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00:00A company that has really been in focus is PB Fintech, first for a foray into the healthcare
00:08space and then for a clarification that there is nothing planned on it right now.
00:12So what really is the picture emerging?
00:14Yashish Dahiya, Chairman and CEO of PB Fintech joins us now on the show.
00:17Mr. Dahiya, very good morning and great to have you on NDTV Profit.
00:21Thank you so much for taking out the time and speaking with us.
00:26Let me start by asking that conceptually, the idea seems to make sense that if you are
00:31selling health insurance, why not complete the chain and make it easier for people to
00:36access the end product as well?
00:38But how exactly do you aim to fulfill that need?
00:42Yeah, I think let's call this a company XYZ and PB Fintech is, you know, at some point
00:51going to go to its board and request for permission to take between 20 to 35 percent
00:56stake in this company XYZ.
00:59But it's important to understand what is XYZ doing and what is PB Fintech's interest in
01:04XYZ, right?
01:06So there are about 4 crore people in India who pay about 10,000 rupees every year on
01:13average to buy health insurance.
01:16And at the point of claim, they have a difficult time sometimes.
01:20And the reason for this difficulty is a lack of conflict.
01:24It's a conflict of interest between hospitals and insurers at that point.
01:27For one, it's a revenue.
01:28For another, it's a cost.
01:30And also, our pops have been increasing very fast.
01:33So the health care cost is really rising very fast.
01:36And the middle class India is struggling to keep up with it.
01:39And the insurance industry is also struggling to keep up with it.
01:42So the idea is to create an HMO.
01:45XYZ wants to create an HMO for the insurance industry and wants to pilot it in NCR by
01:51acquiring six to eight hospitals and making sure and demonstrating that cost of claims
02:00can come down while giving good quality customer experience.
02:04As far as the customer is concerned, the idea is to make sure that something like bill and
02:10claim goes out of the customer's vocabulary.
02:13Because today, the customer has a lot of anxiety about what will the bill amount be?
02:18How much will be approved?
02:19How much will not be approved?
02:21How much is going to be settled by the claim?
02:23And then how much will I have to pay out of pocket?
02:25The idea is to make that experience seamless while still reducing cost for the customer
02:31and also investing a lot more in care and wellness so that customers largely stay out
02:37of hospitals.
02:38See, think of a very simple thing.
02:40If dengue breaks out in Delhi, that's a cost for the insurance industry.
02:44There's a revenue for the hospitals.
02:46So to some extent, we're trying to align both of them as in XYZ is trying to align both
02:51of them.
02:52Now, PB FinTech wants to take a minority share in this for two reasons.
02:56One, XYZ benefits a lot because of the existence of PB FinTech, because PB FinTech can explain
03:02this to hundreds of thousands of customers every day that, look, this is a great idea.
03:07You should try and take a product like this because it's beneficial for you and thus popularize
03:12the concept.
03:13So to an extent, XYZ benefits because of that, because it gets scaled because of that.
03:19And I think for PB FinTech, it's a huge advantage.
03:22Can I just come in?
03:23Can I just come in with one specific point on XYZ?
03:26And I must say, as someone who has been on that other side of claims and bills, and I'm
03:30sure a lot of our viewers connect with this, it's great if there is a seamless experience.
03:34I'm just trying to understand that for XYZ and the hospitals that they own or acquire,
03:40it doesn't make sense to reduce hospital bills.
03:43No, it does.
03:44And I'll explain why.
03:45Yeah.
03:46So how do you run a hospital business with lesser bills?
03:50HMO is not a new concept.
03:52HMOs exist all over the world.
03:54These are dedicated facilities.
03:56So this is a dedicated facility for the insurance industry.
04:00And thus all their processes, all their procedures, everything aligns and has got a huge amount
04:06of trust from the insurance industry.
04:07I'll give you a very simple example.
04:09Take two cities.
04:11Both have 10 million people.
04:12In one city, all the customers pay upfront and say, healthcare costs you have to take
04:17care of.
04:18The other city, everybody says, no, you don't take care of anything.
04:22I will pay when I fall sick.
04:25Now just think of a very simple thing.
04:28In city A, the hospital actually benefits if nobody falls sick because they've already
04:32been paid.
04:35In city B, the hospital benefits when people fall sick.
04:37Financially, I'm not trying to say anything more than that, but financially there's a
04:41benefit because that's when hospitalization happens.
04:44So one actually benefits from higher utilization.
04:46One actually benefits from lower utilization.
04:49You're turning the entire, it's like I have already been paid.
04:53Now every service I am providing is from my own pocket.
04:57So actually my interest is in the service.
05:00And now you just think of it mentally between city A and city B, which one will be able
05:07to serve a larger population with a smaller number of rooms?
