Portea Medical was acquired in July 2013 from founders Karan Aneja and Zachary Jones, who started it in 2012, based on the US model of home healthcare. But given that there are major differences between the US and India’s healthcare practice, what were the initial teething problems and how was the model tweaked? What differentiated them from the other start-ups in this area?
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K Ganesh
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At the very early stages, Aneja and Jones tried to create a replica of the US model. While the needs were similar, they realised that the skill set of clinicians in India vs. the US was different – this drove them to think critically about the types of services that could be offered and in turn, analyse and understand their needs and wants.
Through meetings with various doctors/ hospitals/patients, they were able to address the core needs such as general physicians’ visits, nursing care and physiotherapy services for primary and post-hospitalisation care. But the two chose to dive deeper – they looked into various other aspects of the healthcare ecosystem in India and chose to offer counselling and nutritionist services in the privacy of patients’ homes. This really let individuals address their various health problems, but without the pressure of thinking about what was culturally appropriate.
Being two Americans starting something up in India, this was a totally different ballgame for them; the two faced quite a few issues, but were quick to pivot their model and had a deeper understanding of the space to help resolve them as soon as they could.
What really differentiated these two was their understanding of the space and their ability to figure out what the market needed and what was lacking – they were fearless and were able to confidently convince decision makers to make bold decisions, to change what they had known for so many years. They started various pilots with hospitals/ insurance companies to address many of their issues and help them to be run more efficiently. This forward thinking vision is what really attracted us to the team.
Why do you feel this is the right time for this idea to click?
There are a few things that come to mind:
- Healthcare is a need, but can be looked at as a direct to consumer product. You can carve out a niche – people are ready to pay for convenience as well as top quality healthcare services, it doesn’t matter if we’re providing it in someone’s home or if they have to go to the hospital
- Family dynamics – India is moving away from the joint family, we are all independent and want to remain that way. But at the fundamental level, we are Indian and want to take care of our families – Portea allows individuals living away from their families to take care of them and be connected at all times
- Technology – this is the time to disrupt the market, everybody has a smartphone and we can use this technology to really improve the quality of care that is delivered as well as ensure better health outcomes by tracking individuals. Today power in the hands of the consumer with a smartphone is like having a supercomputer in your palm – be it for imaging, video conferencing, analysis , communication, is mind blowing.
- Personalised medical devices – the advances in this field have been phenomenal in the last two years. The latest Consumer Electronics Show (CES) show at Vegas was all about wearable devices and mobile health. This makes “personalised” and “proactive” medicine a real possibility in the coming years as against traditional “population-based” and “reactive” medicine.
How does the model work from the patient point of view? What kind of services/packages are on offer?
From the patient’s point of view, it is quite simple.
- They give us a call (they’ve either been referred to us by their senior clinician or they find out from other sources).
- They schedule an appointment (we are able to book appointments based on the clinician’s availability in the field – they carry GPS-enabled smartphones and we can estimate the time it will take them to reach a patient’s home)
- Clinician reaches out to the patient to understand their illness – we then get in touch with their senior clinician to inform them that we are going to see their patient and ask if there is anything that we should be wary of when treating their patient since they understand all nuances of the patient
- Clinician visits patient – we do general procedure/ protocol and carry out senior clinician’s orders. (clinicians’ have a checklist on their smartphone of things they are to do/input into the system, this ensures holistic treatment + update of EMR). The senior clinician is updated on the patient’s progress
- EMR is updated fully (using smartphone) + synopsis of patient’s visit is emailed to senior clinician.
Right now, we are focusing on general primary health care, post-hospitalisation care, and chronic disease management. We have packages addressing various aspects in all of these areas.
The Rs 48 crore in Series A funding from venture capital firms, Accel Partners and Ventureast will fund the scaling up of Portea Medical for 2014 so could you spell out the expansion plans? And beyond 2014?
