Apollo Hospitals of India(A)

Table of Contents

1. Superior value to customers: Does Apollo Hospital Madras provide superior

value to its customers, shareholders, and employees through a well designed service system in other words is it a breakthrough service organization? Apollo Hospital Madras provided superior value to its customers, shareholders and employees through well designed service system. It is breakthrough service organization as it is the first its kind in India and become successful with perfectly aligned Strategic service vision with year on year increase in number of Patients served, profits made and employee satisfaction from individual growth best compensation benefits (compared to other private hospitals).
1.1 Customers: Apollo Hospital Madras provide superior value to its customers by

providing superior medicate care in complex ailments (best consultants supported by best technology and supporting staff) coupled with best of non-medical care, high sanity standard and hospitality while costing less compared with other private hospitals. Case facts: Service vision is centered around providing its customers high quality treatment for complex ailments with human face. Pratap Reddy emphasized on personal care provided by each employee to the patient and health of patient health is most important measure of success. Apollo charged 20 to 30% less than local competitors for procedures and charged 10 to 15% less than top hospitals in Bombay and New Delhi. Provided in house facilities for treating all complex ailments. This has reduced time delays involved in diagnosis of ailments (case with private nursing homes). This has reduced the average stay of the patient at the hospital and hence the cost of treatment. Provided treatment for many medical specialties (Exhibit2). This coupled with coordination from consultants enabled Apollo to provide best medical care to its customers. Adequate facilities were provided to make the equipment available for diagnosis thus reducing the risk of delaying the treatment and deterioration of Customer health condition. Apollo Madras achieved lower mortality rates of 2 to 3% which is far less than 15% of Government hospitals.

 Offered different service products to its Customers such as Primary health, preventive medical care (Insurance product). Vice-President of India chose Apollo Madras for Coronary By-pass operation.

1.2 Employees which included consultants, lab technicians and supporting staff are

provided with superior value by providing best of benefit plans (compared to other hospitals), team-spirited culture with scope for individual growth which motivated them to perform better. The staff attrition levels did not affect quality of operations and in most cases the reason for leaving Apollo is not dissatisfaction. Case facts: Employees are middle star for Apollo signifying their central role in success of Apollo. Consultants were free to decide the fee to be charged from Patients which is broad range set by Apollo. Consultants were provided library faculties with latest medical journals, reference books to abreast themselves of latest treatments. Consultants were paid to attend medical conferences abroad. Apollo free news letter conferred prestige on individual consultants along with hospital, thus helping consultants develop strong individual reputation. Coordinated atmosphere provided by Apollo enabled consultants to provide best treatments to patients with the help of other consultants. Apollos wages were 10% t 20% more than that of its competitors. Provided additional benefits such as free medical care for complex ailments, subsidized meals, paid vacation and Attendance bonus. Employees are recognized and encouraged for their individual contribution, many from maintenance and housekeeping departments. Provided scope for individual growth and team-oriented culture motivated employees to better perform. Employees are provided to direct contact with top management.

1.3 Share Holders are provided superior value through year on year increase in

revenue and the number of patients served. Apollo achieved higher value/cost leverage by reducing average stay of patient at Apollo by two days compared to competitors. This also enabled Apollo to server more Customers thus increasing the revenue.

Case Facts: Achieved higher utilization of Medical equipment while balancing the utilization and available thus not compromising on the quality of service. Average number of days patient stayed at Apollo is seven days, two days lesser then competitors. Apollo generates more revenue in the first four days of patient stay as patient receives treatment which utilizes consultants, diagnostic services making use of the technical facilities. By reducing the average stay for a patient, it could accommodate more patients and hence generate more revenue. Achieved cost efficiencies through efficient business processes which reduced the cost of treatment for the patients (charged less than 10 to 15% compared to private hospitals in Bombay and New Delhi). The costs of diagnostic services were 20 to 30% cheaper compared to local competitors. Maintained employee attrition rate which did not affect quality of service provided to customer thus reducing the amount of training required. Apollo top management could win the confidence of the employees through various employee benefit programs along with direct benefits. Ventured into other services such as Primary health care and Preventive care to increase the number of patients served and improve revenues. Created network of referral doctors to get more patients thus creating demand of services.

2. Key elements (Basic and Integrative) of SVV: What are the key elements

(Basic and Integrative) of Apollo Hospitals Madras Strategic Service Vision?

2.1 Basic elements of Strategic Service Vision: 2.1.1 Target Market segment:

Middle class and upper middle class Indians who could pay for treatment for complex ailments. This constituted half of 270 million Indian middle class which is also growing at 8% a year. The target segment consisted of 1) individuals who could afford pay from out-ofpocket for the treatment expenses 2) employees of corporations providing medical support to its employees.

