‘If we have to provide best-quality care, I cannot compromise on the use of technology. This has a necessary cost’

Coomi Kapoor: A general complaint is that the costs of super-speciality hospitals are so high that the average middle-class person cannot afford them. Moreover, insurance is not sufficient to cover the high cost of treatment or a long stay at a hospital.
It is a misconception that super-speciality  hospitals are expensive. Cost is different for conducting a tonsil surgery or treating a medical condition or doing a heart surgery. We used to charge $3,000 in 1983. Our outcomes have improved since then from 90 to 99 per cent, but costs have come down to $2,500. Continuously, we try to get better outcomes, better quality.

Coomi Kapoor: When you started Apollo Hospital in Delhi, the government gave you a piece of land on the understanding that you would treat a certain percentage of patients free. The charge is that you have not fulfilled your side of the bargain. The land was given for Re 1 and Apollo was to charge Re 1 for management. That was the agreement. We have never charged anything extra. In the US, they charge 7.5 per cent, in India it is 5 per cent of the turnover for managing a hospital. By the time the hospital was being built, the government moved us to another location. Then land papers disappeared and the project got delayed by six years. By the time our hospital opened, the cost of project had gone up from Rs 70 crore to Rs 160 crore, not just because of inflation but also due to availability of newer technology. More importantly, Customs duty was also waived. From day one, we have given accountable free treatment to all patients referred to us by the government. Their stay is also longer. We keep free beds and don’t put any paying patients on these beds.

Sunil Jain: How many foreigners can we expect to come to India for healthcare treatment?

The global medical tourism industry is $150 billion and India can get 50 per cent of that. In South Asia and Africa, it is $11 billion, while the Middle East attracts about $30 billion.

Coomi Kapoor: How many are we getting at present?

Only a billion plus, including naturopathy and Kerala treatment.

Jayati Ghose: Despite good medical talent and cost advantages that India has, why are we not a medical tourism hub? That’s because medical visa rules are very complex and unfriendly. Under a medical visa, a patient can only come to the country three times, but he may need to visit the doctor more often. So this needs to be changed.
Sunil Jain: There have been problems about nursing colleges. The Medical Council of India decides how many such colleges can be set up.

You can train 150-200 doctors in one batch, but cannot train more than 100 nurses. That is a problem. The ratio is 150 doctors to 300 nurses. We have been talking to the government, but till now no change has been made.

Subhomoy Bhattacharjee: Is an insurance-led model the best way to provide healthcare at the lowest level?

That is the right way, yes. No one thinks they will fall sick. But when they do, it falls on the family or friends to pay for the treatment. So a good health insurance or health plan is the answer. In my village, we had a scheme 15 years ago, where they paid Re 1 a day, i.e. Rs 350 a year, towards medical insurance. So all the treatment in the hospital was cashless. It worked beautifully. Unfortunately, the Rs 20,000 universal coverage plan covers only primary healthcare, so they should have something attached to it, say one out of 10 who have a more complex problem, the same cover can take care.

Sunil Jain: One common thought is that private hospitals are very expensive. Very often, hospitality and hospitals are used interchangeably. About 60-70 per cent of all hospital beds set up in the country over the last decade have been set up by the private sector. Given that costs are as they are and the government is as inefficient as it is, can we have a model where the private sector is looking after public health? Also, are we getting into a high-cost model like America where it is all insurance company driven?

Today, they are calling Apollo more expensive than Narayana Hrudayalaya. Even when we  started, they used to call us a five-star hospital. I said we are seven-star, not just five-star, in quality. I want to look at tertiary and quaternary care for which you need 360 degrees of connectivity and equipment and skilled knowledge. There is a price to this. Now if someone wants to get tonsil surgery conducted by us, it would be more expensive than another place with no infrastructure cost. Also, no aircoditioning will reduce 5 per cent of the cost, but it is essential to reduce infections.

Sunil Jain: Can we get primary health centres run by the private sector?

I will be starting in my village, Aragonda, a project called ‘Total Health’. I am adopting 70,000 people to look after their total health — mental, social and environmental  — from birth to death. Currently, it is a blank board. Everyone can say these things need to be done for a child to be born. We have asked the government to give us the public health centre at the village where the staff can work under our guidance and whatever money you give, you give it to us. Also give us the liberty to alter where we allocate the money. This is under consideration by the government now.

Telemedicine will make a huge difference. Under the National Knowledge Network, Sam Pitroda promised that every 6,000 people will have a node. I asked him, ‘why don’t you allow heathcare to ride on it’. Not just Apollo, make all other hospitals and government hospitals part of it so that the ASHA (Accredited Social Health Activist) worker at that place gets information first hand about a dengue fever or food poisoning outbreak. In a district in Andhra, we had 180 telemedicine centres and the telecost was Rs 25. So if a model can be done in one district in a month’s time, then why can’t the whole country do it? Currently, we are using telemedicine only for curative purposes, we can also use it to provide health awareness. Ninety per cent of our disease burden can be taken off if you can make the individual responsible.

Shobhana Subramanian: You have four daughters, do they overrule you?

At home, they do. Openly, they don’t disagree. But we always frankly discuss what should be the right way to manage the business. They have all identified four separate areas under healthcare. Preetha looks after the hospitals, Suneeta looks after the corporate and new initiatives, third daughter (Shobana) looks after pharmacy and insurance business, and fourth (Sangita) looks after education, tele-medicine, philanthropy and HR.

Shobhana Subramanian: Who will be your successor?

Automatically, it will be Preetha. All my daughters are capable, but Preetha has been tackling hospitals from the beginning and is well-accepted by everyone. She is as or more capable than her daddy.

