Apollo Hospital
Indian Hospital Chain Welcomes Foreigners-In Wards, on Computers
Patients Avoid Queues Elsewhere, Gel Needed Care in Madras for Less'
Dr. Reddy and His Four Daughters
By Jay Solomon
MADRAS : India-Last year, Terry Salo Flew 22 hours from his home in Victoria, British Columbia, to this southern Indian port city for a partial hip replacement.
Mr.Salo, a former commercial fisherman, faced a wait of a year or more for free care from Canada's national health service but the pain had become unbearable. He paid $ 4,500 for the surgery at Apollo Hospitals Enterprises Ltd., a quarter of the cost for similar treatment in Europe and the U.S.
"People need to know that there are other options out there", says Mr.Salo, 54 years old, who was swinging golf clubs a month after the operation.
Mr.Salo is one of 60,000 foreign patients who were treated at Apollo Hospitals over the past three years. Since its start as a single hospital in 1983, Apollo has grown to 37 hospitals with more than 6,400 beds, making it one of the largest private hospital chains in Asia. Apollo's emergence as a global health care provider in any ways tracks India's economic trajectory over the past three decades. The company has capitalized on the high cost of health-care administration in the U.S., and demands of patients elsewhere for fast, inexpensive treatment.
Hundreds of Apollo's data processors work late-night shifts, providing billing services and processing insurance claims for U.S. hospitals and insurers. Apollo laboratories perform clinical trails for Western drug companies, such as Pfizer Inc. and Eli Lilly & Co. Apollo even is remotely evaluating X-rays and CAT scans.
Apollo's range of medical services-from the back office to the operating room-highlights the contradictions of the global outsourcing debate. In seeking to provide a wide range of services at a large discount to Western competitors, Apollo is yet-another Indian company threating jobs in the U.S. and other countries. On the other hand, Apollo's relatively inexpensive medical services have benefited patients from numerous countries. It also has helped India's overburdened health-care system. India has fewer than one hospital bed per 1,000 people, compared with more than seven in developed countries.
"We're showing that a field like medicine is very much a two-way street, "says Prathap C. Reddy, 72 years old, a physician who founded Apollo and now runs it with his four daughters from Madras, also known as Chennai. "We can all grow from each other's strengths".
Apollo and a half dozen other private Indian hospital companies are adding patient rooms, buying new equipment and installing modern telecommunications fear. Meanwhile, they also are setting up marketing offices in cities such as London and Dubai to attract patients, many of whom remain wary of seeking health care in the developing world. Few of Apollo's patients come from the U.S. The Indian government sees health care as a growth industry. Public and private Indian Universities are churning out 20,000 doctors and 30,000 nurses a year, some of them destined for jobs in Western countries. That is roughly triple the pace at which nurses were trained during the 1990s.
In the so-called medical-tourism business, the focus is on big-ticket surgical procedures from face-lifts to liver transplants. Asian countries like Thailand, Malaysia and Singapore have taken the lead in this field. Promoting health-care services alongside tourist attractions, the countries attracted more than 600,000 patients in 2003 alone, according to officials in Thailand and Malaysia.
Apollo offers cardiac surgery for about $4,000, compared with at least $30,000 in the U.S. Apollo's orthopedic surgeries cost $4,500, less than one fourth the U.S. price. Consulting firm McKinsey & Co. says medical tourism could become a $2 billion-a-year business in India alone by 2012; the category is so new it previously wasn't measured.
For now, foreign patients represent 7% to 9% of the overall mix at Apollo. Upon arriving in the country, they are greeted at airports by Apollo staff and whisked off to the nearest of the eight or so hospitals that treat foreigners. These outside guests are treated and housed in buildings with local patients, though they stay in private rooms with one-on-one nursing care,. When fit enough to travel, some patients like Mr.Salo visit seaside resorts as part of their package.
The trip to India isn't for everyone. Mr. Salo warns that Westerners need to brace themselves for some real shocks. The sight of urchins and beggars ramming Madras streets was disturbing, he says. The 36-degree Celcius heat was oppressive. He faced "real doubts" about his decision when be entered Apollo's emergency room and saw the ragged condition of Ideal patients. Outside Apollo's hospitals, clean water and blood supplies aren't a given.
Apollo was a longtime dream of Dr. Reddy. The son of wealthy mango and sugarcane plantation owner, he studied medicine in India but moves with his wife to the U.S. in the 1961, like may professionals of his generation. After a hospital slint in Boston. In set up what would become a successful long and internal medicine practice in Springfield, Mussori. But he missed home, and returned to India in 1970.