There are International patients from mainly Sri Lanka, South Asia and few from Europe and US.

2.1.2 Service Concept:

To give patients the most advanced medical care possible at high quality with Human face. This includes treatment for complex ailments such as coronary heart surgery. Providing best medical facilities and providing them all in house so that treatment is faster at the same time generating revenue for hospital. Differentiate with other hospitals by providing treatment for complex ailments with high quality and at lower cost with operational excellence. Hospitality to the patients for the premium they pay for the service. Corporate culture at every service provided.

2.1.3 Operating strategy:

Efficient utilization of resources which generate the revenue the most such as technical facilities while maintaining the balance between utilization and availability. Availability is more important than utilization as reduced availability would deteriorate patient condition increasing length of patient stay at hospital thus reducing the number of patients served affecting Apollo revenues. Effective integration of all levels of operation, from consultants to housekeeping staff for providing high quality service. Promotion of team spirit among employees. Stressing the equal importance of all services provided from treatment to housekeeping. Satisfied employees for high quality service with Human face.

2.1.4 Service Delivery System:

Service delivery system consisted of Consultant doctors for diagnosis and treatment. Supporting staff such as Junior doctors, lab technicians, maintenance and housekeeping staff.

Medical Technology for diagnosis of ailment. Detailed procedures for every service carried out such as HIV test for every donated blood. Availability of facilities to meet peak demand. Service delivered with high quality proper diagnosis with coordination from consultants, effective treatment with high success rate and hospitality to patients.

2.2 Integrative Elements of Strategic service Vision: 2.2.1 Positioning:

Treatment of complex ailments (with renowned Consultant doctors and advanced equipment) with high quality (curing of ailment and low mortality rate) and proper care (treatment with Human face).

2.2.2 Value/Cost leveraging:

With high availability and best utilization of resources number days patient stayed in hospital reduced thus increasing number of patients served. Patients are categorized first four days patients requiring immediate attention who also generate more revenue for the hospital and patients primarily for convalescence who mainly pay for room and boarding. Satisfied Employees for high quality service delivery.

2.2.3 Strategy System Integration:

Many specialty treatments supported by Apollo (Exhibit 2) Renowned Consultant doctors with effective co-ordination between them to provide proper diagnosis and treatment. Highly integrated supporting staff. Reduced average stay of patient at hospital. High availability of critical facilities.

3. Hyderabad Apollo Hospital: What accounts for Hyderabad Apollo Hospitals

disappointing performance and what are its future prospects?

3.1 Disappointing performance:

Far from heart of the city: Patients faced transportation difficulties. Competing private hospitals: Hyderabad Apollo had to compete with private hospitals already existing even before its inception. Private hospitals offered lower prices to both individual and corporate clients. Less prestigious staff of consultants that was reluctant to commit exclusively to Apollo. They were working at other hospitals and worked with Apollo as part time. Quality concerns at non-medical care. Took long-time to build local referral doctor network. Unsystematic CHANGE program.

3.2 Future prospects:

Even at high premium, Hyderabad Apollo could win corporate and individual client base over a period of time. Improved Consultant doctors reputation and hence improved the confidence of prospective Patients. Started satellite facilities called Medical Centers within city to improve geographic reach, overcoming inaccessibility of Hyderabad Apollo Hospital. Medical Centers also provided minor surgeries and trauma care. Medical Centers also offered full range of diagnostic services and simpler treatments, improving the revenues. Improved referral doctor network by not accepting referral patients on permanent basis. Abundance of room for expansion and anticipated growth of Hyderabad city with foreign and institutional investors.

4. Expansion Vehicle: What expansion vehicle promises most effective to enhance

Apollo Hospitals profits while expanding recognition of the Apollo name?

4.1 Indian Medical Corporation (IHC) as consulting group, to use Apollo

experience and expertise in establishing and maintaining health care facilities, to provide

support to entrepreneurs to build and manage new medical facilities. This is to be achieved through Licensing Apollo name. Licensing Apollo name to groups of Doctors or entrepreneurs to provide medical facilities under Apollo name, would enable Apollo to grow faster without having to building wholly owned subsidies. This required talented pool of managers who would run the hospitals as per Apollo standards.
4.2 Health Maintenance Organization (HMO):

Health care to be provided to customers in return for a fixed annual premium. Since the income is fixed, the better strategy would be to prevent illness to spare itself from cost of sophisticated treatments. However, there is skepticism about how it is going to be received by customers. HMO also require building network of Hospitals under Apollo Brand name. The profitability of HMO depends upon effective preventive care and network of Apollo hospitals serving customers. However, with growing middle class with sizeable spare income to spend on health issues and growing health consciousness and growing health insurance market, Apollo has great opportunities to grow.
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