Apollo Hospitals case Study
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CASE ANALYSIS APOLLO HOSPITALS FIRST WORLD HEALTH CARE AT EMERGING-MARKET PRICES MAN 6726 STRATEGIC MANAGEMENT DOMINICAN REPUBLIC Professional MBA Prof. José R. de la Torre Prepared by: Rafael Rivas Herrera July 24th 2010 Apollo Hospitals Group in India is the acknowledged leader in bringing super speciality world class healthcare to India. It is presently the largest integrated healthcare company in Asia, holding 35% share in the market for private tertiary care and the first to attract foreign investment. 1, pg.3 According to the authors of the case, Health Care is fundamentally a local business. Most other industries have already gone global, yet health care seems to remain outside this globalization spectrum, with no global health care player yet in play, or is there? Dr. Reddy's dream is to bring health care to the majority of the Indian population as well as the rest of the world. Apollo has constantly proved its ability at tackling new business opportunities in local and international markets. They proved their local worthiness with feats such as the development of new hospitals in Delhi and Hyderabad. Even though Apollo enjoyed a good brand in Chennai, they had to develop it again in Hyderabad and that too with a new team of managers. The facility was far from the city as compared to Chennai which was extremely accessible and in overall, the cities were very different.
The most common treatments seem to be for cardiovascular issues, bone-related issues such as hip replacements, and general age-related issues." 2 At present, India provides top quality at much lower expenses than global competitors. Soft assets such as skilled health-care professionals, doctors, nurses, and technicians coupled with the fact that the cost of living is so much lower in India than the rest of the world, means that the same service is possible at a fraction of the price elsewhere. 2 These are major advantages for people traveling to India for medical services. Telemedicine is also an interesting and attractive concept which Apollo should focus on for it aims at closing the physical gap between patients and doctors and reducing travel expenses. Through virtual interactive dialogue it allows patients and doctors at both ends of the spectrum to get to know each other, share ideas, provide information, and perform follow up sessions remotely. By increasing productivity and efficiency, this product is an essential tool for medical tourism. There are four international customer segments for medical tourism in India. These are 20 million Indians living abroad, citizens from countries with rationed health care, uninsured American citizens and citizens from regional countries where top quality health care is hard to find. In view of this, there is sufficient potential demand for promoting medical tourism and therefore expanding Apollo Hospital's size and profits even further.
Any company which can finance its growth without the need of equity issuance or taking on debt is an indication of positive growth. Moreover through franchising, Apollo can further expand without the need to invest heavily from its FCF. In conclusion, the expansion vehicles promising most effectively to enhance Apollo Hospitals' profits while expanding recognition of the Apollo name are leveraging on both franchising and subsidiaries, creating IDN's, and the heavy promotion of medical tourism. With its solid financial position and by applying these three vehicles, Apollo can implement a very good strategy for their expansion. The short-term cash generated via franchising can be injected back into the construction of more subsidiary hospitals. Managing the system will be tough but weighing the advantages, the plan can give them a faster growth and visibility. Initially Apollo can target the major Indian cities and later expand to international territory. Apollo can launch the development of a Health maintenance organization (Insurance and Medicare HMO) which promotes high quality health care through a large network of doctors and hospitals as well as MEDICITIES in partnership with the public sector. Products such as Telemedicine can further bridge the gap in achieving a successful medical tourism strategy. To capture its four main international target customer segments, Apollo Hospitals needs to create and promote a world class marketing strategy, such as the alliance with SITA for medical tourism and therefore take advantage of the immense opportunity to provide top quality health care at low costs, gain world market share, and return outstanding profits.
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