Exclusive: Fortis has not been handed to Manipal-TPG on a platter, says Bhavdeep Singh, CEO, Fortis Healthcare

Shareholders of Fortis Healthcare are protesting against a deal they feel undervalues their company. Last week, the Fortis Healthcare board approved sale of its hospitals business, along with a 20 per cent stake in diagnostics chain SRL to the Manipal Hospitals-TPG Capital combine for Rs 3900 crore. Since then, the Fortis stock has fallen close to 12 per cent.

Bhavdeep Singh, 55, Chief Executive Officer of Fortis Healthcare denies that Fortis has been offered to Manipal-TPG on a platter. Singh, a US citizen and veteran retail professional led the negotiations with the Manipal-TPG consortium for last several months before concluding India's largest ever healthcare deal.

In an interview to Moneycontrol, Singh says he is in talks with major shareholders to convince them about the deal. He says the deal needs to be looked in broader context and the situation that the company is going through in last few months.

Singh looked weary with busy back to back meetings. The window of his cabin provides sweeping view of Fortis Memorial Research Institute (FMRI), Gurgaon, the company's flagship multi-super speciality hospital - interrupted only by the metro trains that ply on Delhi metro's Yellow Line.

Singh spoke on the deal, how the morale of the staff was kept intact during the challenging phase, and allegations against the company for overcharging.

Edited excerpts of the interview:

We have talked to multiple people. We did not have 3-4 proposals (or signed binding agreements). This is the first time we had an actual agreement to work on.

From a company perspective, from a business perspective, from a management perspective and from a employee perspective, we have to look at multiple stakeholders. I understand there are concerns and lots of noise obviously. The priorities are based on the way we look at things, based on journey we have taken in last 18 months. Not only do we think this is a good step forward, I think it's a right step forward. We have a very strong healthcare systems in Fortis Healthcare, we have a strong healthcare systems with Manipal. We are bringing them together at a time when the industry has void and gap when it comes to defined strong leadership position. Anytime you have a deal or transaction you can ask 20 questions about it. When you have netted out (the pros and cons), this is good way forward.

In any complex transaction, there are multiple things to discuss. This deal was no different. I don't think I am at a liberty to talk about specifics.  We have ended on the net positive side.

Of course, it played a role. We are going through them. We are cooperating with the authorities and working to get to a place where we can say okay we have investigated, we have found out. It's just fine.

I think from a valuation perspective everything that is happening in an organisation or in a business - good, bad or otherwise, the reality is in last little bit of time there have been some challenges in Fortis way. Anytime you discuss the value of something you look at the journey, you look at where you have been, you look at where you are and you look at where you are going. And again when you put it all of it together - I don't necessarily agree that as you said - the notion of Fortis being put on platter. On contrary I think there is very strong case for why this could be great. This was one proposal and its good. I do believe coming together will have formidable presence in Indian healthcare space. This is a marriage made (in heaven). From a company perspective - we want to get this done.

Slowly, slowly and with much discussion and deliberation. These aren't one sided conversations because we share what we did and why we did. And the conviction with which we have done it.

Then we listen as well. But I think when you look at the numbers, when you look at the data points, and when you look at the journey that Manipal has taken, the journey we have taken, I think to me the most important thing about this is how complimentary they are. Very interesting we have been having this discussion for quite a bit of time. I guess probably this year or year and half back. I remember somebody well before any of these things actually started - the whole notion what if we merge with this organisation that organisation. At random point of time - what is if there is something with Manipal. My first thought was - my god that would be amazing.

I also thought about other organisations that I won't name. It wasn't just one-off. It was one of multiple things. I had even thought about merging with John Hopkins (smiles). That probably was not going to happen. So on the surface, when you look out and when you look at various components, there is a lot of merit in it. There are very few things in life that everybody agrees on. The discussion and conversations we are having, we are sharing what we are thinking and why. We are having a dialogue with shareholders.

There is a human element to the story. In our organisation we have 7000 nurses and 4000 doctors. The organisation has gone through a lot in last 6-7 months.

Amidst all these external things that were happening, I am absolutely astonished how people have stuck together. Our attrition rate over last six - eight months has actually come down. It should have gone way up. The industry attrition is somewhere in the mid-twenties to low thirties. We haven't had one member of senior management leave, on contrary the level of commitment is very strong.

We had a call with our senior doctors and also have a committee called Fortis Medical Council where 16 of our top doctors said that we are with you. We know these are tough times but we are sticking together.

Transition, merger, demerger, new promoter - this organisation is going to fly (banging the table). How many hospitals in India  publish clinical outcomes. We are the only chain that has detailed 180-point patient facing activities that we track in our hospitals.

We have a programme called  Swachh Fortis in which the staff of every hospital, including doctors, take out brooms to clean the surroundings of the hospital.

Look our healthcare industry today, if I was kind I would say it is challenged. Actually there are bigger issues than that. I spend most of my life in US - in 1993 when Bill Clinton became the President - he appointed his wife Hillary (Clinton) as head of healthcare taskforce. (recommended universal health insurance). It was 20 years later that Obama Care has come in. While the initiative of Prime Minister Narendra Modi is fantastic thing. But it will take time. In next two months Dengue will start, what will happen. Who is in charge of fixing the Dengue. No body has, unfortuntaley Dengue will happen this year, people will get sick this year, hospitalised again and people will die. I want to know who is in charge. The merger Fortis and Manipal can make difference to problems like these.

The allegations you are referring to is the baby Adya case (7-year old Adya died while undergoing treatment with billing coming to Rs 17 lakh. Fortis is facing allegations of over-charging) The count was made that we used hundreds of syringes and gloves and actually I was confirmed the number of syringes and gloves were exactly as per the protocol. If we wouldn't have used it, then headline would be 'Fortis not using enough of gloves'. The information is that the headlines were saying - this was a case of Dengue. But it wasn't, it was Dengue Shock Syndrome (DSS affects children under 10, causing abdominal pain, hemorrhage (bleeding) and circulatory collapse).

We have to share more information and we have to continue to educate people. We have a surgical robot. When doctor performs surgery versus doing it with a robot - the length of stay is shorter, blood loss is shorter, the recovery time is quicker so you have reasons for why things cost more. Healthcare is so basic but even more basic than healthcare is roti, kapada, makaan (food, clothing and housing).  No one questions that.

We publish clincal outcomes, have to document data, verify it and follow up it with patients. We have the best neurosurgery programme in Asia and the bone-marrow transplant programme.  The robot that I am referring to cost the same in India as in US. When they do knee surgery they charge USD 25,000-30,000 dollars and we charge USD 4000-5000. You have to consider all these factors.