Guest Articles

December 18

Kyle Poplin / Scott Anderson

Weekly Roundup: Will Narayana Health’s IPO Hearten Investors and Patients Alike?


‘Charity is not scalable, good business models are’


The collective ears of the healthcare world pricked up this week on the news that Narayana Hrudayalaya is going public.

The firm, which operates under the brand name Narayana Health, has been a shining star as a private entity founded in India by Dr. Devi Shetty. It’s innovated on the medical front – for example, Narayana was the first to use a microchip camera during open-heart surgery to close a hole in the heart – but maybe even more in business – combining economies of scale and specialization to turn a profit while charging an average of only $2,000 for open-heart surgery. Narayana and Shetty have proved it’s possible to provide healthcare, even to poor people, and make money.

Shetty told NextBillion’s James Militzer, in a 2013 interview, that Narayana’s business innovations were spurred by necessity. “I can tell you that when you run out of money, the brain starts working. When you have money, I can tell you that the brain doesn’t work – that has been our experience.”

So it might be fair to ponder: Does an IPO mean the model so many have held up so high will stop working? Shetty’s doing his best to quell those fears: “We are not stock market traders and we will do what is good and what is right for our patients,” he told Forbes. “Everything else is minor detail and will take care of itself.”

Commonly cited problems with IPOs are that public companies have to be more open than private ones, and they’re obliged to grow in order to please investors. Those shouldn’t be a problem for Narayana. After the organization figured out how to build a hospital for $6 million, Shetty told Militzer, “If anybody wants to build a hospital, in India or any other developing country, we are going to give them the blueprints and the cost structure and everything. We want everyone to build it. That’s our model.” And growth has always been its mantra and key to its economies of scale: Shetty started 15 years ago with a single hospital and now has 56 facilities; India has a need for 2.5 million heart surgeries per year, and fewer than one-tenth of them are being performed.

It’s not yet clear what this IPO will mean, financially. The plan was to sell 12 percent of the company for roughly $100 million, but after two days the IPO – which continues through Monday – was only 30 percent subscribed.

But it is clear that Shetty understands why there are so many eyes on him during this transition, and he forcefully makes the point that he hasn’t and won’t change. “Our model was never about free treatments but rather about affordable healthcare,” Shetty told The Indian Express. “Charity is not scalable, good business models are.”

And with that, he’s clearly in the running for quote of the year.

– Kyle Poplin


so, How’s that Multi-Stakeholder Initiative Working Out for You?

It seems like each week a new multi-stakeholder initiative (MSI) is feeling its oats, ready to tackle big, systemic problems involving poverty and/or social, environmental, political or marketplace ills. Conducted by USAID and Omidyar Network, a new study confirms that anecdotal observation: In the past 15 years, the number of MSIs have grown fivefold.

Here’s another stark reality identified in the research, More than the Sum of Its Parts: Making Multi Stakeholder Initiatives Work: “(1) none of the profiled MSIs fully cover their costs, even after decades, and (2) most MSIs never close shop.” So if you’re thinking about forming or joining a new MSI – typically consisting of private sector, NGO/development community and government partners – be prepared to think very long term.

“MSIs are not for the faint of heart,” Martin Tisné, policy director for Omidyar and contributor to the study, recently told me. “We really need to have a good smell test for creating MSIs. … They will not always be the solution to all the world’s problems.”

The study, which is a guidebook of sorts, highlights what has worked and what pitfalls to avoid based on interviews of 17 CEOs in multi-sector initiatives, including the Alliance for Global Cookstoves, the vaccine alliance Gavi and mHealth Alliance. One of the key takeaways, Tinsé says, is “filling the table before filling the tent.” That means first finding the people and then identifying the organizations that should be involved in building the momentum.

Tisné knows whereof he speaks. He was one of the founders of the multilateral Open Government Partnership, which works with governments to increase transparency and civic engagement. For that particular MSI, the elements came together – including the political will and the all-important “galvanizing event.” That was when President Obama publicly endorsed the Open Government Partnership at the UN General Assembly.

For businesses considering a tie-up with an MSI, Tisné says the key question is: What can a company do within a group setting that it couldn’t do alone?

I’d argue that is a question that doesn’t get asked enough; nor is the answer always an honest one.

– Scott Anderson


In Case You Missed It … This Week on NextBillion 

NexThought Monday: Pay for Success … With an Important Twist 

Turning Flower Pots into Life-savers

‘Seeing People for Who They Are, Not What They Can Prove on Paper’

Does Your Organization Actually Empower Women?

Measuring Environmental Performance in Microfinance



Top photo: Dr. Devi Prasad Shetty, founder and chairman of Narayana Hrudayalaya Hospital, collects an award for corporate responsibility. Image credit: Financial Times, via Flickr

Health Care, Impact Assessment
impact measurement