Modern Family Doctor’s Naresh Malhotra on his new innings in the healthcare sector, fund raising and expansion plans | VCCircle
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Modern Family Doctor’s Naresh Malhotra on his new innings in the healthcare sector, fund raising and expansion plans

BY  Sainul K Abudheen
Former CEO of CCD talks about his entrepreneurial venture and plans to raise up to $20M in fresh funding for the Silicon Valley Bank-backed firm.
Naresh Malhotra

Modern Family Doctor (MFD), a chain of neighbourhood clinics and pharmacies set up by Naresh Malhotra -- a key person behind the success of now ubiquitous Cafe Coffee Day (CCD) and an operating partner at Sequoia Capital India – aims to bring back the traditional concept of family doctor to India. The Bangalore-based startup, which raised $2 million from the PE arm of US-based Silicon Valley Bank last year, claims to provide affordable primary healthcare services to lower-income middle class people in the urban population. Founded in July 2011, MFD competes with Bangalore-based NationWide Healthcare Services. The company has opened 20 community clinics – 17 in Bangalore and three in Pune – since its inception and is now looking to raise fresh round of funding to scale the number to 200. In an interview with VCCircle, its founder director Malhotra talks about his new innings in the healthcare sector and fund raising and expansion plans. Excerpts:

You worked with Cafe Coffee Day (CCD) for six years. Modern Family Doctor (MFD) is into a different vertical altogether. How do you see this shift?

This concept has long been in my mind even in my CCD days, as I had a few bitter experiences with the treatment of one of my immediate relatives. I also realised healthcare is largely an underserved sector in India. There is a huge need for primary healthcare segment in India despite the presence of a large number of big hospital chains. MFD is looking to plug this gap. We are targeting the middle-class and lower middle-class population to offer our primary healthcare services.

Although big hospital chains offer secondary and tertiary services to patients, there are a very few players in the primary healthcare which offer services at affordable cost. Hence MFD. We are also bringing back the traditional concept of family doctor.

What are your offerings? What is your USP?

MFD is a comprehensive medical centre that includes consulting, diagnostics and medication services all at one location. Our aim is to address the primary health care needs of individuals, an important first step to ensure good health, aid prevention, address the disease at its initial stages and at the same time establish a stronger bond among the patients and doctors as a community.

A couple of weeks ago, we launched a new service for the elderly in the society. The new service, Care for Relatives (C4R), is focussed on non-resident Indians (NRIs), who can take care of their relatives in India while living away. Our doctors visit the relatives, carry out check-up and send the report back to the kin residing abroad. There are four different C4R packages. The cost varies from $200-1,700 a year, depending on the number of visits and services MFD offers.

Apart from bringing back the traditional family doctor concept, we also provide patients with complete medical documentation online. Our docs discuss with patients their concerns and treatment options so that they participate in the process. Within 24 hours after each visit, a report will be posted on the patient’s health and general conditions and treatment provided on required.

We are also a one-stop shop for all healthcare needs and provide a comprehensive set of additional services that include pathology, radiology and other tests, medication delivery, ambulance services, specialists referrals and follow-up, physiotherapy services, short/long term nursing home care, day surgery and hospital treatments.

Big hospital chains such as Apollo Hospitals and Max Healthcare are more focussed on secondary and tertiary healthcare services. Our working model is different from theirs’. We build clinics in urban and semi urban areas, where affordable primary healthcare services are beyond the reach of the lower income middle class. Our services are affordable as the minimum cost is just Rs 125, while big chains charge anything between Rs 300-500 per patient per consultation.

You raised seed funding from the PE arm of the US-based Silicon Valley Bank a year ago. What is your next fund raising plans?

We used the seed fund we raised last year to scale the number of the clinics to 20. We are now in talks with two US-based PE investors to raise a fresh round of funding to further expand the business. We are looking for $15-20 million from somebody who can add value to our business. A large chunk of the new fund will go into scaling the clinics to 200.

Our primary objective is to get into all cities in India with around 10 lakh population. The initial focus will be Bangalore and Pune. Once we get enough scale in these two cities we will expand into Chennai, Mumbai, Delhi NCR and a few other cities. Our long term goal is to build a strong brand in the primary healthcare business with 500 clinics across the country in 4-5 years.

On average, 18 patients visit our clinics daily. We are now looking to increase the number to 30. We hope to achieve it soon. Nevertheless, we are not spending huge money on marketing our services. We are largely depending on word of mouth.

It costs around Rs 20 lakh to set up a clinic and pharmacy in an urban area. However, we hope to become profitable in 15-24 months from now. We are also looking to clock Rs 8-10 crore revenue next year onwards.

MFD has also plans to expand to rural areas. We are already in talks with the Karnataka and Gujarat governments to set up clinics in rural areas in these states. Apart from that, the company will bear the cost of building a clinic if a doctor comes forward to offer his services in rural areas.

What is the main difference you see between the coffee and healthcare businesses?

Unlike coffee, the healthcare market in the country is so huge and offers huge opportunities. Healthcare in India is a  multi-billion dollar market and grows 15 per cent annually. There is huge competition in the healthcare space, which is good as it ultimately benefits the population in the bottom of the pyramid.

In the coffee business margins are huge, while in the healthcare you have fixed cost. However, we are trying to bring down the excruciating healthcare cost in the country

What are the challenges you face in this sector?

Getting land on lease is one of the huge challenges we are facing. We are dealing with people on both the sides. So, it is a bit hard to get land and set up clinics there. You also need infrastructure, people, capital, etc. The challenges are similar to any other industry.

(Edited by Prem Udayabhanu)

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