance, investigation outputs in range etc.) increase after we transition operations from hospitals to NephroPlus. Another key metric of quality is cross-infection (seroconversion) rate, which is close to 0 for NephroPlus, with the market at around 30% seroconversion over 3 years

Factor 1: Constant Management focus on process improvement and quality improvement including a 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.
Signature Zero Infection Point (ZIP) kit and 56 standardised Dialysis process steps help 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)

• Use of Buttonhole Needles for regular Dialysis process: This helps in keeping the treatment painless
• Standardised and strictly followed protocols for disinfection of Haemodialysis machines and used dialyzers have helped us in avoidance of any kind of cross infections

Factor2: 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 empaneled 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 standardised skill framework developed by HSSC. This gives our student flexibility as a dialysis technician, to work across any organisation outside of NephroPlus too. This coupled with a 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 the highest standard of quality in Dialysis.

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 % Kt/v in satisfactory range 72% 72% 79% 80% (Table explanation: Kt/v measure for dialysis patients in satisfactory range has increased from 72% in Jan’15 to 80% in July’16)

Patient outcome is the highest priority area at NephroPlus, and each cost reduction Currently, NephroPlus is operating across 16 states in 63 cities with 97 centres. We plan to grow to 500 centres by the end of FY22 in India. Internationally we are planning to expand and set up operations in 3-4 countries by the end of FY19. Our business model is stable for the medium term. We aim to reach the next level of scale through a partnership with a greater number of private healthcare institutions as well as increasing our participation in Government PPP models.