Apollo Case

The Apollo Clinic[1]

The Context

In October, 2001, Mr. Ratan Jalan, recently inducted as the Chief Executive Officer of Apollo Health and Lifestyle Limited (AHLL), Hyderabad was deliberating on the growth strategy adopted by the company. AHLL was a new venture started by the Apollo Hospitals Group with the ambitious mission of ‘taking quality health care to every nook and corner of the country’, leveraging the excellent reputation and in-depth expertise of the parent company (Exhibit 1).

Prior to joining AHLL, Ratan had several meetings with Dr. Prathap Reddy, the visionary founder of the Apollo Hospitals Group (AHG) and its Executive Chairman. In his meetings Dr. Reddy had articulated his vision of taking healthcare to the distant corners of India, through his dream project, The Apollo Clinic. Dr Reddy, once a leading cardiologist in the US, had pioneered corporate healthcare in India and was widely acknowledged as its father in the country. The Apollo Group, which started with India’s first corporate hospital in 1983 with a multi-specialty hospital in Chennai, is today’s the largest for-profit hospital chain in South Asia.

In the pre Apollo years a mix of government, charitable/missionary, and private nursing homes dominated health care sector in India. Government hospitals, the primary source of treatment for India’s vast majority, had expensive equipment and expert staff, but were beset with a number of problems such as chronic shortage of drugs, over crowding, long down times for critical equipment due to poor maintenance, inability to attract and retain good talent and poor staff morale. Nursing homes were small hospitals, most with 20 beds or less, had only a few specialties and were often managed by owner-doctors. While they provided a better ambience to patients compared to the impersonal and heavily overcrowded Government hospitals, they were small, offered limited services, lacked latest medical equipment and often worked under severe...