Spotlight

Apollo's duty: A clinic in every city

When franchising was alien to Indian healthcare, Apollo familiarised the concept by establishing a network of Apollo Clinics across the country. Today, it boasts of the largest network of health clinics in India. Sonal Shukla takes a look at the meticulous journey of the Apollo Clinics.

No more is franchising associated only with retail outlets and food chains. Considering the demand for prompt healthcare services, one hospital has made headlines by setting up a chain of clinics— through the franchisee route. Apollo has taken upon the task of ensuring that prompt and the best medical care is available to each Indian, even in small cities.

In 2002, Apollo Health and Lifestyle Limited (AHLL), a wholly-owned subsidiary of Apollo Hospitals Group, took up an ambitious task of establishing a chain of family health centres, Apollo Clinics, across India. The Group recently founded its 50th Apollo Clinic in Mumbai, thus accomplishing an important milestone in its journey to be a major player in the primary healthcare space.

"The size of the primary healthcare market in India is approximately 40 per cent of the value of the entire healthcare spent currently. It has huge potential," says Sangita Reddy, Director, Operations, Apollo Hospitals Group.

"From the current figure of 50 clinics in 35 cities, AHLL aims to set up 250 clinics within the next 2-3 years" - Ratan Jalan, CEO Apollo Health and Lifestyle Limited (AHLL)

A recent report by CII-McKinsey on Healthcare in India reveals that 61 per cent of private spending in India goes into outpatient care. Apollo's own research reveals that day-to-day healthcare market in India is devoid of quality regulation mainly due to the lack of monitoring by a Government agency. "The end customer lacks the rational framework to make decisions about the right service provider in this space," says Ratan Jalan, CEO, AHLL. Thus, Apollo Clinic was born with the first set-up unveiled in April 2002 at Janakpuri, New Delhi.

The total investment per clinic required is Rs 2 crore. The franchisee brings in the investment, and Apollo takes home a royalty of six per cent of the gross revenue generated each month. With more than six lakh customers, the clinics generate revenue of close to Rs 60 crore.

Calling all entrepreneurs

A thorough assessment of the market and its inherent strengths paved the path for the franchisee business model.

"We wanted to encourage entrepreneurs seeking entry into the healthcare sector, and secondly, the franchisee brings in phenomenal knowledge of the local market. It is obvious that we will have limited knowledge of markets like Tinsukia, Salem, Surat or Jalandhar," explains Jalan.

Says Prashant Jariwala, Proprietor of Apollo Clinic at Surat, "The brand gave us quick and easy recognition and there was also an opportunity of networking with the huge chain of clinics and hospitals within the Group."

It works both ways. The franchisee helps the Apollo Group to roll out at a rapid pace.

Spreading Wings

Location of Apollo Clinics East zone : 13 West zone : 10 South zone : 9 North zone : 16 Overseas : 2 From the current figure of 50 clinics in 35 cities, AHLL aims to set up 250 clinics within the next two to three years. The quick roll-out has largely been a result of its ability to identify like-minded franchisees for a particularly territory. "For instance, we have clinics in Gorakhpur, Allahabad and Varanasi in UP, but not yet in Lucknow or Kanpur, since we haven't found the right franchisees," reveals Ratan Jalan, CEO, AHLL. The clinic has already made its mark in overseas markets like Doha (Qatar) and is eyeing the potential UK market. "The huge demand and supply gap and the waiting period is similar to those existing here. It makes sense to tap the fragmented overseas markets with a substantially large Indian population and where the Apollo brand name is already familiar. We obviously won't start a clinic in an organised market like Germany," states Jalan.

A dose for everyone

What's more, the clinics have been designed to look like neighbourhood clinics. "People will readily travel long distances for an open heart surgery, but would definitely require coaxing to when it comes to local diagnosis. It is this logic that propelled us to go ahead," says Jalan.

And Apollo has got its target right. It has adopted the middle path in terms of price, while not cutting down on quality. This was indeed a challenge. "We operate on volumes and save a substantial amount of costs in the process. If a good quality lab is charging, say, Rs 400, the clinic will not charge Rs 500," assures Jalan.

Meeting the right brains

To ensure the quality of its staff, the clinic, till some time ago, employed a thorough selection procedure through psychometric testing.

For its franchisee partners, Apollo has partnered with the Indian Institute of Management (IIM), Bangalore, for a two-week managerial training programme. Says Prof S Sundararajan of IIM (Bangalore), the Programme Director for Management Programme of Apollo Clinics, "Apollo wanted to ensure that all its franchisees are armed with the same level of expertise." IIM did an extensive market research by meeting and understanding the requirements and operations of corporate hospitals, existing diagnostic centers, corporates as well as the end customers. The training programme is a mix of marketing, finance, HR, strategies and operations for a healthcare franchisee management.

Strategic planning

Apollo has realised that if it needed to create faith among its patients, then the best way was through the general practitioners (GPs). This way, it is assured that if a referral is needed, then GPs are the best people.

But for the GP to have faith in an Apollo franchisee it is imperative that Apollo chooses the right man. This calls for a thorough evaluation of business background, future interests, and emphasis on quality and professionalism. "There have been times when we have rejected 50 to 60 franchisees before selecting one," says Jalan.

Despite this, Apollo Clinic has seen its system go awry when the appointed franchisee has handed over the reigns to incompetent people. This could be because it is not necessary for the franchisee to hail from a medical background. They could include entrepreneurs from IT, financial services, FMCG, exports, manufacturing as well as automobiles.

Marketing mantra

While AHLL is careful that its franchisees be carefully selected, it does not mind when it comes to its patients talking. It believes that the real marketing in healthcare is through word-of-mouth. "However, we are looking at some strategic products aimed at different individual segments such as senior citizens and also alliances with some large organisations for joint marketing initiatives," reveals Jalan.

The clinic's three-pronged method involves approaching corporates, doctors as well as end consumers. Creating awareness programmes in the neighbourhood, organising camps, advertising through direct mailers and inserts in newspapers, are some of AHLL's advertising techniques. This way, it targeted more than 200 corporates by leveraging regular checkups for its employees. Some of its blue-chip clients include Coke, TCS, HDFC, Dr Reddy's Laboratories, Maruti and HP.

Hyderabad-based Mindseteyw is currently managing the advertising of the clinic. Says Santha John, MD, Mindseteyw, "The Apollo brand's character and features are in direct contact with people's daily healthcare requirements. One can only go in a positive direction with a brand if it is composed of a lot of sincerity."

sonal.shukla@expressindia.com