Practo Business Model & How does Practo Make Money

Practo Business Model, How does Practo Make Money!

Practo Business Model

Practo is the blue eyed boy of Indian StartUp ecosystem from the healthcare (rather healthtech) vertical, but has not been so much so successful in making a dent in the digital healthcare in India. God knows why they are claiming themselves to be a “Services Marketplace” when they are clearly not, seems the marketplace bug has bitten practo founders too.

About Practo, Funder, Founder and Facts

Well Practo in real terms is not even a startup anymore, its one of those OLDIES from the recession in 2008 :-). Very few people might know that Practo wanted only to sell SaaS software for hospitals and doctors, it is the investors that moved them from software to everything in healthcare kind of a company (which makes sense to me, why on earth would you want to crowd an already overcrowded software application market).

Practo Founder : Shashank ND and Abhinav Lal

Practo Funding : So far raised $140 million (in all) from Tencent Holdings, Altimeter Capital, Google Capital, Matrix Partners, Sequoia Capital, Sofina and Yuri Milner. It is a company based out of Singaore (as usual) called Practo PTE.

Practo Business Model

Practo makes money (very less though, considering it is the largest player in the category in India) from various channels and acquisitions that it did recently.

Before moving to the Business Model of Practo let’s understand the Healthcare space in India (in terms of various propositions available to HealthTech StartUps).

  1. Supplies and Services (to Hospitals, Clinics etc).
  2. Practice Management (SAAS, CRM, HMS).
  3. Appointment Booking (Cloud CRM or PMS).
  4. Remote Assistance (Cloud Telephone, Skype types solution).
  5. Medicine Sales (B2C).
  6. Record Keeping (Back End for both – B2C and B2B).
  7. LifeStyle Management (Preventive Medicine).

These are broad categories of the revenue lines which are in themselves so big, that a single player even of the size of Practo / Lybrate put together can not control and deliver to 100% extent. Thus India is the home to largest number of startups in the healthcare domain (appx 160 as per VC Circle). Since these categories are too large and broad to take over and run, Practo has done some acquisitions and kept them as independently running companies within Practo.

Practo Business Model is a combination of SaaS sales, commission from buyer seller match-making, ad-space selling, It is completely free for Users (as of now πŸ™‚ ). [2017 Update: I think they are trying to go ClassPass way on Subscriptions].

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[Update: As of July 2016, Practo Business Model now claims to be Full Fledged Wellness services aggregator, and have ended up providing services for Pathological Test Bookings, Medicine Delivery, Spa and Saloon Appointment Bookings etc. More on these below].

How does Practo Make Money

I will divide this section in two parts, one via its acquisitions (till date of this post being written) and its own revenue lines.

Practo Business Model via Acquisitions

Practo has acquired 4 companies so far – QikWell (Online Appointment Booking software – SaaS), FitHo (app based LifeStyle disease prevention app – freemium model), Genii (Software development firm – seems they don’t have their own Tech Team, I don’t know their exact reason for this – might be an IP that this company must have developed and was selling to hospitals, so I won’t describe this one below), InstaHealth (Hospital Management Software for Hospitals).

  1. QikWell Business Model :
    • The so called Largest Healthcare startup in India could not even build its own appointment booking system, bought this company over for 40 million USD (stock and cash deal).
    • QikWell makes money by selling ad spaces to doctors, hospitals on its landing page and top results.
    • QikWell takes an appointment booking fee from the doctor after the appointment is successfully booked and executed.
    • QikWell takes an onboarding fee for doctors, hospitals and clinics to avail the online appointment booking software.
  2. FitHo Business Model :
    • User has a freemium option to use the app.
    • This is a preventive medicine app that users use to make sure their lifestyle diseases are at bay.
    • Avg transactions of 800-1200 on their app.
    • This has been dissolved and discontinued and will form a part of the Practo App.
  3. InstaHealth Business Model :
    • 12 Million USD (stock and cash) deal
    • InstaHealth built a CRM sort of a software which it used to sell to hospitals and large clinics for their day to day management.
    • This is available as a SAAS based recurring payment solution to hospitals.

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Practo Business Model via its own Revenue Lines

They have following products to be offered to doctors:

