Even Healthcare’s hospital push: Filling India’s secondary care gap

Bengaluru-based startup Even Healthcare, backed by Alpha Wave Ventures and Khosla Ventures, is set to launch two to three hospitals in the city next year. Fresh from a $30 million funding round with investors including Lachy Groom and Founders Fund, the startup aims to fill gaps in secondary care and general surgeries.

Read this | Apollo to Aster, Manipal to Max, hospital chains ready for a big-bang expansion

Already operating five clinics in Bengaluru, Even Healthcare will spend up to $7.5 million to set up these hospitals, which will handle routine surgeries and treatments for ailments like kidney stones and appendicitis, co-founder Matilde Giglio told Mint.

“We will focus on secondary care. Basically any surgery that lasts 2-3 days. This will include general surgeries for kidney stones and appendicitis as well as maternity care. Everything except oncology, neurology, and emergency services,” Giglio said. 

The company also envisions expanding its hospital network to other major cities in the coming years, aiming to create a seamless healthcare journey for patients by integrating diagnosis, treatment, and insurance claims within its network. This setup seeks to reduce the common friction often seen between hospitals and insurers.

Targeting India’s growing healthcare market

Founded in 2020 by Giglio, Mayank Banerjee, and Alessandro Ialongo, Even Healthcare has positioned itself as a comprehensive healthcare provider, bundling insurance, consultations, diagnostics, and nutrition guidance in its plans. 

To date, the company has raised a total of $50 million and reached an annual recurring revenue (ARR) of $28 million, with a user retention rate of over 90%.

This expansion into hospital ownership puts Even Healthcare in competition with larger players like Apollo and Max Healthcare. However, Giglio believes their model will benefit Even’s existing members, who can start their journey at the company’s clinics for consultations and lab tests before transitioning to their own hospitals for surgeries.

“There is a massive opportunity in this segment, as no single secondary care hospital in India has achieved strong recognition. We want to build the best secondary care facilities in Bengaluru first, followed by other major cities, with a focus on superior customer service,” Giglio told Mint.

India’s hospital market is expected to double to $200 billion by 2032, driven by population growth and a booming health insurance market, according to health ministry's estimates.

Private investors are taking note of this growing opportunity, having invested upwards of $5.5 billion in 2023 alone, according to a report by consulting firm Bain.

Read this | Blackstone breaks into Indian healthcare; bites into Kims Health, Care Hospitals

Even’s foray into hospital ownership mirrors the strategy of Policybazaar’s parent company, PB Fintech, which recently committed $100 million to acquire minority stakes in hospitals across the country.

“We believe if claims were a quicker and smoother experience it would increase the number of people buying health insurance. It would be much better if interests were aligned between insurers and hospitals to give customers amazing claims experience and we believe that would grow insurance penetration,” the company had said in a filing to the stock exchanges in September.

However, PB Fintech’s stock took a hit after the announcement, falling more than 10% during the day, underscoring investor concerns around the capital-intensive nature of the hospital business.

"A lot of capital is needed to scale a hospitals business. They will need to buy equipment, hire doctors and medical staff. It's a long game," said Hari Radhakrishnan, regional director of First Policy Insurance Broker.

The convergence between healthcare providers and insurers is evident. In July, Bengaluru-based Narayana Health launched “Aditi,” an insurance product covering essential procedures like laparotomies and caesarean deliveries, indicating a trend of hospitals entering the insurance space.

More here | Is Narayana Health Insurance model a gamechanger for India’s healthcare system?

India’s health insurance market is projected to grow at a compound annual growth rate (CAGR) of 12.8%, from ₹1.3 trillion ($15.1 billion) in 2024 to ₹2 trillion ($23.8 billion) by 2028, according to GlobalData, highlighting the potential for companies bridging the healthcare-insurance divide.

Bridging the trust gap

The relationship between hospitals and insurance providers often presents challenges. Hospitals aim to boost revenue through extended stays and additional tests, while insurers seek to reduce claim costs to preserve margins.

“When hospitals and insurance companies aren’t aligned, conflicts of interest escalate. That’s why it’s advantageous for any insurance provider to have its own hospital network to streamline claims,” Radhakrishnan said.

For Even Healthcare, owning a network of hospitals helps them control the full patient journey—from lab tests and diagnosis to surgeries and insurance claims—according to Radhakrishnan.

"OPD services are rarely covered in insurance covers in India mainly because there’s a massive misalignment of incentives between healthcare facilities and insurance providers,” Giglio explained. “We have changed the paradigm by saying that we will cover everything from A to Z if you buy our membership, but first you need to speak to our doctor and do everything within our system.”

This approach allows Even Healthcare to expand its margins, which Giglio notes will ultimately make their products more affordable for customers, with membership plans driving most of their revenue.

“Having our own set of hospitals and clinics will help us reduce our own costs and make pricing more competitive for our customers,” Giglio added.

With her experience as a venture capitalist in the UK, Giglio recognizes the complexities of building a preventative healthcare model in India but sees vast potential.

Also read | Aster’s Alisha Moopen on why global investors are flocking to India’s healthcare

“There is a market for preventative health in India but people just don’t know enough about it. We know we can be successful because we are providing almost everything in a single plan,” she concluded.