For example, he needed time and upfront investment to hire the right dentists. 1,000 dentists were carefully picked from a pool of 40,000 applications. 800 of these dentists are currently on Star’s payrolls. Star also developed their systems to align their incentives with meeting clinical protocols rather than revenue generation.
Is it possible to reduce costs?
“So, you know you’re getting a salary, and you’re not running around places to find new patients. It takes longer and it costs more, even though I could reduce my costs significantly by just putting everybody on a consulting position,” says Singh.
Over the first six years, Star established protocols for recruitment that resulted in 70% of their hires being postgraduates or specialists with experience. It also established a distribution company—Xmedco Commerce—that distributes the equipment and material used in Star’s clinics as well as a dental lab to lower the costs. These two businesses, along with Star are part of a parent company registered in Mauritius—Global Dental. Star also established training protocols and an auditing system to determine whether a dentist meets treatment and diagnostic standards.
The aim was to build a brand that patients see as trustworthy. And trust takes time. A senior executive at Star responsible for growing the business explains that the biggest challenge over the first six years was to train dentists to try and restore the tooth instead of immediately resorting to root canal treatment and extraction. This, despite the latter procedures generating more revenue. This is what convinces patients that these guys are not after the money, he adds. As a result, he says, about 25% of patients coming to Star’s clinics are there for repeat visits.
Expanding the efforts
It was only by late 2016, once investors were confident about Star’s business and clinical model, that the chain ramped up its expansion efforts. It acquired Helion Ventures-funded Today’s Healthcare—22 clinics under the brand name Denty’s in Hyderabad—for an undisclosed amount. This was a win-win. Star quickly gained a sizeable presence in South India, while Helion got an exit.
Total took a different path. It also raised money—around Rs 105 crores ($14.8 million). Some of its more prominent investors are private equity funds such as Asian Healthcare Fund and LGT Venture Philanthropy. Vikram Vora, Total’s CEO, claims that investors are in no hurry to exit. However, a former dentist with Total indicated that this needs to be taken with a pinch of salt. There is a difference between saying something and meaning it, he says.
Total also followed a different business model, aligning its business model with its brand name—Sabka Dentist, which means everyone’s dentist. The focus was on more affordable dental care. As such, while the price of a root canal varies from Rs 2,500-3,000 ($35-40) for Total, this can range between Rs 2,500-6,000 ($35-85) for Star. Singh asserts that quality consciousness does mean higher prices sometimes, but insists there are always affordable alternatives.
Vora’s vision for Total is a chain promoting a culture of preventive and affordable care that is also profitable. Preventive care in India, however, is a hard nut to crack. This is a notion that Vora also agrees with. Ken has reported in the past on how preventive care has not grown as expected in India. Despite this, Vora sees an opportunity in this space.
A dental chain with 600 centers
According to Vora, over 40% of the revenue of UK-based MyDentist—a dental chain with 600 centers—comes from people visiting regularly for cleaning and polishing (The Ken could not independently verify this). Since its inception, preventive care has grown to contribute 15% of Total’s overall revenue. “It is steadily growing. That is what gives us comfort. A hope that it can get to 40-45%. It is a long-term goal. If I say it would happen till 2025, I would be lying,” Vora says candidly.
However, conversations with some of Total’s former dentists reveal some cracks in the facade. One of Total’s ex-employees indicated that Total’s approach was inherently flawed. While the chain was looking to drive large volumes of transactions from the lower-middle class, most of these patients didn’t convert to repeat patients. In fact, while most of them were seeing a dentist for the first time, they were usually there only for immediate relief from toothache.