We are currently in seven cities across India – we intend to address three more large cities by the end of June. There are currently ~50 cities that we are looking at, based on the disease prevalence/size of population/education levels and ability to pay. The target is to eventually be in every city which has a population of more than 10 lakhs.
| Promoters’ profile |
 Zachary Jones, SVPGraduated magna cum laude from Columbia University, New York. Previously with Sanford Bernstein Equity Research, New York and Copal Partners, Gurgaon. Co-founded home healthcare business in 2012 and was CEO prior to roll up |
 Karan Aneja, SVPA serial entrepreneur and molecular and cell biologist by training. Graduated from the University of California, co-founded SidKar Green Technologies and Filtered Helmets before venturing into the home healthcare business in 2012. Was head of business development prior to roll up |
 Meena Ganesh, Co-founder & CEOPreviously promoter and Board member of TutorVista and CEO and MD of Pearson Education Services. Prior to this, was the CEO of Tesco’s operations in India, the Tesco Hindustan Service Center |
Given that this is a relatively asset light model of healthcare, when do you expect it to break even? What are the revenue targets for 2014? And revenue growth targets for the consecutive years?
Given that we are in the early stage, we are growing at a scorching pace. In the last three months we have gone from two cities to seven cities, from 50 people to 350 people. We expect each city to break even in two years and as a company we expect to break even in three to four years as we will be expanding to new cities constantly.
What is the target revenue mix from the different segments you are targeting: direct patients/ consumers, hospitals and insurance?
The target mix is 70/30 – that’s 70 per cent direct to consumer and 30 per cent (B2B) focusing on post-hospitalisation care, plus some of the initiatives that we have begun piloting with various hospitals.
Portea Medical has the first/ early mover advantage but going forward, what’s your USP from competitors, existing or future?
There are several:
- Proven ability to execute: This is a very hard, execution-led business and not something that two geeks or computer science guys can create with an app or cool software. Hiring, training thousands of healthcare workers, across the length and breadth of India – most of them in remote locations, is a major challenge. Hiring, deploying, monitoring and motivating a distributed workforce remotely is a major task. The founders have a successful track record of doing so in multiple ventures. TutorVista, was India’s largest employer of teachers and India’s largest employer of remote workers across all industries, employing over 6000 teachers across India. TutorVista has trained over 10,000 teachers, remotely. This execution capability is a major USP.
- Technology: Developing a technology platform that is integrated, proprietary and open enough to meet all the requirements of the patient, hospital, insurance company, employees and the healthcare worker is a huge and complex task needing substantial investment and technology DNA. The tech background of the founders and past experience in developing such technology platforms is a major asset. The entire service is possible only with very strong technology using smart phones, geo fencing, GIS applications, integrating personal medical devices, high end analytics of patient data, predictive modelling and remote management. This takes time and money to create. We have at least a year’s head start in terms of anyone else entering the space. With the current investment in technology and the funding, this will become a three year head start very soon for anyone else to catch up.
- Capital: This is a low margin business but high growth and scale business. It needs a lot of capital to roll out in multiple cities, and investments in training and technology. With Rs 48 crores in funding – the largest ever Series A funding by any company in the sector, we have raised the bar for others. Unless you invest this quantum of money, you cannot provide high quality service at reasonable cost. Unless you operate pan-India, you will not be able to break even. So capital is an important consideration to kick off such a venture.
- Stellar team: Our core team of technology entrepreneurs possess a good track record of execution. Aneja and Jones come with strong exposure to US quality home healthcare, Dr. Manjusha Anumolu our cofounder, has worked in the US and India in general medicine. All of these are important ingredients to the success of this business model. The founders of the company have been pioneers in identifying a big business need, using technology-driven execution models to create lasting, valuable businesses that address major pain points in India.
What factors could be potential road blocks?
- Successful execution: This is a very hard business. The speed with which we are able to hire, train, deploy and motivate large healthcare workforce, and scale our operations will be key.
- Technology innovation in personal medical devices: While there are a lot of breakthroughs, will the good work that is being done, be commercially viable soon? How reliable and quality certified will such innovations be for commercial use? Of course, this does not affect the whole business model; just that part where we intend to use the devices for monitoring on a continuous basis.
What are the pain factors?
The services we provide are very personal in nature – it’s not like selling a book or providing another credit card facility. There is a great deal of emotion involved; people come to us when they are in pain or distress and look to us to solve their problem and give them solace. This is a huge responsibility. We take that very seriously. This keeps us awake at night, so to speak, and all our plans, systems and processes reflect the enormous trust and responsibility that our customers are placing in us.
