Interview
Hospitals for the poor

In an exclusive interview with Middle East Health, Sobhi Batterjee, the president of the Saudi German Hospitals Group, tells Callan Emery about an innovative business plan he has initiated to provide healthcare services to the poor.

Sobhi Batterjee is a man of grand ideas. This is immediately striking when you talk to him. He philosophises about providing healthcare on a grand scale – building dozens of hospitals, creating thousands of jobs and providing healthcare to hundreds of thousands of people. They are bold thoughts yet they are rooted in a deep and humble respect for religion and the importance of helping to save lives. But perhaps the most striking thing about this man is his uncanny ability to turn these seemingly improbable ideas to reality.

I first interviewed Engineer Batterjee, the president and CEO of the Saudi German Hospitals Group (SGH Group), in 2004 in Jeddah when he told me about his incredible plan to build 30 first-class hospitals across the Arab world by 2015.

We met at his first hospital in Jeddah where he showed me blueprints and artists’ drawings of his next two hospitals, planned for Riyadh and Madina in the Kingdom of Saudi Arabia (KSA). Those hospitals – as well as one in Aseer, KSA, and one in Sana’a, Yemen – are now complete and operational. Construction of hospitals in Dubai and Cairo are near completion. And there are others in various stages of planning in North Africa and the Middle East.

So it was no surprise when I sat down with him in Dubai recently and he told me: “I have a revolutionary concept which I have devised. I intend to do business with the poor.”

He explained that this concept of his had been in the planning phase for some time and that he thought that the time was now right to make it public.

In addition to the 30 hospitals- by-2015 plan, which is now well under way, Batterjee says the SGH Group plans to build a further 10 not-for-profit hospitals to provide healthcare for the poor. The Group will do this jointly with GE Healthcare and a number of other organisations and charities.

“To date we have plans to build these hospitals in Gaza, Yemen, Pakistan, Bangladesh and Kashmir, as well as in Africa – although we have not decided which country at this point,” he said. “They will all be 50-bed general hospitals for primary care, minor surgery, dentistry and so on.

SHG Group will design, construct and manage these hospitals,” he explained. GE Healthcare will play an important role regarding the provision of equipment – details of which will be announced in January.

Not for free

“However, these hospitals will are not offer free healthcare,” he emphasised.

“Let me explain my concept of doing business with the poor.

“Do you know why the poor are poor?” he asked rhetorically, launching into his explanation, “Because no one wants to do business with them.

“So how do we systematically address the needs of the poor? Throughout history the poor have been given donations, which are needed, but this has not solved the problem. Still, the rich get richer and the poor poorer.

“If no one does business with Microsoft and no one want to buy their products – they will be poor. That’s why the poor are poor – because no one wants to do business with them,” Batterjee pointed out.

“I came up with this concept of doing business with the poor,” he said, adding that the concept is built on the following basis.

“Every business has knowledge. Every individual has knowledge. Every organisation has knowledge.

“Why don’t these businesses, individuals and organisations use their knowledge to do something for the poor?” Batterjee questioned.

He explained that, as it stands, organisations in the private sector target clients in order to make a profit.

“Let us call this the ‘forprofit’ division within the organisation.

“What I am saying to these businesses is: Why don’t you develop another division in your organisation, regardless of whether you are involved in healthcare or any other industry, which will leverage the organisation’s knowledge base to create new business with another market segment, namely the poor.”

He pointed out that this sector does not need capital in order for you to do business with it. “You need to look at the poor as a customer, actually, an unsatisfied customer,” Batterjee emphasised.

“You go to your research department, your sales department, your workshops in your specific industry and tell them: ‘look, this is an unsatisfied customer, wrack your brains to develop a product that we can sell to them’.

“Furthermore, the poor should be able to afford this product. It will be sold not for profit, but purely at cost. And in addition you must give the poor a chance to pay only when they can.

He explained that these products should be stripped down to their core functional parts, saying that there is no need for the aesthetic, non-functional parts which add considerably to the cost.

“Now this sounds revolutionary, doesn’t it?” Batterjee quipped.