  • Practo Business Model via Practo Health Feed
    • Social Network tool for doctors to post Updates as health tips and patients can follow the doctors of their choice (yeah, as if I am sitting here doing nothing but looking for an alternative to facebook to waste my time on).
    • Free as of now.
    • Used by doctors to scout for “BUYERS” in the market.
    • Used as a hook for the “CUSTOMER” to eventually buy the product from the marketplace.
  • Practo Business Model via Practo Consult
    • QnA tool for patients to ask questions publicly and can be answered by any doctor with a profile on Practo
    • Free as of now.
    • Used by doctors to scout for “BUYERS” in the market.
    • Typically do you think EXPERT DOCTOR wastes his time answering questions by Patients and that too for free? I don’t think so! Thus answers are given by useless doctors. So no point using by a Patient.
    • Used as a hook for the “CUSTOMER” to eventually buy the product from the marketplace.
  • Practo Business Model via Practo Profile
    • Listing of the doctor is called profile.
    • Used as Real Estate (Selling premium listings, and getting on top of the search results).
    • Using profile you can get a book appointment button (which is free as of now, but will soon move to a paid appointment booking for doctors, free for customers).
  • Practo Business Model via Practo Ray
    • Practice Management Software for Doctors (PMS).
    • Consider this like an ERP for a Hospital or Clinic (Doctor can manage all that he does from his diary – from this PMS).
    • Paid – Monthly recurring fee [Single largest source of revenue today].
  • Practo Business Model via Practo Reach
    • Ad space sale on Practo Website and App.
    • Available in all size of packages of monthly, quarterly, geographically, specialty wise etc.
  • Practo Business Model via Practo Tab
    • Giving a Tab to Hospitals and Clinics to do basic stuff like leave feedback, collect data, book appointments etc.
  • Business Model of Practo via Spa, Saloon, Gym Bookings
    • Practo now provides bookings to Spa, Saloon and Gyms
    • Understanding says, that as of now they might not be making money out of it, but soon they would start charging commissions to these businesses.
  • Business Model of Practo via Medicine Delivery
    • Possibly purchase of Medicines in bulk and directly selling them to Chemists and Consumers
    • Or Purchasing through Chemists and delivering the Consumers [similar to the Net-Med story]
  • Business Model of Practo via Pathological Test Booking
    • % commissions from the Lab Owners [which earlier the doctor used to get]

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Concerns to Business Model of Practo :

  1. Practo Business Model has the fundamental flaw of leakage of customer contact, Once I get connected to the doctor, no chance in hell, that I will use Practo Again (moreover the doctor would ask you to directly call up at the reception and take a time – he also does not want to pay any commissions)
  2. Moreover, you should note, who is willing to pay commissions, a Settled doctor will never pay commission for appointment booking, because they already have a lot of business and people dying to meet them:
    • New Doctors
    • Fraud Doctors with Fake Degrees
    • Incompetent Doctors
    • Un-Specialized Doctors
    • Barred Doctors (setup a practice in a small town)
  3. Major need is in Tier 2 -3 cities, adoption of Internet is abysmal in these cities any which ways.
  4. Depleting ad – margins on account of Google and FaceBook’s local listings, reviews and booking buttons
  5. JustDial is just waiting to kick some a*s and replicate part of Practo Business Model, it has 5 times the number of data available with Practo and 10 times the traffic, only thing that they need to do is to add a review section (better version of their existing review section) and a book appointment button
  6. ZocDoc with much advanced product line (Practo’s US counterpart) and a larger pocket

Disclaimer: The Practo Business Model is one of those business model examples that combine Health Tech and Arbitrage / trading. The understanding of the Practo Business Model is of the Author’s himself, neither any investor, banker or VC (local or global) or qualified consultants or the company have confirmed or explained the same to the author and the descriptions, stats, facts and figures, if used, are either obtained through secondary web research or interrogation of relevant search professionals or other resources on the web. Please use your own discretion to use this info when required and by continuing to read, you agree to indemnify the author & Unicornomy from the entire liability arising out of using this info on your own.

Unicorn Economy
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13 Comments

  1. Major need is in Tier 1 cities and not in tier 2-3 cities because in tier 2 or 3 cities most of them prefer to visit a particular doctor not by booking online.I guess you are not from tier 2 or 3 cities thats why u dont understand this model.

    1. Hi Deb!
      What I meant by major need is in Tier 2 and Tier 3 Cities, is that major need of good doctors is in tier 2 and tier 3 cities and that the people in these cities are majorly dependent on references of friends and relatives on choosing the doctors, which can be a major win for Practo – Tier 1 City people are generally familiar with their doctors and directly visit them so no need of practo here.

  2. Very detailed Article !

    Yes, there are some flaws in business model, but model is bridging gape between the patient and Doctor for the first time, when patient visits doctor. I have used many time, its replacing personal recommendation to User reviews.

    Thanks for providing details πŸ™‚

    1. Chandran, Man – Congrats on your startup (if this is yours) – Not a good idea to use Competitors name in your Meta Description – first they can sue you if they find out, second, Googles “HummingPanda” algo will understand you are trying to “scapegoat” the competition by spamming them so will deindex and or push you towards lower SERPs… Trust me, Been there done that… πŸ™‚

  3. Why soo judgemental..
    Practo worked great for me. I was not getting appointment of a doctor even after calling many times. Practo solved my problem in seconds. Practo earned a user for lifetime. It is these gaps which practo fills and this will take them a long way.

  4. Very Interesting detailed information, I was personally doing some other App business little related to what practo is doing so I would be very grateful if could personally contact to you to get some help and ideas

  5. Unicorn Economy , what if someone comes with a model that provides the services of Practo Ray and Practo Profile free of cost to the enrolled doctors along with providing opportunities of additional revenue ?

    What shall doctors prefer ?

    I may also like to know per doctor cost of providing and Maintenance of such services annually ….?

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