So investment in technology, systems, hiring people and training is to ensure that we are able to discharge this responsibility day after day. Each and every transaction is very important – it throws up challenges in terms of three parameters – consistency, reliability and quality of medical care. If you look at the market, we believe that this is an access-to-services play. It will take time to build awareness, but we are confident that people will need our services.
We have been scaling quite rapidly, but it would always be great to move a little faster! We are firm believers in providing the best – we’ve been exceptionally picky about the people that we have hired, but we believe that it differentiates us – we provide patients with the best possible experience in their time of need. We’re creating an all-star team, not one that just comes out to play – finding that talent takes a bit of time, but we’ve been quite fortunate in finding it.
How do you as an investor, choose the sectors, and business ideas to invest in?
- We look at sectors that are large and unaddressed – where we can create a large impact and thereby large, valuable businesses. We don’t like niche businesses. For example, we will not fund a website that sells online jewellery for pets in India or provides vocational skills to people in New Zealand, and so on.
- We look for simple, day to day pain points that are not addressed and explore if we can build businesses that can use technology or new models to disrupt the status quo. TutorVista was built to address the need for a tutor, Portea Medical is built on the need for healthcare which is affordable, convenient and accessible from home
- We look for nascent sectors where we can create a category leader. We want to be among the first three players to enter a category and want to become the largest or second largest player in the sector. That gives us the ability to create disproportionate valuation and benefits for all the stakeholders. All my ventures were the first in the sector or industry and became category leaders: TutorVista – world largest online tutoring company, CustomerAsset/First Source – top 3 call centres in India, Marketics – first data analytics company from India with a $ 63 million exit, IT&T – India’s largest third party maintenance company in the 1990s.
- We like Internet and technology-based models where there is an offline and online combination as we believe this suits the Indian market very well. Bigbasket, India’s largest eGrocery company focusses on online for booking and sales, but the last mile delivery is through our own warehouse and vans, with drivers delivering groceries at home. Portea Medical is online in terms of sales and marketing, but delivery of medical services is offline at homes.
- We like strong execution plays which are tough to pull off – where most people will fear to tread. This creates a big barrier to entry.
How long do you stay invested?
We are not angel investors. We are promoters of the businesses, so like any founder we stay till the end. We exit only when there is a monetisation event. Unlike angel investors we don’t look to exit in series A or series B. We expect companies will typically take 5 to 10 years to monetise and give us an exit. In terms of past track record, IT&T was eight years, CustomerAsset was two years, Marketics was five years, TutorVista was six years.
What is your role?
We are promoters. We come up with the idea, develop the business plan, formulate the strategy, bring in cofounders and the core team, fund the business till institutional investors come in, stay actively involved in running the business, raise series A money from VCs and continue on the board.
For instance, at Bigbasket, we put together the idea and got the cofounders – ex Fabmart/Fabmall founders to come together and create BigBasket and raised $ 10 million from Ascent Capital. Another example is Bluestone.com, which is focused on online sales of fine jewellery. We wrote the business plan, got the founding team together, launched the business and raised $ 5 million from Accel partners and Sama Capital. In all cases, we are promoters and will be with the company till full monetisation and take active part in running of the company.
What is your advice to entrepreneurs in the healthcare space looking for investments?
- It is a large, exciting space which is evolving rapidly. There are innumerable opportunities. But pick and choose where you want to enter after a lot of thought.
- Choose a big area where there is a large opportunity and space. Preferably new disruptive model rather than, say, open another super speciality hospital or open a pharma chain. There are too many players and unless you have very special skills and have lot of capital, this is difficult to pull off.
- Play to your strengths rather than copy the US model or someone else’s model. What is right for them or right in another geography are not the same here in India. and for you. For instance, healthcare is mostly covered by insurance and Medicare in the US and Europe, while in India it is mostly private-pay. So the factors are very different.
Any advice to funders who are looking to invest in this space?
- Healthcare is long-term play and one needs to be patient. It is difficult to scale and even more difficult to exit. So, please be aware of the time-frame.
- While there are lot of cool apps and cool technology, building real revenues and real scale is tough – this is a very emotional, involved and personalised decision – so bet on strong, real business models that address real pain points.
