Finding a hospital bed should be the last thing on the minds of patients in need of medical care. Relax. Apollo Hospitals, a leading healthcare provider in India and elite member of the Medical Tourism Association®, expects to expand by 1,000 beds across the country within the next year.
Apollo, an elite sponsor of the 6th World Medical Tourism & Global Healthcare Congress, Nov. 3-6, in Las Vegas, announced growth plans after a formal agreement with Kohlberg Kravis Roberts (KKR), in which the New York-based private equity (PE) will invest Rs 550 crore – some $89 million in U.S. dollars — in the hospital chain.
The funds will be used primarily to pare debt and build more hospitals. In existing locations, Apollo will build birthing centers and hospitals for women and children. Construction in seven untapped locations including Indore and Patna will increase the number of owned hospitals from the current 38 to 51, and simultaneously expand the affordable healthcare brand Apollo Reach by 500 beds.
Prathap Reddy, Apollo Hospitals chairman, believes the expansion will address doctor shortages, a major challenge confronting the Indian healthcare system.
“We are not short of funds,” he said to The Economic Times. “With a healthy debt-equity ratio and with a brand that banks trust, finances are least of Apollo’s problems. But, we face a human resource crunch in healthcare; doctors, managers, paramedical staff. We have been trying to address this issue from day one by training hundreds of doctors in post-graduation programs, who become our consultants.”
Apollo will house a network of 8,420 beds across 51 hospitals today. Capital investments in the next three years will up bed capacity to 3,000. Reddy said the healthcare corporation plans to enter the Mumbai market by setting up three hospitals with 900 beds. The company plans 10 green-field hospitals — construction and development on land where there is no need to demolish existing structures – in India this year, adding about 2,500 beds.
“This 10 could easily have been 15 or 20, considering the need gap in the country,” he said. “Why then are we not doing it? We have devised unique ways to attract the cream in talent and do our bit to reverse brain-drain by hiring doctors from overseas, especially from United Kingdom and the United States.”
For close to two decades, Apollo medical directors have traveled to the United Kingdom to screen potential physicians. Reddy said he has personally met with upward of 200 doctors at St. James Court in London to filter the best and most promising candidates.
India did not become a preferred destination for medical tourism overnight. S. Premkumar, group CEO of Apollo Hospitals Enterprise Limited, said the evolution is a fascinating story in itself and exemplified through successful collaborations for not just the benefit of patients, but payers and providers operating within regulatory boundaries as well.
“It is common knowledge that in the last two decades, India has emerged as a preferred information technology destination, so much so that India is today synonymous with its success in IT,” said Premkumar, who will speak on “How India Became a Leading Medical Tourism Destination” at Caesars Palace. “Interestingly, what triggered the Indian market attractiveness was cost arbitrage. Cost was indeed the main focus during the emerging stages of IT, but over time, sustainable business models evolved by shifting from time and material through fixed price to outcome-based models with vendors increasingly seen as partners in business.”
Balancing Cost Advantages
Despite significant cost advantages, Reddy says India has struggled to become a hub for medical tourism because foreign travelers still face obstacles entering the country. Apollo has great interest in attracting the U.S. employer market, and hopes to alleviate any perceived fears American human resources executive might have when they meet at the Congress in Las Vegas.
“It takes three days to get a medical tourist visa done and a patient must report at the police station immediately after landing in the country,” said Reddy. “A medical tourist is not a criminal, why should he have to report at a police station, where he or she is made to wait for hours. A very senior official from Oman told me recently that no well-meaning, middle-class person wants to visit India for this reason.”
Reddy said a resolution to these “bottlenecks” would increase medical tourism 20 fold.
“I have been trying to get this rectified for last three years, but in vain,” he said. “At a time when Thailand, Singapore and Malaysian governments are leaving no stones unturned to attract medical tourists, why would a tourist go through all the fuss and walk in to India for such a treatment.”
Apollo had pinned hopes on attracting medical tourism patients to India through telemedicine, but even those strategies have not panned out as planned.
“I think the problem is not so much with the telemedicine models as much it is due to the fact that our country has not been able to roll out robust networks of 3G, 4G effectively,” said Reddy. “A majority of healthcare players are ready with the models. I wish this revolution had happened a day before yesterday, but it will happen. I cannot give an exact timeline because the issues are not so much with the healthcare players.”
Reddy said much has changed since he founded Apollo three decades ago, marking the corporatization of tertiary healthcare structures in India. Startup funding was at the heart of his initial struggles, but Reddy made 20 pilgrimages between Delhi and the Reserve Bank of India in Mumbai to secure financing.
“I remember writing to the then Prime Minister Rajiv Gandhi that I wish I had set up a beedi or beer factory instead of starting a healthcare company,” he said. “I requested for three things, first that hospitals should be allowed to raise funds like any other industry; second, when someone fell sick, he should have insurance protection to pay for the treatment; third, when a company or employer takes care of an employee’s health, it should be treated as income in his hands.”
Reddy said three weeks later, the government enacted legislation that reversed restrictions on funding, subsequently, allowing 100 percent foreign investments in the sector. Health insurance followed when the government granted tax exemptions, both for individuals and companies.
More than Numbers
Since then, Reddy says both he and Apollo have come a long way. He said Apollo’s original vision was and continues to introduce clinical and operational excellence in healthcare. Of primary focus is non-communicable disease, which is predicted to cost India $6.2 trillion from 2012-2030, according to the Harvard School of Public Health. For this reason, providers have shifted their focus toward preventive healthcare.
“If we do not adopt this model of preventive healthcare, we will have to pay an exorbitant cost by 2030, in the form of human lives and compromised quality of life which will lead to economic paralysis,” said Reddy. “Today, we don’t piece the two together.”
Reddy boasts that Apollo has become an international leader in the number of select transplants performed.
“It is not just a numbers game; our outcomes are equivalent or better than the best in the world, but most importantly they come with cost benefits,” said Reddy. “When we started heart surgeries, 30 years back we charged $3,000.Today despite inflation the price has come down to $2,000, thanks to innovation and reduced morbidity. This is something we wish to replicate in every branch of therapy and every piece of healthcare, to deliver excellence in healthcare at a reduced cost. That is why I say Apollo is not Mayo Clinic or John Hopkins, but they are not Apollo either.”