Apollo relooks hospital format, banks on tech to bolster revenues

Venkatesh Ganesh Bengaluru | Updated on January 20, 2018

SUNEETA REDDY, Joint MD, Apollo Hospitals

Apollo Hospitals is relooking its hospital formats and working on a business model that is not capital intensive going forward, as it seeks to pare debt.

Talking to BusinessLine, the company’s Joint MD Suneeta Reddy said Apollo is looking at ways to reduce the patient’s stay time, coupled with newer formats to treat different kinds of diseases.

“We are looking at newer ways of embracing technology that can result in patients spending lesser time in hospital,” said Reddy, who joined the business in 1989 and spearheads finance.

Apollo’s average revenue per bed was ₹2,820 in Q3, down 4 per cent from ₹2,939 in the previous year period, according to data from Edelweiss. The company clocked revenues of ₹1,380 crore in the March quarter, a 17 per cent rise over the same period last year.

Reddy added that technology can be used to connect specialists to specific doctors, monitor health records online, etc. A technology push can bring in cost benefits for the company and enhance comfort levels for patients, say industry watchers. “In urban places, it is difficult to travel distances, navigate traffic and pay for food, which adds to the cost of the treatment,” explained Reddy.

Win-win plan

Apollo currently operates 9,200 beds across 64 hospitals. While the traditional business model would be to add more beds or hospitals, technology can bolster revenues without these.

“Using technology properly can be a win-win for all,” said Vishal Bali, co-founder and Chairman of Medwell Ventures.

According to a report by Axis Securities, Apollo had debt of ₹609 crore in fiscal 2015, which is expected to reach ₹676 crore in 2016.

Vinay Betala, Associate Director – Corporates, India Ratings & Research, said any improvement in profitability would require a quick ramp-up in patient numbers and capacity utilisations for hospitals.

Year of consolidation

Across the sector, revenues from mature hospitals are increasing whereas new ones are still in investment phase.

“For Apollo, FY17 is likely to be a year of consolidation with higher capacity utilisation,” said Edelweiss analyst Deepak Malik.

Published on May 24, 2016

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