Knowledge@Wharton: Building VPS Healthcare into a Billion-dollar Firm

How Shamsheer Vayalil Built VPS Healthcare into a Billion-dollar Firm

Published Oct 19, 2015

Shamsheer Vayalil is founder and managing director of VPS Healthcare. He has successfully led the group from a single hospital in 2007 to an end-to-end health care provider with a rapidly expanding global footprint. Today, VPS Healthcare has operations in the U.A.E., Oman, Europe and India and is developing new projects in Qatar and Saudi Arabia. With more than 650 physicians and 7,500 employees, the company serves some 2 million patients a year.

A doctor by qualification, Shamsheer (as he prefers to be called) acquired an MD in radiology from Shri Ramachandra Medical College following his MBBS from Kasturba Medical College, India. He then moved to the U.A.E.

One of his accomplishments is Burjeel, Abu Dhabi’s largest private tertiary care hospital. In this interview with Wharton management professor Michael Useem, who oversees the school’s Center for Leadership and Change Management, and Knowledge@Wharton, Shamsheer discusses how he went from being a radiologist to a health care entrepreneur. “It has been a tremendous journey,” he says.

Below are edited excerpts from the interview.

Michael Useem: A few years ago, you were a practicing radiologist. You practiced medicine. And now you deliver medicine to a lot of people. The last time I checked, some 2 million patients come into one of your facilities every year. What did it take to make that transition?

Shamsheer: I’m trained as a radiologist. I spent almost 10 years of my life in medical training and another two years for my Master’s degree. I realized that as a radiologist, my life would be more or less contained to the basements of hospitals, because all the radiology departments are in the basement. You don’t see the sunlight. I decided that my life should be used for the larger good of the public. Being in a business family, you always have the urge to do something by yourself.

I worked for a year in the government hospital in Abu Dhabi. Then I resigned from the job and didn’t know what to do. At that time, I didn’t have any formal training in business. But I knew I had a strong desire to do something, to build a health care system which could bring a change for the patients. With that dream I started, and here I am with a good number of hospitals, good doctors and a good team. It has been a tremendous journey.

Useem: Many people have the dream of becoming an entrepreneur. You launched your first hospital in 2007. What did it take to finally make that decision? Once you had made it, what were some of the steps you took to learn the business skills you needed to run an enterprise like a hospital?

Shamsheer: You learn something new every day. As someone who didn’t know how to run a business and had no previous experience of running hospitals, it was a completely new challenge. And I was enjoying that journey — to be there every day, talking to the mechanics, talking to the contracting people, talking to them about construction, learning how the electromechanics work inside an operating room, and how the waste water should be ejected out of the hospitals.

So, everything was different. Everything was learning. And I was very keen to learn. I would be there early in the morning, spend 18-20 hours without any problem, fully charged. I didn’t get sleep because of the excitement. This is still the case, sometimes when you have interesting projects. The ability to learn was something that helped me a lot. I was a good listener. I would listen to people. I would accept that I didn’t have any experience. So I hired the best people on the job.

“I would accept that I didn’t have any experience. So I hired the best people on the job.”

Useem: It’s a very interesting point — to become a leader of a hospital, you’re chief executive of the system, which includes medical centers, pharmaceutical deliveries. It’s not just hospitals on three different continents. You’ve had to become a general manager. You’ve had to do everything. You had to know everything.

Shamsheer: I’d say I’m the owner and the cleaner.

Useem: That is very true.

Shamsheer: My focus is, I don’t get involved in operations. My important task every day is to manage a team of 15-20 people across different areas that we operate in. They give feedback after talking to the patients. I get input from the patients. I take it very seriously. Then I work backwards to the systems.

Knowledge@Wharton: You’ve built a fast-growing business. I believe you are now close to a billion dollars worth of revenues. What was your strategy in building a business so rapidly in the U.A.E.? What were some of the steps you took?

Shamsheer: For me, it was all about building capacity. I wanted to go where there were no facilities available. I didn’t want to build a hospital and expect everyone to come to that particular building. I would rather look at areas that were devoid of health care and go build capacity, improve the capacity efficiency. That gives you the ability to negotiate with your vendors. It brings down your operating expenses. You have service line optimizations.

If you want to maintain the best talent, you need to have certain volume. That comes with capacity. I was not focused on revenues. I knew if I focused on quality and getting good doctors, it would bring me the revenue. So we went in for accreditations. We got U.S. accreditations to start with. At that time it was not really required by any legal norms. But we went ahead and got these things and it taught us how to work in a more systematic way. Even though we have a lot of anarchy, which comes with growth, we have teams who are focused on certain activities, and they are not concerned about other things in the group.

