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Apollo Hospitals bets on apartments and housing societies to expand primary care clinics

 

After a brief pause, Apollo Clinics, a multi-specialty clinics division run by Apollo Health & Lifestyle Limited (AHLL), the retail healthcare arm of Apollo Hospitals, is charting an aggressive expansion plan.

It plans to add 10-15 clinics every year, and has also tied up with ApnaComplex, a company that manages apartment complexes, gated communities and co-operative housing societies to setup society clinics.

Initially, Apollo plans to launch 100 such clinics in cities starting with Bangalore, Pune, Chennai and Hyderabad, and it plans to extend the chain to eight more cities with over 500 centers over the next 3 years.

A society clinic will operate out of a small place allotted by the apartment society and will provide health consultations, tests, health checks, vaccinations, and a pharmacy.  A dedicated nurse will be present through the day, while a physician from Apollo is made available at specified time, the entire set of Apollo specialists will be online or will be on call.

Apollo so far has a network of 77 primary health clinics across 34 Indian cities and one in Qatar.  Half of those clinics are managed by Apollo, with the rest being franchised.

In a franchisee model, the partner puts the entire investment of setting up the clinic and running the operations while Apollo extends its brand, network eco-system, guidelines on standard operating procedures and shares knowledge. Apollo charges a one-time license fee, and an ongoing license fee based on revenues.

Difficult model

The clinics division was founded in 2002 with an aim to capture a pie of primary healthcare market that’s largely unorganized led by doctor-driven clinics and nursing homes.

Apollo Clinics typically operate out of 5,000 square feet integrated facilities that offers specialist consultation, day care procedures, dentist, diagnostics, preventive health checks, and pharmacy all under one roof, at a price point lower compared to hospitals.

The small clinic model is nimbler, and allows Apollo to locate facilities in neighborhoods that are closer to where patients live and where leases for smaller spaces are typically cheaper, reducing overhead.

Apollo can also focus on the services that are most relevant to the local communities and equip it appropriately, reducing fixed costs.

It takes around Rs 3 – 3.5 crore investment to put up a clinic, and would require 2.5-3 years to break even.

Apollo was trying a model at a scale that never had any precedent, and things sometimes didn’t pan out as anticipated.

“This model is capital intensive, both on the capex and opex front, and our growth has been measured,” said Anand Wasker, COO, Apollo Clinics, in an interview to Moneycontrol.

“Over the years, we have experimented with cities and partners. We had faced some rough weather in the previous five years. During that time, we have parted ways with some of the partners and shuttered down clinics that didn’t do well,” Wasker said.

Wasker says an organized primary healthcare model will take some more time to catch up and it would need lot of investment.

“At least in the top 10-20 cities, a lot of consumers will want to go to a setup which they can trust, has a set of standard operating procedures (SOPs), convenience, digitally enabled, makes their life easy and gets proper outcomes. That’s where the world is moving, that’s where healthcare is moving, but very slowly, especially primary care,” Wasker said.




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