Apollo Health and Lifestyle Limited (AHLL), a company set up by the Apollo Hospitals Group has taken on the ambitious task of setting up 30 'Family Health Centres' by December 2002 through innovative business initiatives largely in the area of primary healthcare. Heading this organization is Ratan Jalan, as CEO an engineer from IIT-Kharagpur. His 25-year long career began with a decade at HCL and went on to set up the MIS division for the Duncan Group at Kolkata. For the next ten years, he was in advertising and direct marketing at Lintas. In 1996, he shifted his focus to healthcare and was President & Chief Operating Officer, Asian Health Services Pvt Ltd, a 50:50 joint venture of Service Master, a $7.5 billion, Fortune 500 company that provides consultancy, planning and design services. After taking on the mantle at AHLL, Jalan was instrumental in setting up two Apollo clinics in New Delhi. In an interview, with Nandita Vijay of Pharmabiz.com, Ratan Jalan discusses AHLL's the concept of retailing in healthcare systems through the company's franchise-based business model.

What is the idea behind setting up of Apollo Health & Lifestyle Limited (AHLL)?

Apollo Health and Lifestyle Limited was formed as a subsidiary of Apollo Hospitals Enterprise in November 2000 and the idea of Apollo Clinics was born because we sensed there was a sizeable opportunity in the area of primary healthcare. On an average, families are spending Rs 540 a month on day-to-day healthcare. In return they get poor infrastructure and unhygienic clinics. There is a very little quality control. Preliminary research also indicated that potential customers were demanding better quality, consistent and standardized services. With the Apollo Clinic, we felt that we should be able to deliver all this. But I would also like to add that we would not attempt to replace the family physician. We will be complementing their services. In a way, we are bringing the concept of retailing into healthcare systems through our franchise-based business model.

How do you rate the Indian healthcare market today?

Healthcare as per various estimates is close to a Rs 100,000-crore industry and a study done by KSA Technopak indicates that a family in urban India spends as much as 11 percent of household income on healthcare, that is, outside hospitals.

As of now, the day-to-day healthcare (visits to the family doctor, laboratory tests etc.) is not organized. There are no defined standards of service and no stringent regulations. Quality parameters are not defined.

Thus very often, a blood test taken in two clinics yields different results. It is like a cottage industry. Compare this with the US where healthcare constitutes 13.7 percent of GDP and is the largest business in the US, larger than even information technology.

What are your plans to further expand your service offerings?

We would offer a range of world-class services, coupled with reliability and competitive pricing. In addition, to consultation services with leading specialists, customers can avail comprehensive diagnostic facilities, a range of specially designed preventive health checks, a well stocked 24-hour pharmacy and even counseling and tele-medicine.

Preventive healthcare is a very large market abroad. In India, too the awareness regarding Preventive Health is now catching on. In the corporate sector, a lot of organizations are realizing that healthy employees are a lot more productive. We would offer Preventive Health Programs apart from promoting the benefits of a good lifestyle and regular health checks.

What specific strategies have you adopted to grow in the current scenario?

We have adopted Franchising as our business model. The franchisee model is the most viable vehicle as we will be able to exploit the entrepreneurial abilities of owner-managers, and at the same time, achieve economies of scale and efficient services through our domain knowledge and experience.

The franchise model aims to increase penetration and geographical reach of these clinics. In fact, in April, we have already opened the first such franchisee owned clinic in New Delhi. Anybody who has the requisite finances and shares our vision and quality focus could explore the possibility of setting up an Apollo Clinic. This way we would like to touch every town that has four to five lakh population.

How successful was the two-week residential Executive Business Education Programme for your franchisees at the Indian Institute of Management (IIM)?

The programme was a success and we will be doing more such programs regularly. The franchisees benefited from interactions with Professors at Indian IIM-Bangalore and the healthcare industry.

Do you think this concept of franchise will catch on in India?

Today, consumers are sensitive to both care and cure and are hungry for information. They are also willing to dig deeper into their pockets to get that extra reliability, reassurance and convenience. The Apollo clinic will offer that extra at a reasonable price. Our philosophy is that the clinic should be value for money and customers should feel that they have got more than their money's worth. So I do not see any reason why this concept will not work in India.

How does AHLL benefit from the tie-up with IIM-B?

Since our business model is franchise-based, its success depends largely upon the leadership abilities of the franchisees. It is therefore important to equip them with multidisciplinary skills, especially relevant to healthcare businesses. Since IIM has the expertise for conducting such a course, this partnership will be very fruitful.

What kind of organization do you want to evolve into?

The future belongs to the service economy. And our ability to create the right customer experience is going to be the most crucial determinant of our success and its sustainability. All our efforts will be directed towards providing best service quality.

Do you have plans to launch similar services abroad?

Yes, we are looking at overseas markets where there is a huge demand for good healthcare services. We will be focusing on areas where the Apollo brand name is already familiar and where there is a large Indian migrant population such as West Asia, Bangladesh, Middle East and Sri Lanka. We have already signed an agreement with Al Rajhi Banking Corporation of Saudi Arabia to manage a clinic in Al Khobar. We intend to open atleast 20-25 clinics in the next 2-3 years.

Would the Apollo Clinics be the next revolution in the Indian health horizon?

With the growing awareness amongst consumers there is a need to provide the same brand promise across the chain to offer convenience. Thus, it better that healthcare organizations have brand management at the parent or institutional level, rather than at the sub-brand or clinician level. And with 250 Apollo Clinics on the ground in next three years, we are talking of revolution in the Indian health horizon.