We have some people on the ground, firefighting things every day. But [we have] some people like me who are on top, who go around building new centers. I’m more into building capacity. I’m more into projects. You could see me at any point of time in any of those projects, with sleeves rolled up. I still love to do it. I think speed is of the essence. We take positions very fast.

Useem: We appreciate your courage in getting everything going. We also appreciate your courage in moving out of Abu Dhabi. You’re still there, of course. But in addition, you have operations now in Oman. That’s not too far away. London: that’s pretty far away. India, culturally, the is quite a gap there. And you’re here now in the U.S. to think about partnering with a couple of hospitals as well. Looking back on your move out of your home territory, what is one of the more difficult cultural chasms you had to cross to make things work?

Shamsheer: It is always the comfort zone that you leave when you go into a new territory, or a new market. But you adapt very fast. You know the local cultural sensitivities. You know what the people demand. Oman or London, you have to give them what they want to see and tell them what they want to hear from you. So once we can adapt to the local requirements of the market, regardless of the market, and keep the patient’s need at the center, it works. It is so good, over time, to grow fast. Because technology has developed, you can reach any part of the world. One day, I have some meetings in London. I fly back to Abu Dhabi the same night. The next day, I have something else. Just use the time and take decisions.

Knowledge@Wharton: If you were to look back on your journey — and I presume that over the past seven or eight years it has barely begun — what have been some of the most testing challenges that you have faced? How did you overcome those challenges, and what did you learn from them?

Shamsheer: We started at a time when the insurance law was introduced in the U.A.E. At the same time, there was the world financial crisis, so there were a lot of mixed responses to our starting the hospital. But I was confident that whatever the crisis, health care was going to be the last sector affected. In fact, we saw an increase in the number of patients visiting the hospitals during that period, because a crisis leads to headaches and that leads to psychiatric consultations. Jokes apart, testing times give us the opportunity to be what the market needs. But you need to be realistic. You need to set goals that are achievable, and then go all out.

Useem: One of the great aggravations that many patients complain about is wait time.

Shamsheer: Yes.

Useem: You were talking about trying to get that down. In your own experience, what are the management tactics to cut wait time? And just to go back to another phrase, to make the hospital that much more “patient-centered”?

“I was not focused on revenues. I knew if I focused on quality and getting good doctors, it would bring me the revenue.”

Shamsheer: The concept was to make a network of clinics going to communities, because we don’t want patients to come to the hospitals when they really don’t have to come in. It’s an unnecessary cost. It’s a lot of headache, when people should not be in the hospitals. So we have started opening clinics across communities, where we educate patients that if it’s something they need on an urgent basis, that is the place to be. Or if they are terribly sick, then come to the hospital. It’s a difficult situation. Everyone wants to see the doctor when they are sick, and they want to be the first to see the doctor. So again, it’s improving their accessibility point of view.

Useem: It really is. Hospitals are there to bring patients in and render services. But from what you said, one of your tactics here, or one of your strategies, really, is to keep patients out of the hospital.

Shamsheer: Yes.

Useem: Clinics, wellness programs, better diet, exercise and all of the above. I think, in that sense, you’re delivering health services fully. It’s not just what happens when somebody comes in and needs an x-ray. The best thing is, they don’t come in for an x-ray at all.

Shamsheer: That’s right. We want the hospital to do cardiac surgeries, neurosurgery, knee replacements and let the patients who need wellness programs go inside the malls, do their shopping, get into these clinics and get themselves checked on a continuous basis. We have launched programs for disease management of people suffering from diabetes so they don’t miss their medicines. That leads to complications and they end up spending a lot of money and time on recovering. People like these kinds of initiatives. Initially, they are kind of hesitant to go to outreach programs. But once they find value, [they do].

Knowledge@Wharton: What are some of the most surprising, innovative things that you have tried out? I heard something about a dental clinic that was done quite innovatively. Could you tell us that story?

Shamsheer: There is a zoo on the outskirts of Abu Dhabi where a lot of children go. I take my children there as well. [During one visit] I met one of my clinic managers who was just passing by, and we had a good discussion. He came up with the interesting idea of, “Why don’t we start a dental clinic inside the zoo for the children who come? So that they walk in, get a routine check-up done. We identify the cavities, and let them know that there’s a cavity developing.” At that time, I thought it was a crazy idea. But we opened the clinic. Now we have requests from parents to have some facilities even for themselves when they come with the children. I think there are innovative ideas to reach out to the masses, especially inside the malls, inside the hypermarkets. Health care will change dramatically in the years to come.

Useem: If you think about the years to come, digital delivery of appraisals, of diagnostics — I think it’s out there. These have been slow to develop. But if we were to sit down in five years, my guess is digital medicine is going to be a big piece of what you’re doing.