Sunil Jain: Will there be multi-speciality hospitals in Tier II and III cities, and will they have the same cost structure as a Manipal Hospital or a Narayana Hrudayalaya?

Yes, there will be multi-speciality hospitals. If we have to provide best-quality care, I cannot compromise on use of technology. This has a necessary cost. However, in Tier II and III cities, we have a distinct cost advantage. Both land and administrative costs are lower. Between our hospitals in small towns and villages, which are branded as ‘Reach’,  and metro hospitals, there is a clear cost difference of 17-20 per cent.

Pallavi Ail: How will you attract and maintain doctors, nurses and other paramedical staff for hospitals in smaller cities?

The doctors are concerned about their children getting good education — fortunately, today Tier II and III cities have excellent schools, and this has helped us attract and send skilled people to these cities. Every year, about a thousand doctors from the UK apply to return to India and work for Apollo Hospitals. We select about 300 from them. This year, 80 per cent of the selected doctors have opted to work at Reach hospitals.

Shruti Ambavat: How has private equity helped you in terms of growing your business? Is there a deal with KKR (Kohlberg Kravis Roberts)?

We have completed a deal. We have taken Rs 550 crore from KKR to clear our debt and to also expand in new areas in the healthcare sector, beyond hospitals.

Shobhana Subramanian: What are the new areas you are venturing into?

We will venture into health IT. We need to reach people on the move. The environment for 3G, 4G  mobile broadband is developing and we want to use the cellphone to bring health awareness to the public and to keep them well.

Sunil Jain: You are buying into them as a private equity firm?

We have already started a company for health IT where we will bring in private equity plus provide solutions to reach out to the masses. We are also working on home health. This means a nurse or physiotherapy for patients who have been discharged. In the future, we want to take it to the next level where a discharged patient or elderly patient is connected 24X7 to the hospital through IT systems and we can reach out to him for any assistance at any time.

Sunil Jain: How much would health IT form part of your total business?

I don’t know, but we will do beyond our promise. Numbers are important. We need to live up to the trust that people put in us. This year, we are adding 10 new hospitals with 1,500 new beds at a cost of Rs 2,000-crore, plus upgrading facilities. One challenge was to bring talented doctors and paramedics to practise in villages and Tier II and III cities. Today we have seven Reach hospitals, and are adding six more. The focus is to take healthcare to rural areas, to help patients who travel at least 200-300 kilometres to reach a hospital.

Abantika Ghosh: There is an ongoing issue of pending bills with the Central Government Health Scheme (CGHS). Some private hospitals have left the CGHS, and some have threatened to leave. How can this be resolved?

Hospitals should be transparent, however the CGHS should also be transparent about the cost. They are reimbursing at 2006 tariffs. We pay in three weeks for whatever we buy. But they give repayment in six months and deduct as they please.
Abantika Ghosh: There is a perception that the corporate healthcare system has reduced trust in the doctor-patient relationship. How do you look at it?

I am a doctor first. My patients still love me. One must continue to enjoy the trust of patients. A one-day gain may become a long-term loss if the patient loses trust. Hospitals and doctors must be transparent. However, patients should also understand that costs vary from disease to disease and surgery to surgery.

Surabhi: A lot of Indian drugmakers are facing flak from foreign regulators on manufacturing practices, with Ranbaxy being the latest. What is you view on this? Also, will you continue to sell Ranbaxy drugs?

Ranbaxy is not the only company, they have pointed to others also. I don’t find anything wrong. I have met the FDA (Food and Drug Administration) head. Their point is clear, and I agree. A drug, instead of improving, may harm fatally. So I agree there needs to be strict discipline in manufacturing. Our government should also be strict. Last time, we had stopped Ranbaxy drugs for sometime and sought a detailed explanation, and only resumed selling the drugs after the government of India vouched for their safety.

Pritha Chatterjee: There was a Supreme Court judgment on medical negligence last year against Kolkata’s AMRI hospital. How do you react as a hospital group? Also, have you taken any precautions?

We did not see reason in the judgment. A doctor has all-pervasive power of prescribing or taking a specific course of treatment. How can the hospital be held responsible? Also, where the doctor is concerned, I can’t say whether he was negligent or not. It was a difficult case. We have guidelines for doctors. We have also discussed legal aspects of treating patients.

Pallavi Ail: Are you planning to rope in a partner for your pharmacy business?

When we talk about a partner, it is for two reasons. Primarily, how can we run the pharmacy business better — we are running it quite efficiently as of now. The second thing is the sourcing. We are not looking for an investor in the pharmacy, but a partner who has dual sourcing. He will source from India and we will be able to source from him. When I get the right partner, I will come back
to you.

A partner can bring three things. First, if they are large, they know how to manage a large chain. That we have learnt already and we have a strong IT system to manage the chain of pharmacies. Secondly, it is the sourcing. That can give some cost benefit. But the partner should also source from India, i.e. we take some products from them and they buy some products from Apollo. It should be an equal partnership.

Shobhana Subramanian: Who are you more proud of — Dr Reddy, the doctor, or  Dr Reddy, the entrepreneur?
The doctor. I am a doctor and I miss seeing patients.

Shobhana Subramanian: Why have you given up  practice?

Because of time, and also, I have not been able to keep up with new technology. As a cardiologist, so much has happened in this field and newer things are happening. If you don’t have time, you cannot keep up. If I had stayed at my initial 150-bed hospital, I would still be practising. But then that would be at the cost of expansion.

 Transcribed by Jayati Ghose