November 27, 2009

Nova Medical to set up day care hospital chain

Nova Medical, a company floated jointly by US investment fund GTI Group and an Indian surgeon, plans to set up a chain of day care hospitals across the country with investments from teams of local doctors.

The firm plans to give a small stake in each hospital to local doctors who will also practice at the centre. GTI holds a 72% stake in Nova, while Bangalore-based ortho surgeon Dr Mahesh Reddy owns the remaining 28%.

The company plans to set up 25 such hospitals across the country in the next 18-24 months, Nova’s CEO explained. The investment will be around Rs 250 crore. The parent company will bring in 70%, or Rs 7 crore, of the investment in each hospital and the remaining Rs 3 crore is expected to be brought in by the doctors.

“We will invite only reputed specialised doctors across speciality areas who are willing to practice at the centre and can invest a minimum of Rs 5 lakh and up to Rs 10 lakh. In the next 2-3 years, we may go for an initial public offering or a strategic sale for the holding company, which will create value and exit opportunity for all investors,” said Girish Rao, managing director and CEO of Nova Medical.

The company now operates one hospital in Bangalore under the proposed business model. About 30 doctors are co-investors here. Nova plans to set up two more hospitals each in New Delhi and Mumbai.

The new centres will specialise in surgeries and would aim to bring down cost of treatment for patients. “Our business model aims to bring down cost of treatment for patients by 15-20% compared to what is charged in multi-speciality hospitals,” Mr Rao added.

According to MG Bhat, a gastroenterology surgeon who is an advisor to Nova Medical, about 70% of the surgeries in the US are done through day-care centres some of which are run under a co-ownership business model.

Link: Original Article

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