Duties Meet Duty Sleep tariffs blocked the import of state-of-the-art equipped at the time, and hospitals often had little choice but to try and send their most seriously ill patients abroad for care. In 1979, Dr.Reddy was treating a young business man who needed coronary bypass surgery. Lacking the necessary equipment, be advised the man to fly to Houston. The patient couldn't afford to and died.
'I pledged in myself then and there that I would make certain India would have world-class facilities before I died", Dr.Reddy says.
While the country had some private charity-owned health care facilities, the best-known ones established by the late Mother Teresa, many of his friends doubted he could start a profit- making hospital. "I never though it would materialize", says Joseph Thachil, an Indian doctor and kidney specialist then working in Toronto and now a doctor at Apollo in Madras.
Initially, financial regulations prevented Dr. Reddy from raising funds from International banks and overseas Indians. There were limits on amount of land private hospitals could procure. Government bureaucracy, meanwhile, required multiple applications for imported equipment.
Seeing It Through
" I told him there was no precedent for what he was doing", says Manmohan Singh,. India's Finance minister in the early 1990s. "But he persisted", opening the first of his hospitals in a modest five-story building down a narrow lane journey with ox carts in Madras. The hospital since has taken over a hotel that used to operate next door.
Ultimately, economic reforms Mr.Singh introduced proved significant for Apollo. A surge of investor Interest in India allowed Dr. Reddy to raise money by listing parts of his growing business, including the parent company, on the Bombay Stock Exchange. Apollo expanded into clinical research, education and pharmacies.
Apollo also attracted investment from units of Schroders PLC in the U.K. and Citigroup Inc. and Goldman Sachs Group Inc. in the U.S. Sharp drops in Indian tariffs, meanwhile, allowed the company to import gear almost as soon as it appeared in Western hospitals.
With barriers down, Dr. Reddy expanded rapidly. He formed a joint venture with the state government in New Delhi to build and finance a new hospital and franchised Apollo's services to bring to new clinics to other parts of India. He also signed deals with hospitals in Kuwait, Sri Lanka and Nigeria to contract out the company's management services. Today, Apollo operates in eight countries across South Asia, the Middle East and Africa.
But the core of its business is a fast growing class of Indians who have the money to forgo free treatment at state-owned hospitals. India's middle class is estimated at roughly 250 million people. Checkups typically cost from 4,000 to 8,000 rupees ($90 to $180). That is affordable to India's growing number of call center workers and engineers-though still out of reach for the poor, estimated at about 300 million.
For the first three quarters of the year ended March 31, Apollo posted net in come of 283 million rupee, more than 275 million rupees it earned in the full prior fiscal year. Its revenue located 3.7 billion rupees for the nine months, compared with 3.3 billion rupees during the same nine months of the year before. Nearly 62% of Apollo's revenue came from its core hospital business during the 2003 fiscal year; 36% came from pharmacies, and the balance from the never outsourcing business.
The company expects the number of patients to grow about 20% per year over the next decade, and Dr. Reddy anticipates the outsourcing business with soon make up 25% of total net profit.
"The globalization of health care is changing service rapidly, and Apollo has been among the most aggressive in pursing these opportunities", says offer Carmel of Maccabi Health care Services, a top Israell health care provider in Tel Aviv.Mr. Carmel says Maccabi is seeing to relicate some Apollo strategies.
Nerve Center
Apollo's focus on developing a global business is on display at its 17-year old nine-hectare campus in the Jubilee Hills of Hyderabad, 800 kilometers north of Madras. About a dozen white stucco office buildings stretch across the rolling and besides a hospital and nursing school, the building house Apollo information technology operations. Eucalyptus and bougainvillea line the roads. A Hindu temple has been erected for prayer, and the sound of worshipers reciting mantras can be heard from the hospital ward.
In a camped conference room in one building on a recent day, Sangita Reddy, 11, one of Dr.Reddy's four daughters, gathered with staff around a pool-table size model of the Hyderabad complex in the group were architects and experts in the ancient India art of Vastu, a discipline focusing on mastering the universe cosmic forces, such as water, fire, and earth. The goal; identifying the most auspicious setting for a new building for foreign patients. A had location could be harmful to their care, said Cherukuri Sasidhar, one of the designers,who aims to blend eastern and Western medicines and architecture.
In another room on the campus, 30 Apollo staffers pored over medical bills and insurance claims, some of the 400 data processors who move in and out of the information technology wing each day. They have memorized hundreds of codes that correspond to different medical procedures. The unit's manager, Miriant Mamta Edwards, punched numbers for radiological procedures into her computer. On her cubicle hangs a sign: "I came , I Saw, I Coded".
