Apollo to cash in on its franchise, set up chain of health clinics

Says Mr Ratan Jalan, CEO, AHLL, ‘‘the franchisee model will be 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.’’

Mukta Magazine
December 18, 2001

Apollo to cash in on its franchise, set up chain of health clinics

Apollo Health & Lifestyle Ltd (AHLL) a wholly-owned subsidiary of the Apollo Group of Hospitals, plans to set up a chain of franchised primary health care clinics across the country. The company has around 8 clinics functioning at the moment, all of which are company owned. However, the new model it is looking at is a franchisee-owned one in order to increase penetration and geographical reach.

Says Mr Ratan Jalan, CEO, AHLL, ‘‘the franchisee model will be 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.’’

What kicked off this foray into primary healthcare was the recognition of the phenomenal business potential this segment offers. Consider: A KSA Technopak study of SEC A and B households revealed that 11 per cent of an urban household’s income is spent on healthcare, of which 68 per cent is on non-hospital expenditure. An internal assessment also showed that the average healthcare expenditure per family per month was Rs 540 on consultation and tests alone.

To be branded Apollo Clinics-Family Health Centres, the clinics will be based in residential areas and offer complete solutions to day-to-day healthcare needs, offer specialist services, diagnostic services, 24-hour pharmacy and preventive healthcare check-up packages.

The target is to have 75 clinics by the end of 2002, beginning with the north. In Delhi itself it has a target of setting up 10 clinics. AHLL Is targeting revenues of between Rs 4 to 8 crore per clinic in the first year and a total of Rs 750 crore by the end of the third year when all the clinics will be functional. ‘‘Our philosophy is that the clinics should make money because of volumes not margins. So the fees for consultations and tests would not be premium. Our focus will be on quality and achieving operational efficiency,’’ says Mr Jalan.

The clinics will cover an area of 4000 sq ft, with an investment of Rs 2 crore. Besides a one-time development fee of Rs 15 lakh, the franchisee would pay 4 per cent of revenue annually as licensing and managerial assistance fee. On its part, AHLL will be involved in the project at every stage, helping in arranging finance, designing the interiors, manpower planning and selection, recruitment and training, sourcing, skill upgradation and selection of equipment and IT infrastructure.

It has signed on GE Medical Services to develop a customised and seamless Clinic Management Software Solution for operational efficiency. A standardised model is being designed by architect Alfaz Miller, blending functionality with aesthetics, which would communicate the same brand promise across the country.

It has also finalised a rigorous training programme. Says Mr Jalan, ‘‘Training is critical for standardisation in the delivery of services. IIM(B) has customised a two-week residential programme for franchise center heads. Besides this, we have commissioned NIS Sparta to conduct two programmes on service quality training for front office staff and a sensitisation workshop for physicians. An Apollo team will also conduct health issue related training for ground staff.’’

AHLL has earmarked Rs 6 crore for the first 18 months for national brand building initiatives. At the local level, a system of revenue sharing with the franchisee has been devised to target specific groups. Says Mr Anas A Wajid, sr manager, marketing,‘‘we plan to have at least one promotion a month which may be occasion-specific, disease-specific or aimed at developing awareness. We would also be doing a lot of direct marketing and targeting specific communities and groups like schools, besides corporate houses for health check-ups.’’


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