Times of India
02 June 2010

Famed cardiac surgeon Dr Devi Shetty has hired five MBAs, fresh out of IIM–B, to eventually take over as CEOs of various divisions in his group, Narayana Hrudayalaya. Shreya Biswas reports
IIt’s Lunchtime At Narayana Hrudayalaya, the multispecialty hospital in Bangalore. Chairman Dr Devi Shetty, one of the best known cardiac surgeons and philanthropists in the country, walks into the room. Five of his VPs and a CEO are waiting to join him over a sumptuous thali. This is probably one of the youngest top management teams in the healthcare sector. Every one of Dr Shetty’s colleagues in the room is under 30 (or in one case, just about). Abhay Singavi, CEO of the preventive healthcare division, is 24, while the five VPs Kailash Nath, Manu Ramachandar, Karthik Ramakrishnan, Akshay Oleti and Bidesh Paul are between 22 and 30. The latter are fresh hires from IIM, Bangalore, and have come on board just a month ago.

In an unprecedented step, Shetty recently announced that the five will, in a few short years, become CEOs of various divisions within Narayana Hrudayalaya (NH). Remarkably, they were hired as CEOs–in–waiting, and are clearly being groomed for it. Shetty has been a pathbreaker in many ways particularly with his social entrepreneurship, of providing good health and cardiac care, at low cost. But putting a multicrore company in the hands of less–experienced youngsters is something else altogether. "We are expanding fast, " Dr Shetty explains. "We need young, dedicated professionals who can come up with innovative ideas and work 15–16 hours a day. IIM graduates are a good fit, as they face a gruelling schedule both before and after entry into an institute. "

Shetty wants to grow NH from the Rs 320–crore entity it now is to a Rs 3,000–crore enterprise. To do that, he needs a strong second line of management. Rather than chase elusive and expensive lateral hires the healthcare industry suffers from a dearth of managerial talent — he is looking to his team of freshers to take the company to the next level.

"Top–level managerial talent is literally absent in India. So, it has to be either homegrown or picked from other industries, " says K Sudarshan, managing partner of EMA Partners International, a London–based search firm, having presence in India.

Till now, whenever hospitals have been set up, lateral hires have taken over the bigger roles or the senior–most medical expert was put in the job. Adds a top boss from Fortis, Asia’s largest healthcare chain: "It’s difficult to find readymade talent in the country at the mid–senior levels. Those who are getting hired now will take a long time before they are ready to take on a bigger role. " Fortis, which has grown from five to six hospitals in 2004–05, to 68 in 2009–10, has tried creating a pool of hospital managers by picking up 15 people every year from campuses across the country.

This, of course, is in complete contrast to what Dr Shetty is doing with his newly–hired VPs. "We were cautious about who we wanted to hire, " says Shetty about a move that, among other things, gives NH a 24–year–old CEO for the first time ever. "We didn’t need individuals who had short–term focus on money, but people with passion and long–term perspective. " NH also plans to recruit 10–20 MBAs from IIMs and other B–schools every year to build a talent pipeline, grooming the youngsters over the years and providing on–the–job training to subsequently handle projects in various departments, including operations, finance, HR, logistics and budgeting.

In fact, NH already provides cross–functional training to its new pool of managers. For instance, since joining as a management trainee some three years ago, Abhay Singavi has worked in every department of the hospital. During his tenure with the international division, he noticed that a majority of patients were from the Middle East and Africa, but a language problem was hindering the free flow of patients. So, he hired Arabic speaking drivers and nurses to help. "It gave a boost to the umbers turning up for treatment, " he says.

Given the situation, it’s clear why these youngsters picked NH over the hefty paypackets offered by finance and consulting companies. Some of them turned down companies like IBM and Essar, and salaries 20–60% higher than their current one, to join Dr Shetty. "In my hometown of Kolkata, Dr Shetty is revered for his work, " says Bidesh Paul, 30. "I didn’t know much about the group till he came down to IIM and made a presentation himself. I was impressed. "

NH’s ability to provide quality healthcare at affordable rates operates on the basic principle of economies of scale. Dr Shetty calls it the ‘Walmartisation’ of healthcare, whereby the group does everything on a large scale, bringing down the costs. None of the hospitals has less than 500 beds. The Bangalore campus of five hospitals leverages the common infrastructure and equipment to reduce the cost of tests for patients from the Rs 3,500 typically charged by other hospitals, to Rs 1,200 at NH. Similarly, a surgeon at NH’s flagship cardiac hospital does 3,000 surgeries by the age of 35 — as many as a surgeon in the US would do in a lifetime and saves on per–patient cost.

That’s why an open heart surgery at NH costs $2,000 as against $5,000 in other Indian hospitals and between $20,000–100,000 in the US. NH has offers from 10 countries, including Mexico, Indonesia, China, the Philippines, Malaysia and the Cayman Islands, to set up shop. In India, it already has a presence in Bangalore and Kolkata, while facilities are being planned in Ahmedabad, Jaipur, Dharwad, Hyderabad and Jamshedpur.

The bargain has been good for the new recruits too, since rarely does a company hire MBA graduates as CEOs–in–waiting. All five will head a 2,000–3,000 employee division or hospital each, in the next 4–5 years, says Dr Shetty. "How many organisations would have a fresh graduate join as VP? It takes a lot of time to reach the top, " says Ramachandar, 26, a mechanical engineer from BITS, Pilani who is drafting a proposal for PE Funds to raise money for a hospital in the Cayman Islands.

Dr Shetty knows that healthcare, a sunrise industry, necessitates a second rung of leadership. In 2001, at 44, he started the first hospitals in Kolkata and Bangalore. "It was tough, negotiating with banks and vendors, and I was all hands–on, " he says. Now, he wants to pass on this learning to his young leaders so that they don’t need outsiders to run NH. Each of them is working on 2–3 projects. Bidesh, an IIT, Kharagpur alumnus, is working on an internal complaints management system to monitor how many complaints pour in from various departments and how long it takes to resolve them. Computer scientist Akshay is using his healthcare software development experience at SAP Labs to link the Bangalore, Kolkata, Hyderabad and Jamshedpur facilities.

The young team knows every bit counts, well aware that healthcare is slated to become a $70–billion industry by 2012. "It will be the next IT. There is a huge opportunity to be tapped, and an equally bright future for professionals in the sector, " says Karthik Ramakrishnan. His colleague, Kailash Nath, adds: "It all about starting with the right frame of mind. " No one knows that better than Dr Shetty.

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