Bringing in innovative formats in healthcare AHLL provides a range of healthcare services under one roof so that the patient need not to move from one place to another for consultation, test or medicine and that too at lesser rates
He could have chosen the easy path. But when he joined as the CEO of Apollo Health and Lifestyle Ltd (AHLL) in 2001, Ratan Jalan decided to tread the not-so-well-beaten route. It was to champion one of the dream projects of Dr Prathap C Reddy, the visionary Chairman of the Apollo Hospitals Group. There were the usual things he had to do - the company had to offer quality at an affordable price, what one might term value-for-money. But, it was the additional things that he did that have revolutionized retail strategies in India's healthcare sector. He combined his V-F-M motto with innovation, long-term thinking and vision, and niche products that hadn't been thought of until then in the healthcare market.
In the past three years, he has created a business model - and a structure - that's now being replicated by competitors. Be it the concept of a one-stop healthcare shop - 'The Apollo Clinic', boutique birthing 7centers - 'The Cradle', or the company's planned foray into day-care surgery centers, Jalan has practically transformed the face of healthcare retailing in this country. Add to that his ambition that AHLL's model can be replicated globally! And it fits in so well with Dr Reddy's dream that India offers potential to be the healthcare destination for the world.
It all started with the company's perception of the growing demands of the consumer. Confronted by grossly inadequate quality-focused healthcare services, the consumer was yearning for better quality and more value.
"Day-to-day healthcare segment is very fragmented, like a cottage industry. There are thousands of doctors, diagnostics centers and clinics making it difficult for consumers to choose quality. Since Apollo already has phenomenal brand equity, the Group felt that it would make immense business sense for us to get into this segment. Hence, Apollo Health and Lifestyle, a wholly owned subsidiary of the Apollo Hospitals Group, was set up”, says Dr Reddy.
The Rs 68,000 crore primary healthcare segment has been fragmented, largely unorganized and unbranded. Patients would normally troop into the nearest, neighbourhood clinic without any concept of quality. It was in this context that the company launched its first clinic in Janakpuri, New Delhi. AHLL brought to their doorsteps a brand that they could trust in terms of quality; a brand that offered services at prices that were cheaper than the highest in most categories. And a day-to-day healthcare clinic that offered convenience by providing a range of services under one roof, so that the patient didn't have to go from one place to another for consultations, or tests, or medicines.
Most importantly, all these services were made available in a pleasant, non-hospital like atmosphere: renowned architect Alfaz Miller spearheaded the architecture, interiors, signage and project execution and designer Ravi Bajaj designed the staff uniforms. AHLL made sure that the customers get the best at the Apollo Clinics. IIM Bangalore and NIS provide training to the franchisees and the employees of the clinic while Wipro Healthcare IT provides the entire clinic management software.
Additionally, AHLL decided to focus on wellness, rather than illness, which implied an emphasis on "preventive aspects of healthcare." Data show that 60 per cent Indians suffer from easily preventable diseases that can be cured, subject to their timely detection and diagnosis. Therefore, efforts were directed towards creating awareness in a bid to make people more conscious of their health by inculcating in them the belief that investing in a preventive health check is better than taking good health for granted. That's how health check packages like Apollo Master Health Check, Apollo Executive Health Check, Apollo Heart Check, Apollo Well Woman Check, Apollo Child Check and Apollo Family Health Check were introduced.
A careful analysis resulted in the business model for the clinic, which requires an investment of about Rs 1.7 crore and 4,000 sq ft of space. Given the business potential in the segment, the company zeroed in on the opportunity to establish about 250 clinics in India and also some of the overseas markets. However, there was still a major problem to contend with - While Apollo had more than two decades of experience in healthcare, it was mainly in relation to large multi-specialty hospitals. It was also evident that an in-depth knowledge of local market conditions would be vital for the success of the clinics. The way out was through the franchising model, which is a huge success in the US with annual revenues of over
$1 trillion through the 700,000-odd locations. In India, the franchising business is growing at a frenetic pace of 40-50 per cent a year. "We realized that our expertise is not in running these retail facilities because it requires a good knowledge of local business. Therefore we adopted the franchisee route for expansion. The idea behind this business model is to supplement our expertise in the healthcare domain with the franchisee's understanding of the local market, not to forget his entrepreneurial spirit”, says Jalan.
The model is a win-win situation for both the franchisor and the franchisees. That explains why a number of retail chains like the Indian Barista, which grew initially through self-owned coffee shops, have decided to take the franchise route now. For the franchisor, who's the owner of the branded products, it's "the best - and the fastest - way to grow the business," both domestically and globally. More importantly, it allows them to maintain the same benchmarks and offer similar service standards in all the locations. But it's the franchisee who gains the most. In fact, most retail experts feel that becoming one is "the best (and the safest) way to do business”.
However, Jalan adds, "we have to be more focussed on the quality/profile of the franchisees that we sign on, than on quantity. There's simply no point in increasing the franchise network if the people who we join hands with, don't share our vision, or lack the mindset that we desire."
AHLL has provided its franchisees with all the expertise required for creating and successfully running the business, from project planning and manpower recruitment and training to architecture and interior design, IT support, local sales support and on-going service quality training and monitoring.