In another room, Apollo executive Mvya Sehgal met American health care executives who had flown in to look at new Apollo is handling their company's remote billing operations. To accommodate more billing and claims operations, a floor has been cleared in the complex for 300 more workers.
Clinical Trials
Meanwhile, pathologist Shyamala Sasikeran was overseeing clinical trails for half a dozen Western pharmaceutical companies. Over the past year, her staff has studied the effects of antibiotics, cancer drugs and heart treatments on local residents.
"More people will come to India" for treatment, says Saif Salim Sulieman al-Ziyuti, who ws at the complex with his cousin, Salim Ali Salim al Ziyutt, for annual checkups. They had traveled from their home in the United Arab Bmirates, three hours away by air "They take good care of you", says the white robert Mr. Saif. The cousins says their medical care at home is first-rate, but a scheduling backlog means works of waiting.
For Dr. Reddy, one question bovers: How big can Apollo grow? Local politicians, among others, complain that the company's services are too expensive for the average Indian. "There needs to be a way for hospitals like Apollo to channel more of their profits to the poor", says Harsh Vardhan, a physician and former Indian health minister in New Delhi's capital region who now is a senior member of the ruling Bharatiya Janata Party.
Apollo executives say they are helping India's poor. The company sets aside beds for free care and has established a trust to aid the needy. The company also noes that new technologies, like examining patients in remote areas via. television monitor, allow Apollo to reach India's poor in ways doctors once couldn't. Apollo has set up nearly 60 "tele-medicine" centers over the past two years.
On a recent afternoon, Apollo doctors sitting around a conference table in Madras digitally connected to Dr.Reddy's hometown of Aragonda. The X-ray of a 10-day old boy with a misplaced heart into the room. "We can make a composite diagnosis in just one hour", says Vilva Nathan, a physician. "Before it could have taken days just to get the patient to the hospital"
A healthcare powerhouse
The Hindu Business Line (9/22/2003) On November 9, 1979, a man in his 30s died of coronary heart disease, "because he could not afford to go to Houston and pay $20,000 for a heart surgery. That day, I was devastated when I saw his 31-year-old wife with their two children... four-year-old son and two-year-old daughter. All that he needed was a simple coronary bypass surgery that September," recalls Dr Prathap C. Reddy, Chairman of Apollo Hospitals.
This incident was the nucleus that resulted in the birth of the Apollo Hospital in Chennai in the September of 1983. Twenty years down the line, a couple of weeks ago, its Cardio-Thoracic unit in Chennai, headed by Dr M.R. Girinath, completed 25,000 open-heart operations, of which over 18,000 were coronary bypass operations. In a way the 38-year-old opened up the avenue for saving the lives of 25,000 people.
"In those days no significant coronary bypass surgery was being done in the country. So I said I must bring international quality health care for our people." Today, the group has 28 hospitals in 38 places, including Sri Lanka and Dubai, and has done 50,000 cardiac surgeries, including heart transplants "with outstanding results and at 10 per cent of the international cost. We've gone right up to liver transplants, doing 27 liver transplants not charging $500,000 but only $38,000."
You almost pounce on him to ask the obvious: how may Indians can even afford a fraction of the cost? "Health insurance is the answer. For six long years, I've been telling the prime minister, the health and finance ministers to make health insurance mandatory."
He wants contributions to health insurance right from the time when a birth certificate is issued (Rs 50) and 10 per cent of school fees. He is appalled that people would willingly insure houses and vehicles against damage or theft but not their lives. He loves to give the example of his little village Aragonda (about 160 km from Chennai) where the Re 1 per person per month insurance scheme "is working beautifully. We have a good hospital there and the scheme caters to the health needs of 52 villages in the area. After all mandatory insurance is not rocket science... South Korea did it in 10 years. If we put our heart and soul into it, we can do it in five years."
A votary of the private sector's participation in the health care delivery system, as the Government can't meet the health care needs of a billion people, he feels that though private hospitals had demonstrated that they could achieve "clinical and surgical excellence at excellent results, it is not yet time to rest on our laurels. India is ready to take on the world in the health sector in two ways," says Dr Reddy.
He hopes more and more Indian hospitals would realise and grab the opportunity to manage several services of western hospitals right from India and with help from IT enabled services. "We now have only 4 million people who are employed in health care; it can easily go up to 30 million if our hospitals exploit all these opportunities. We have to now create economic wealth for our country from our sizable health infrastructure," he says.