05:10My bet is city A will be able to service it because city A has a defined interest in making
05:16sure people do not fall sick, do not end up in hospital.
05:18There is home care, there is strong OPD, there is strong wellness.
05:23Whereas in city B, the interest is I will make money when people come to me.
05:28So at least from a financial interest perspective, city A will handle more customers per room
05:36than city B.
05:37And I think if one appreciates that, I think that is the real answer here.
05:42Got it.
05:43Yashish, good morning.
05:45If this goes through, wishing you all the best for that.
05:48My question is from a PB Fintech shareholders perspective.
05:52How much does the shareholder see PB Fintech investing in this?
05:56Because you have about 5000 crores of cash, if I'm not wrong, in or about.
06:00And would the ROIs, simply put, I'm just using ROI as a metric.
06:04Would the ROIs on that business be commensurate or better than what PB Fintech enjoys currently?
06:12No, no, absolutely.
06:13So see, first of all, it's an investment.
06:15It is not PB Fintech owning hospitals.
06:18The investment will be between zero to 100 million dollars.
06:21It's a one-time investment.
06:23There is no commitment to keep on investing into the future.
06:27This company XYZ will, in a good case scenario, prove this model works.
06:32And then either do an IPO or go into a REIT infrastructure kind of arrangement.
06:37But it is not PB Fintech's job to make sure that the next phase of its growth
06:42is funded by PB Fintech, right?
06:43So I think from PB Fintech shareholder's perspective, the total potential loss is the
06:52investment.
06:53Also, a bulk of this investment is going to real estate.
06:57I don't think real estate is going to go down to zero.
07:00Even if the venture fails, you will get something back out of it.
07:03So I'm just trying to really talk small here.
07:06But at some level, there's a lot of defensibility in XYZ's cost infrastructure is largely real
07:12estate cost infrastructure.
07:14Finally, the reason we believe in this is because it has a huge benefit to PB Fintech
07:22if this works, because the insurance industry grows.
07:24And so I think you cannot just look at the downside.
07:27You also look at the positive side.
07:29That maybe PB Fintech's business, if it was going to be X over 10 years, would be 3X.
07:34And the insurance industry will be Y over 10 years can be 3Y.
07:38And that benefit is much more than, let's say, $0 to $100 million one-time investment.
07:46So it's obviously very beneficial.
07:48And this venture also relies on PB Fintech.
07:51So this venture relies on PB Fintech for demand generation to educate customers.
07:57This is a great model.
07:59OK.
07:59So what do you reckon, therefore, Yashish?
08:02The other point is, I mean, what the venture does in a good scenario, and we really hope
08:06it succeeds, could be great from an investment perspective.
08:10I'm guessing healthcare would see multiple such options available.
08:14Would you want to venture into stuff like this, which also has business benefits, but
08:18also investment benefits?
08:19Just trying to understand the thought process here.
08:21See, we don't invest very easily.
08:23We are not a very acquisitive company or a very investment-oriented company.
08:27But this just makes so much sense that we cannot not invest in it.
08:32And the advantage to both sides is, and the synergies are so high that it would be very
08:39foolish for us to sit out when something like this happens.
08:43When XYZ is happening, for PB Fintech to say, I will have no role whatsoever in it, I think
08:49would not be smart.
08:51Timeline you're seeing, Yashish, to execute this acquisition of XYZ?
08:56I would say quarters, not years, but unlikely to be weeks or months.
09:04So I think that kind of gives you a broad indication of timelines.
09:09So more than two, less than four?
09:12I don't know.
09:13I can't be that.
09:14It depends on XYZ, right?
09:15XYZ has to put together its consortia of investors.
09:19Yeah, yeah.
09:20And they have that task also.
09:22That task also.
09:23And they may be, they're talking to healthcare companies.
09:26They're probably talking to insurance companies.
09:27They're probably talking to development finance institutions.
09:30PB Fintech would be, management would love to take this to the board for approval.
09:37But it is still subject to board approval.
09:39But PB Fintech, in a way, would be ready to do its part.
09:42But the remaining 70% to 80% investment also has to be organized.
09:47And that is a job that XYZ is concluding.
09:50XYZ would service only PB Fintech or other insurers as well?
09:55It's for the insurance industry.
09:56It is not in any way, shape or form.
09:59PB Fintech is a minority investor, as might some insurance companies be.
10:03Okay, understood.
10:04Thank you so much, Yashish.
10:05I wish we could speak more, but markets are going to open in a couple of minutes.
10:08Best of luck.
10:09Because if it's something that changes the experience of Indians grappling with healthcare
10:13and health insurance, that really will be something to watch out for.
10:16Yashish Dahiya there of PB Fintech on their 4A.