“An interesting aspect that we have noticed is that those franchisees who are now signing up, are taking on more than one franchise to start with, even in cities like Mumbai where cost of real estate is quite prohibitive. This, we believe, is because entrepreneurs wanting to invest in the clinic franchise are today seeing the healthy performance of existing clinics and the resultant business potential”, elucidates Jalan.
The franchising model has helped the company increase the penetration and geographical reach of The Apollo Clinics in a significantly reduced timeframe. In a period of just two and a half years, 28 Apollo Clinics dot the length and breadth of India - from metros like Delhi, Bangalore, Kolkata, Chennai and Ahmedabad to smaller cities such as Jamshedpur, Guwahati, Siliguri, Salem and Kannur. “At Apollo, this is more than a mere number. For us, it's another neighbourhood having access to world class healthcare with a human touch. Another neighbourhood having the assurance of a pharmacy staying open close by, at all hours of the day. In other words, it's yet another neighbourhood smiling”, says Dr Reddy proudly.
To add to that, atleast 20 more clinics are expected to open over the next few months, in Bhopal, Gorakhpur, Jaipur (the second in the city), Mumbai, Thane, Surat and Varanasi, among others. Additionally, franchises for 60 different territories have already been awarded and the company expects to sign on another 20-25 franchisees by the middle of next year.
More importantly, the standardization and quality levels that AHLL has achieved with its franchisees has enabled it to spread its wings globally: it is taking the Apollo Clinics to more locations abroad, including Bangladesh, Middle East, Nigeria, South East Asian countries, London, and is looking at Pakistan too.
Discussing The Apollo Clinic's increasing focus on the international market, Jalan says, “The move to open Apollo Clinics in various countries is a pre-planned exercise. We are moving to foreign countries to offer our services to the large number of Indians staying there. Our plan to leverage the opportunities in the International health market, primarily through the franchise route, is perfectly in tandem with our current business as it will ensure widening of our footprint without affecting our focus on the Indian market.”
The Apollo Clinics are managed by entrepreneurs who have come from backgrounds as diverse as IT, Finance, FMCG, Manufacturing, Exports, Real Estate, Retail and Healthcare. The Clinics successfully offer Specialist and Super-specialist Consultations, Diagnostic Services, Preventive Health Check packages, Telemedicine and a 24-hour Pharmacy, all under one roof.
Well, with such a revolutionary idea in place and seamless execution, recognition was not difficult to come by; AHLL has been honoured with the prestigious 'Franchisor of the Year' Award this year as well, making it the winner for two consecutive years in FranchiseIndia 2003 and FranchiseIndia 2004.
“The Apollo Clinics are very close to my heart. We've worked hard and created something wonderful. It is even more gratifying when you can create, and then repeat every time, anywhere. So, it feels good to be applauded for the efforts we have put in,” says Dr Reddy.
The Cradle: Boutique Birthing Centres
Once the basic primary foundation had been laid, Jalan turned his attention to dazzle experts with his innovative strategic approach. Thus was borne the concept of boutique birthing centers - a completely new segment in the Indian healthcare sector. Called 'The Cradle', these state-of-the-art specialized maternity care centers, cater to the needs of the expectant mothers and their newborns. It brings to Indian mothers the best birthing facilities all under one roof in line with global trends, which hereto did not exist in the country. And, is targeted at parents who only want the best and don't want any compromises with regard to a significant milestone in their lives.
“Normally, a visit to a hospital is associated with a trauma or a disease. A child birth, in contrast, is an event, which is one of the most natural phenomena, and an event which epitomizes wellness. At Apollo, we see giving birth to a child as a joyful experience and have therefore ensured that The Cradle does not wear the look of a hospital. At The Cradle, our thrust is on providing a friendly and caring environment, which is supportive to the psychological state of the expectant mothers, besides the best in medical attention”, says Jalan.
The first Cradle is operational in Greater Kailash II, New Delhi and has already delivered more than 70 babies in the first 3 months of its opening. AHLL is looking at setting up 8-10 such centers in all major cities such as Delhi, Mumbai, Bangalore, Ahmedabad, Chandigarh, Ludhiana and Jallandhar, among others.
Convenience and comfort are paramount at The Cradle. Where maternity homes and hospitals cart an expecting mother from one room to another for every stage of the birthing process - Labour, Delivery and Recovery (LDR), The Cradle is conceptualized to provide Single Room Maternity Care (SRMC), in which Labour, Delivery and Recovery take place in a single setting.
Other state-of-the-art medical facilities that are available at The Cradle, include fully equipped Operation Theatres (for caesarean deliveries), Central fetal monitoring, where the doctor can monitor the patient from a single location, Level III NICU, Blood store and an Out Patients Department. The Cradle has a range of accommodation options from spacious suites with attendant rooms, to super deluxe and deluxe rooms.
Think about this. According to a CII-McKinsey study, healthcare's contribution to India's GDP is expected to grow from 5.2 per cent to 8.5 per cent in the next decade and healthcare spending will more than double to 200,000 crore by 2012. And the manner in which Dr Reddy is growing Apollo's business, both he and AHLL will definitely make a key contribution to this growth.