Building a Chain of Branded IVF Clinics in India

March 5, 2013

Many venture capitalists (VCs) are interested in investing in the Indian healthcare industry.

Many venture capitalists (VCs) are interested in investing in the Indian healthcare industry. It has become a hot area, because it is very efficient, and it promises so much room for growth. IVF  especially is a very exciting market, given the fact that it’s currently underdeveloped, and there is so much potential for scaling up – not just to meet the needs of Indian infertile couples, but also because of reproductive tourism.

Venture capitalists have invested quite a bit of money recently and entered the Indian IVF market, but most of these ventures have failed. There is a desire to rapidly launch a pan-India network of IVF clinics, in order to make the most of the advantage of being first to capture the market.

The key question is: What makes an IVF clinic successful? If a clinic does not achieve a high pregnancy rate quickly, it is doomed to fail.

There are two things that need to be emphasized. IVF is a very hands-on treatment – it is not something that can be delegated or outsourced to someone else. Successful IVF clinics are run by a person who is extremely thorough, someone who’s obsessed with attention to detail.

If you want to run a chain of clinics, you then need to design and implement systems and processes that are replicated identically across all the clinics, so that all the centers have equally good success rates. The biggest problem today is the large amount of variability within IVF clinics, so that even within one city, one center will do well, while another will flop, even though they seem to be following exactly the same processes. This can be extremely hard to understand and very frustrating for the doctors. We still do not know what causes this kind of variability. If we do not understand the underlying problem, how do we implement better quality control systems?

This attention to detail means that the IVF doctor needs to be do IVF as a full-time practice. It’s not possible to have a gynecologist who does IVF on a part-time basis, and will also do some hysterectomies and endoscopies side-by-side in order to maximize his income. This is why it needs a full-time dedicated doctor to head the IVF center.

While starting a chain of IVF clinics does not need deep pockets, it’s not very expensive to set up an IVF unit, and the return on investment is phenomenalm, the VC needs to have patient money. It takes time to successfully replicate the IVF clinic model across geographies.

This is a great time to setup a national IVF chain. There are lots of advantages to having centralized operations, because this gives you an economy of scale, and marketing and branding can be controlled centrally. A high quality brand, built patiently over time, will inspire confidence in patients, who would rather go to a clinic that provides high tech,  high quality care. Most IVF clinics today are run by doctors in solo practice, and their results often leave a lot to be desired.

Equally importantly, the IVF chain cannot afford to be personality dependent, it  should not be run by a single doctor. It should be doctor independent, because it’s not possible to have a single doctor try to trouble shoot when problems arise in multiple locations, as they inevitably will.

The key is to have a central head of quality control, whose fulltime job is to monitor each center closely, to ensure that they are all doing the same thing, each time. I would argue that a problem with IVF doctors is that they tend to have large egos, they think they know all the answers, and refuse to change their set ways. They always want to tweak protocols, to improve their success rates. This is a recipe for disaster. The flagship center needs to provide training, so that each center will be a clone of each other, even though the doctors are different.

It’s possible to set up a chain of IVF clinics in India, but an IVF clinic is not an eyecare clinic or a pathology lab. Cataract surgery is very straight forward, which makes it very reproducible. However, doing IVF treatment is slightly different, and we cannot use a cookie cutter model when setting up an IVF chain. There is still quite a bit of “art” in IVF treatment, which means it requires a lot more supervision and handholding to be able to carry out successfully.

The other danger is that in the pursuit of numbers and profits, each center will try do too many cycles. The optimal number of IVF cycles a clinic should do is about 1,000 cycles per year. This makes it busy and profitable – but still manageable enough, so that the care remains personalized.

Creating a national IVF brand is both a challenge and an opportunity. Anyone who is willing to do it properly is likely to reap rich rewards.