Shamsheer: Digital is already there. We have diagnostic imaging which is connected right across the group, and can be reported from any facility or even from home. That, again, reduces the need for a lot of radiologists on the ground. That has really helped in faster decision-making. So it’s all about taking the right decision at the right time using the right technology. That saves lives. You have something called the “golden hour,” where you need to be connected. You can’t anticipate when the golden hour is going to happen. It could be on a Sunday, it could be on a holiday. And you [may not] have people in the facility. If you have a digital platform where people can log in, see the films, report the clinical needs, that could save a lot of hassle for the patients.

Knowledge@Wharton: Some time ago, India’s Prime Minister Narendra Modi was in the U.S. He was in Silicon Valley, talking to CEOs there about an initiative called Digital India. The plan is to connect more than 500,000 Indian villages through a fiber network. What kind of opportunities would this give health care providers, especially people at the bottom of the pyramid, who traditionally don’t have access to quality health care?

Shamsheer: I think this could lead to a lot of two-way communications when it comes to health care delivery. To reach out to these areas is very difficult. There are logistical problems. It’s next to impossible to take the best of doctors to those rural areas. If you have the connectivity, then you have things like telemedicine, which could be used. We could have a lot of information passed down to the public in their own languages.

“Once we can adapt to the local requirements of the market and keep the patient’s need at the center, it works.”

Useem: What advice would you give to persons like yourself who started off as professionals and then got bit by the entrepreneurship bug?

Shamsheer: It’s all about listening to your heart, your gut feeling, and what you really would like to do. I think that’s what is important. I remember when I was doing my training, I used to think of a day when I could have a hospital and treat a lot of people. That was always inside my heart. There was a time when I had to break the mold and follow my heart. There are no regrets. There was a point of no return: I can’t go back and practice. I would advise a lot of youngsters to come forward, to be in health care especially, because the world needs a lot more health care.

Useem: Give it a try.

Shamsheer: Yes! Why not?

Knowledge@Wharton: One of the key attributes of any good entrepreneur — and I think you referred to it earlier — is the ability to pick the right team. I was listening to Mark Zuckerberg from Facebook talking about how he selects people who are his direct reports. He said, “What I look for is if I’m willing to work for that person, then I hire that person to work for me.” What do you look for in your team?

Shamsheer: For me, it’s about people with the right attitude. The people who don’t feel that they have done it all, have seen it all, those who still have fire in the belly, something to prove. And you should treat people with a lot of respect. For us, we always have an issue with job descriptions. I remember the first few people that I hired and they asked me for a job description. And I said, “You tell me what you can do for us.” That is an approach I’ve taken. I still follow that. I used to call a lot of the top directors when they joined. I used to call them personally under a disguised name so that I could get a firsthand experience of how they behave with people at a lower level. How Shamsheer Vayalil Built VPS into a $1 Billion Global Firm

Useem: Looking back over the eight years since you founded the hospital itself, could you pick out an incident or a decision or a time that seemed exceptionally challenging? Just walk us through what happened, and what decision you reached.

Shamsheer: We keep taking tough decisions on a daily basis. [Once] we were asked to build a tertiary hospital and were given a building and 10-15 days to decide whether we needed the building or not. It was a commercial building at that time. We brought in some consultants from the U.S. They came and said it’s not going to be possible. That was a very difficult moment.

Then, one of the local architects on the site gave me a solution. I had to trust him completely. This was a $200 million project. Looking back, that’s a feather in our cap. And it has done extremely well. The hospital, which looks like a hotel, has a different environment altogether. We have gourmet kitchens inside. We have music playing all the time. People come in to have a cup of coffee.

Useem: Just a quick observation on what you’ve said, with a question to it. You went out, you made a decision. Should we open a clinic at a zoo? I don’t know. But let’s try it and see what happens.

Shamsheer: You call it paid experience, you know? Some of it works.

Useem: Paid experience is a good way to put it.

Shamsheer: Some failed, we had closures. But we learn from every mistake. We try hard not to repeat the mistakes. But eventually, you don’t keep making the same mistakes. But again, it’s the 80/20 rule — 20% of the things that click compensate for everything else.

Knowledge@Wharton: Where do you see yourself and the enterprise going over the next seven or eight years? You’ve already come a long way since you started. What’s next?

Shamsheer: We want to go global. We want to be in a lot more markets than we are right now. We want to provide a lot more advanced care for the less privileged across the world. We have manufacturing activities. We are getting very strong in these as well. What we feel is that we have to build a health care ecosystem where we have an integrated delivery approach, where we control the various aspects of delivery — right from patient care, the logistics, the supply chain, the pharmaceuticals, the back-end, the IT, the home care. We feel that that’s where we need to go. It’s a long journey.


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