About the Industry Health status varied Lag in availability of medical personnel & facilities Country Per 1,000,000 population Doctor Nurse Hospital beds India 407 214 1600 U.K 1615 7891 8000 U.S. 2380 3204 5900
Health care provided by State Government National Government By 1995, existence of150 Corporate comprehensive hospitals Estimation of 250 private hospitals by the year 2000 Out-of-pocket payment by patients Emerging middle class Upcoming markets
Porter’s 5-force model Threat of Substitutes Bargaining Bargaining Forces of power of Power of competition Suppliers Buyers Threat of New Entrants
Threat of Substitutes- limited No substitute for medical care A basic requirement
Threat of New Entrants- High High capital costs Long gestation periods (2 to 4 years) Industry- an attractive proposition due to High growth potential of the sector Stimulation to private sector An estimation of having approx 150 corporate hospitals by 1995 250 private hospitals by 2000
Competition - Intense Large number of players in the industry Govt. Hospitals – A strong competition High exit barriers (due to high capital investment)
Bargaining power of suppliers-High Referral doctors served as a major source of customer base.
Bargaining power of Buyers-Limited No substitute
About the Company Founded in 1983 by Dr. Pratap C. Reddy First Corporate hospital in India Comprehensive For profit Grew out of Dr. Reddy’s own practice Obstacles Regulatory Financial Combination of professional management structure and entrepreneurial approach
Management Philosophy Clear Vision High quality medical care “With a human face” Had no models to emulate. Apollo hospital organized around 5 stars Medical Personnel Medical Technology Employees Hospitality Value
Critical Success Factors (CSFs) CSF, sometimes referred as to strategic factors are those which are crucial for organizational success. When strategists consciously look for such factors and take them into consideration for strategic management, they are likely to be more successful while putting in relatively lesser effort.
Probability of Impact on business Impact High Medium Low High Critical High Low Medium High High Low Low To be watched Low Low
CSFs for Apollo HospitalsProbability of Impact on Impact business High Medium Low Market, Quality, High International - Regulatory Socio-cultural, Medium - - Economic Low Technological - Political
Market Environment Enormous , unmet demand for high quality health care among Indians Hospital Sector Private Nursing Homes Government Hospitals Factors Rates No. of beds Services Technology & Settings, facilities
Technological Environment Expensive but no large scale sudden changes
Economic Environment Economic Development pursued by Indian Government after independence Central planning Import substituting industrialization Liberal economic reforms in 1980
Regulatory Environment A new round of changes : Introduction of new industrial policy by Prime Minister Dismantling of licensing requirement Elimination of Government monopolies, reduced tariffs and liberalized foreign investment Stimulation of private sector growth Rao reforms leads to immense market excess
Political Environment Politics had no great role in the industry. Although lobbying could be used as an influence Lobbying: Presenting the idea to Prime Minister Liberalization of hospital sector, allowing broad access to financing and encouraging hospital development.
Socio-cultural Environment World’s largest democracy Variety of Economic levels Social status Cultural Group Co-existence of poor and middle class
International Environment High quality medical care available internationally as compared to India Brain Drain - A big issue
Environmental Sector Nature of Impact of Each Factor ImpactMarket Enormous , unmet demand for high quality health care among IndiansTechnological Expensive but no large scale sudden changesEconomical Economic Development, Liberal economic ReformsRegulatory New Industrial Policy, Rao reforms, Dismantling of licensing requirementsPolitical Politics had no great role in the industrySocio-cultural World’s largest democracy, Co-existence of poor and middle classInternational High quality medical care available
Financial capability factors Initial skepticism faced Convincing investors that a super- specialty hospital was viable in India A capital of $4.6 M issued through shares Colleagues contributed to 40% of stock By 1995, growth and potential of the company attracted foreign institutional investors. Financial performance had not been affected by competition despite the appearance of 5 other private hospitals in Madras Readiness of investor to invest
Marketing Capability Factors Marketing capability factors could be segregated into four basics categories: Product Promotion Price
Product High quality services as compared to competitors Specialized services High success rate meeting the international standards(88%) High sanitary standards Quick diagnosis Providing six categories of Rooms (Ranging from
Promotion Creating awareness : An initial challenge Concern on ethical propriety Focused on encouraging awareness of preventive health measures Goal of developing long term trusting relationship with patients
Promotion Aimed marketing effort at women Marketing programs Referrals Hospital capabilities Awareness programs Public Local schools
Promotion ApolloHeartbeat : A quarterly news paper Low priced check- up packages Advertising of Special priced diagnostics packages
Price Higher prices in comparison to the competitors.
Operational Capability Factors Effective utilization of equipments Average stay of the patient is less in comparison to competitors Apollo : 7 Days Other hospitals : 9 Days Govt. : 12 Days Quick diagnosis & treatment
High success rate A well maintained library provided access to key medical journals & reference books from around the world Online bibliography search system
Personnel Capability Factors Top caliber renowned doctors and surgeons 120 doctors from U.K. and North America Employees: The “Middle Star” for Apollo Team spirit An understanding about “Apollo’s large ambitions” in each employee Strong sense of Community
Wages Apollo hospital : 10-20% higher than local private hospitals Government Hospitals : Paid slightly higher than Apollo Employee benefits Induction manual : Dr. Reddy’s view of relationship with employee
Information capability Factors Recording of complaints in a computer database that revealed the patterns by Location Type of Complaint
General Management CapabilityFactors Clear vision of Dr. Reddy from the beginning Advanced medical care possible at high quality and “With a human face” Apollo is organized around 5 stars Medical Personnel Medical Technology
Employees Motivation Culture Compensation Hospitality Value Total opportunity cost Quality assurance CHANGE
High standard and stress on hospitality towards patient Emphasis on the fact that every employee contributed materially to patients’ experience at Apollo Team oriented culture Apollo’s operations geared towards providing outstanding value to patients.
Capability factor Competitive Strength/WeaknessFinancial capability Readiness of investors to invest, growth potential of the company and the sectorMarketing capability High quality service, Effective Promotion Program, High pricesOperational capability Effective utilization of equipments, Lessened duration of average stay per patientPersonnel capability Growth opportunities for employees, Employee participation, Top caliber medical personnelInformation Computerized database of complaintsManagement with a efficient retrieval systemCapabilityGeneral Management Clear vision, Team oriented culture,Capability Open and constructive organisational
STRENGTHS, WEAKNESS, OPPORTUNITIES AND THREATS (SWOT ANALYSIS)
Strengths Professional and personal contacts of Dr Reddy Colleagues and technology- A central source of satisfaction at Apollo Academic Support Consultants reputation Effective application of latest medical technology Perceived by consultants as a more attractive option compared to the Govt. hospitals
Weaknesses No models to emulate Questions about quality control in non-medical areas Quantitative measures of Quality were needed. Test results came slowly Cleanliness of cafeteria- A question?
Opportunities To spread the Apollo brand name across India To create joint ventures with international medical centres To cater to the growing middle class market Venturing into diverse business like Insurance and creating a hybrid of insurance and medical care
Threats Competition for some skilled staff like nurses Emigration