It’s betting big on its new growth prescription. For the Rs 524-crore Apollo Hospitals Group, after having built it in the last 19 years into a 5000 beds, 37 hospital group, there are now changes afoot. If so far, the biggest driver of its business had predominantly been the group-owned hospitals and clinics, it is now expected that in the future, there will be a strategic shift to managed care hospitals. Secondly, it hopes to build upon the existing growth to virtually double the group turnover to about Rs 1000 crore by 2005-06. Finally, there will also be a big thrust on the third party administrator (TPA) strategy to fuel its growth. How successful will the Apollo Group be in making this happen? Confirms Apollo Hospitals Group chairman, Pratap C Reddy, “Our fully-owned and partly-owned hospitals will continue to help us grow for the time-being. But three years down the line, our managed care division will contribute 40-50 per cent of the overall business.” Adds Praveen Singh, vice-president, Healthcare Products of consulting group, Feedback Ventures, which has extensive experience in the healthcare sector, “ Managed care is a good strategy. But its results will be seen only in about 2-3 years.” India Inc. takes a close look at its growth plans to see how it will pan out.

Leveraging Core Competence

What Apollo will do is try to capitalise on the nearly last two decades of expertise in the healthcare segment to manage hospitals for others. This is expected to be built on the nearly 7.5 million patients that the group has treated so far with a number of pioneering innovations and achievements to its credit. The managed care division, where Apollo has only management interests currently charges five per cent of the managed unit’s annual turnover as fee. Indeed, so critical is this strategy to Apollo’s future that the group expects that the proportion of owned beds to managed beds will change from 1.5:1 to about 1:1.5....