PB Fintech is the incubator, the catalyst, not the eventual owner of the healthcare project: Yashish Dahiya

On Policybazaar mum or dad investing huge in PB Healthcare
Yashish Dahiya: About 4 crore folks, yearly pay the insurance coverage trade a certain quantity of premium within the hope that once they fall unwell, once they go to hospital, there they’ll face no problem and that’s the reason they purchase that insurance coverage coverage. Nonetheless, once they attain the hospital, a sure battle begins occurring. What’s that battle? If their invoice is bigger, it’s financially useful to the hospital. If the invoice is bigger, it’s financially a loss to the insurance coverage firm and the client is caught within the center. And due to this battle of curiosity, there’s numerous ache as a result of when you could have battle of curiosity, you could have distrust. So, if you’ll profit from one factor and I profit from precisely the other, then we’re more likely to have a battle. And that might imply distrust and that might imply I’d verify each transfer of yours.

So, an insurance coverage firm is validating issues like, was this hospitalisation required? Was this remedy mandatory? Was this an overtreatment? After which they’re additionally checking if the client had declared one thing incorrectly, and so on. That’s okay, that’s the insurance coverage firm’s downside and the hospital’s downside. When will it develop into my downside? Really, it turns into my downside when it’s an insurance coverage firm’s downside, as a result of ultimately insurance coverage corporations need to survive. However allow us to preserve that away. The client has to attend for six to eight hours to get their declare settled and we’re listening to tons and many delays in declare settlement. And the rationale these delays occur is as a result of that investigation is on and why do investigations occur due to the dearth of belief.

So, what are we making an attempt to do? We try to say, okay, insurance coverage trade, what in case you had a set of hospitals who observe a really customary protocol, which you and they comply with? What does that imply? If I get unwell and I wish to report back to a health care provider, the physician decides whether or not I should be within the hospital. If I’ve malaria, if I’ve dengue, do I actually should be in hospital? Do I would like an ICU? Do I should be in a major care hospital? Do I should be in a secondary care hospital or is my sickness so sophisticated that I really should be in a tertiary care hospital or a quaternary care hospital?

If you happen to return 20-30 years, we had one thing known as a GP or a household physician who used to do this for us, who would advise us on our course of medicine, that has largely disappeared. We intend to deliver that again. So, we intend to basically provide you with a household physician who would advise you in all such conditions. However what’s extra, once they advise you that, hear, you have to go to this hospital, there’s additional comfort created. Whenever you go to the hospital, you do not want to face in a queue to get admitted. There isn’t any pre-hospitalization course of, there is no such thing as a post-hospitalization course of. All of these develop into straightforward. Why do they develop into straightforward? As a result of we belief you.

As a result of the physician who first spoke to you is a trusted entity who has no incentive from you going to hospital, who has no profit from you getting a specific remedy. So, you’ll be able to belief them that, look, this physician will not be advising a surgical procedure to me as a result of it advantages them. So, the belief goes up and since the belief goes up, the claims course of turns into simpler. This idea is normally known as an HMO and that’s what we hope occurs in India, as a result of with an HMO occurring, I believe hospitals and insurance coverage corporations and clients get aligned.Now, from a market standpoint, you could have made an funding of about $80 million. Is that the preliminary dedication? May it go up or this as huge because it will get?
Yashish Dahiya: I’ll clarify. You need to separate out PB Well being and PB Fintech. They’re two separate corporations. PB Fintech is an incubator of the thought, however doesn’t intend to be a majority shareholder or the proprietor of the corporate. PB Fintech can have perhaps 30% fairness within the firm for the 800 odd crores. Now after this, PB Well being will run its personal enterprise with no matter Rs 2,000-2,500 crore that it raises. Sooner or later, it could run out of cash. After which PB Well being might say, I need more cash. Now, arranging that cash is the job of the PB Well being board, the PB Well being administration. PB Well being shareholder as a 30% shareholder has no legal responsibility to place in a single rupee extra. Alternatives can change, conditions can change, however as of right this moment, I don’t envisage PB Fintech ever having to speculate anymore as a result of the opposite traders who’re approaching board, whom I cannot title at this stage, are fairly robust and are a lot stronger of their healthcare practices than PB Fintech. Like PB Fintech has no healthcare observe. So PB Fintech is an enabler. It’s a catalyst. When you could have a catalyst, when two components come collectively, they react, they don’t react until the catalyst is there. So, you want the catalyst to do the response. However as soon as the response is over, the catalyst is left there simply as it’s. The catalyst had no different position apart from ensuring the response occurred, that’s the position PB Fintech is taking part in. It’s the incubator, it’s the catalyst. PB Fintech will not be, for my part, as of right this moment, the eventual proprietor of this challenge.