Inspiration

“Actually, one of the people who inspired me was Dr Mohammed Younis, [the pioneer of micro loans for the poor and the founder of the very successful Grameen Bank in Bangladesh].

Batterjee said he had also been inspired by C K Prahalad professor of Corporate Strategies at the Ross School of Business University of Michigan. According to Wikipedia Coimbatore Krishnarao Prahalad is a globally recognised business consultant whose client list includes AT&T, Cargill, Citicorp, Oracle and Unilever. His current work addresses a complex emerging market, the world’s poor and innovative business models that will help end world poverty.

“I have met both these men in Dubai and, inspired by their ideas, I have blended their theories to create this concept I have of doing healthcare services business with the poor,” he explained.

As an aside, Batterjee noted his admiration of these educational events that take place regularly in Dubai, “where we as local leaders are exposed to the best practices and ideas from around the world.

“Dubai has indeed become an educational city. No longer is it just a tourist destination. I now consider it the capital of the region in all spheres – education finance, investment, media and so on.”

Referring to Younis’s Grameen Bank, Batterjee said: “Everybody, thought: ‘Are you kidding, giving money to the poor!’

“And this is the key. If you are afraid that the poor will take your product [in Younis’s case, cash] and not pay you back, you are wrong!” Batterjee exclaimed.

He said Younis had shown this by lending cash, “a more valuable commodity than any product”, and has had a very high repayment rate. (In excess of 98%, according to Grameen Bank).

Batterjee put the question: “Why is there this high repayment rate by the poor?” He explained that he believes the poor have a sense of honour. They struggle to make a living and feel honour-bound to those who help them, who lift them out of poverty, to repay the debt when they can. He said it was important to understand this aspect and added: “The poor are demoralised. By helping them you also help to raise their self-esteem and in this way you get a ‘satisfied customer’.

“It has been done with the world’s most valuable commodity – money. So why can’t I do it with healthcare?” Batterjee asked.

“Why can’t I offer x-rays, appendectomies, tooth fillings, newborn deliveries for the poor – and tell the patient ‘this is not a gift, this is a loan. You pay me back at a time when you can’?”

Economy of scale

Engineer Batterjee pointed out that there were many benefits to doing business with the poor “and this should appeal to the big corporations”.

“First of all there is a huge economy of scale. This is not a losing venture. There is a lot of money at the bottom of the pyramid. They call it the fortune at the bottom of the pyramid,” he said, referring to the pyramid-shaped representation of the distribution of wealth in society in general, with the poor represented by the base of the pyramid.

“There are four billion people in the world that no one wants to do business with,” he stressed.

“So how does this appeal to the corporates? Firstly, a lot of material [construction material and interior fitting of the hospitals] will be bought, which will impact the ‘for-profit’ division and the ‘not-for-profit’ division. Secondly, the organisation’s image will be enhanced with people seeing the organisation as one which is humane. This is corporate social responsibility.”

He noted that various studies have shown that people prefer to do business with, and consumers prefer to buy the products of, companies which are socially responsible.

“So this will positively impact the profitability of the business.” “Doing good, is good for business!” he remarked.

Batterjee was careful to point out that this concept of his cannot be viewed as a donation. It is rather the sale of a product with a good measure of social responsibility tied to it.

“And what’s particularly interesting,” he added, “I have found that when you initiate such a project a lot of other organisations see it and want to be a partner.

“Once you have reputable brands involved, such as SGH and GE, charities are more willing to come aboard as they know that their money will be used carefully, legitimately and transparently.”

He said this also applies to Zaqat money – the obligatory duty for Muslims to pay a percentage of their income as alms. “People will be more willing to give their money to a transparent system such as this.”

“We are now being contacted by many charitable organisations who want to get involved.

“And this is good, because no single organisation can undertake such a project on their own.”

According to Batterjee, the Islamic Development Bank and Consolidated Contractors Company have expressed an interest in working on this initiative with SGH Group.

At the time of going to press a contract between SGH Group and GE Healthcare had been signed, the details of which were are to be made public in January.

 Date of upload: 22nd Jan 2008