The eventual proprietor of this challenge will most likely be someone with a deep understanding of the healthcare trade and who desires to have a foray within the healthcare trade for the subsequent hundred years. At the very least two of the traders who’re coming alongside are such individuals who have a world view on the healthcare system, have seen this mannequin occur in lots of locations, perceive this mannequin deeply and thus are dedicated to this mannequin in a long-term, far better manner than PB Fintech can be.

As new traders are available, will this Rs 800 crore for a 30% stake develop into the yardstick for them to come back in or the traders will come at a premium after which the sum of half valuation for PB Fintech shareholders due to PB Healthcare modifications?
Yashish Dahiya: No, all people is coming in at precisely the identical valuation. Whether or not it’s me, whether or not it’s Alok, whether or not it’s anyone else, all people is available in at precisely the identical valuation and so do the exterior traders and PB Fintech. Please do respect that everyone is taking part in completely different roles right here. Anyone is taking part in the position of a catalyst. Anyone is taking part in the position of a long-term investor. Anyone is taking part in the strategic position of a long-term motion within the healthcare trade and thus we don’t wish to get into who’s benefiting extra and who’s benefiting much less. Everyone is coming in at precisely the identical worth. Everyone pays the identical variety of rupees for every share and there’s no privilege by way of worth differential to anyone in any way.

Between you and Alok, what can be your private holding on this enterprise?
Yashish Dahiya: On the finish, the spherical is structured in two items. What has gone for approval proper now could be spherical one after which there’s spherical one B which occurs 90 days later and one other investor comes on board in that spherical. After all, topic to it occurring, nothing is ever assured until it’s signed. By the top of that, I’d be about 3% or so, 3 level some %, Alok can be about 1 level some % and sure, that’s that.

And simply to have one other follow-up query on the valuation, Rs 800 crores for 30% stake. Earlier than the enterprise has began, you could have incubated an organization with a valuation of about Rs 2500 crores, simply to place the maths proper.
Yashish Dahiya: You haven’t. I wished to make clear, you could have incubated an organization at a price of zero. I wished to be very clear on this. See that there are two ideas and we’re being fairer than anyone maybe has ever been. There’s a pre-money valuation and a post-money valuation. So, the day the corporate is began, allow us to say it has Rs 2500 odd crore of money, it has precisely a valuation of Rs 2500 crore. So, it’s money valuation, there is no such thing as a distinction in any way and that could be a essential half too. It’s not like we’re saying on day one, the corporate is valued at Rs 2500 crore. The worth of the idea is zero. Neither is the incubator, neither is me or Alok taking any worth for the idea per se and that could be a essential half to see, we’re valuing it at precisely zero.

I need readability on that. Within the valuation of this firm, there is no such thing as a premium for the model or for the thought. It’s pure money of Rs 2500 crore, which might be the money within the guide and that’s the proper manner of it. After which when the long run worth will get created, then it’s a utterly completely different kettle of fish. So, what can be the yardsticks on which traders and shareholders ought to map the progress of PB Well being?
Yashish Dahiya: It’s a personal firm and the yardsticks on which PB Well being would get managed would depend upon the PB Well being traders and the PB Well being administration. Nonetheless, as a result of PB Fintech can be an investor in it, I’m taking the lens of PB Fintech and saying, how ought to PB Fintech have a look at this funding? And what can be the success standards? Primary, clients ought to have an important expertise as a result of why is PB Fintech investing? PB Fintech is investing to allow a change within the healthcare system.

If clients do not need an important expertise, then that factor won’t final, nevertheless worthwhile it’s or nevertheless loss making it’s, it won’t final. I don’t assume this enterprise will die due to lack of money. It’ll die if it doesn’t give nice buyer expertise.

Quantity two, I believe the buyer outcomes ought to be superior to what they’re right this moment. So, the early issues which you could measure might be issues like re-hospitalization charges, re-operating charges, these ought to come down, the particular person shouldn’t be coming again for a similar sickness many times.

Quantity three, the insurance coverage value should come down as a result of if the insurance coverage value doesn’t come down in any respect, that’s quantity three, I’d say if one and two are delivered within the first three-four years, to me as a PB Fintech who’s investing on this enterprise, who desires it to succeed and who desires this transformation to occur, I believe success has been achieved. It might be nice if additionally the insurance coverage value got here down, which I believe it is going to, however that won’t be the endeavour on day one. The endeavour can be to verify the shoppers have an important expertise.

And lastly, the enterprise also needs to make a revenue. I’m assured that with management of that enterprise, a revenue might be made. Nonetheless, that’s not an pressing requirement. It doesn’t need to occur in a short time. However I see these 4 parameters. Primary, buyer expertise. Quantity two, buyer outcomes. Quantity three, insurance coverage prices really coming down. And quantity 4, the enterprise delivering a revenue.