[international business]apollo hospitals

APOLLO HOSPITALSFIRST-WORLD HEALTH CARE at EMERGING-MARKET PRICES

INTERNATIONAL CONSULTING

CONTENTSCONTENTS

Issue DefinitionEnvironment Analysis

Strategy OptionsStrategy Choice

Action Plan

ISSUE DEFINITIONISSUE DEFINITION

ISSUE DEFINITIONISSUE DEFINITION

1

Apollo Hospitals Group faced ample opportunities.But which strategies were most promising?

Integrated Health Care Delivery Networks

International Hospital Management

Medical Tourism

ENVIRONMENT ANALYSISENVIRONMENT ANALYSIS


2

Treating patients from more than 50 countries

Share in the tertiary care market stood at 14% in India

35% share in the market for private tertiary care

1. Internal Environment - Apollo Group


3

1. Internal Environment - Local Competitors

ApolloHospitals

ManipalGroup

FortisHealthcare

Ltd.

33 hospitals 11+7 hospitals4 hospitals

(10 hospitals)

6400 beds 6000 beds600 beds

(4000 beds)


4

Indians spent 5.2% of GDP on health care(less than South Koreans 6.7% and Brazilians 6.5% but more than China 2.7%)

2. Local Environment


5

4%

7%

10%

13%

16%

2000 2001 2002 2003 2004

Total Expenditure on Health, %GDP

US France Canada UK Korea


6

Only 15% of the Indian population was covered by insurance

2. Local Environment


7

25%

50%

75%

100%

US Canada France UK Korea

Public expenditure on health, % total expenditure on health in 2004


8

Total expenditure on health has increased constantly

3. Global Environment


$1,775

$3,350

$4,925

$6,500

2000 2001 2002 2003 2004

Total expenditure on health, Per capita US$ PPP

UK Canada France US Korea

9


India has a competitive advantage in the Health Care Cost

3. Global Environment

10


11

$6,000

$12,000

$18,000

$24,000

$30,000

US UK Malaysia Singapore Thailand India

$6,000$7,500$8,000

$9,000

$27,000$26,000

Global Cost Differences for Cardiac Surgery(US$)


12

$32,000

$64,000

$96,000

$128,000

$160,000

H/V Replacement Heart Bypass Angioplasty Gastric Bypass Hip Replacement Knee Replacement

$8,500$9,000$11,000$11,000$10,000$9,500

$40,640$43,780$47,988

$57,262

$122,424

$159,326

Health Care Cost Differences between US and India(US$)

USIndia


13


Apollo Hospitals Group is dominant company in the India tertiary care market.

13

But there are number of competitors in the market for privately-provided tertiary care.

And Indians spend most of health care expenditure(64%) in their pocket directly without public support.



13



Growth Limits of Domestic Health Care Market in short-term view



13




Global Total expenditure on health %GDP has increased constantly.

Also, Global Total expenditure on health per Capita has increased.

And, India has a competitive advantage in the Health Care Cost.



13




Global Total expenditure on health %GDP has increased constantly.

Also, Global Total expenditure on health per Capita has increased.

And, India has a competitive advantage in the Health Care Cost.

Opportunity of Global Health Care Market for Apollo Hospitals

STRATEGY OPTIONSSTRATEGY OPTIONS


14

Integrated Health Care Delivery Networks

International Hospital Management

Medical Tourism


15

Advanced Health Care technology and a huge cost advantage

Intellectual Property(Human resources and Managing Know-how)

Apollo intended to pursue an asset-light strategy

STRATEGY CHOICESTRATEGY CHOICE


16

Integrated Health Care Delivery

Network

International Hospitals

Management

MedicalTourism

Pharmacy NetworkThe group operated the largest

pharmacy network(40% of profits)

Colombo HospitalDominant Position in Sri Lanka

InternationalConsulting & Project(33% of consulting revenue)

SITACAREwww.SITACARE.com One-Stop Shop(200 offices in India, 7 offices in EU)

Domestic Market Strategy

Integrated Health Care Service

Financial Risks

Cost Advantage in Global

Using Human Resource andIntellectual Property

Asset-Heavy Strategy

Cost Advantage in Global

Using Intellectual Property

Lack of Infrastructure

Less Market Dominance

http://www.SITACARE.com

http://www.SITACARE.com


17

Domestic Health Care Market faced Growth limitation but Global Health Care Market is growing up


17

If Apollo concentrate on the IDN or the property of the abroad hospitals, they have to invest more and it would be against group which pursuit asset-light strategy.



17

If Apollo concentrate on the IDN or the property of the abroad hospitals, they have to invest more and it would be against group which pursuit asset-light strategy.

Therefore, Apollo need to concentrate on the medical tourism using advantages of health care technology and cost,

and abroad hospital operation management using their human resources and intellectual property.



18

Cooperation U-Health International Clinic

Operation Management

Time

Global Medical Tourism

After-Care Infrastructure

Medical Tourism in India

Strate

gy

ACTION PLANACTION PLAN


19

Short-Term Strategy

Medical Tourism

How can we make foreign patients?

Mid-Term Strategy

After-care Infrastructure

How can we structure After-care Infra most efficiently?

Long-Term Strategy

Global Medical Tourism

How can we make dominance in the Global Medical Tourism Market?

1. Strategy Goal


20

2. Medical Tourism - Segments Choice

Members of 20 million Indian diaspora

Countries with rationed(EU Nations including UK, Canada)

The Legions of uninsured in the United States

Patients from regional markets in which top-

quality were hard to find

21ACTION PLANACTION PLAN


22

2. Medical Tourism - Segments Choice

Members of 20 million Indian diaspora

Countries with rationed(EU Nations including UK, Canada)


Patients from regional markets in which top-

quality were hard to find


23

2. Medical Tourism - US

30

35

40

45

2000 2001 2002 2003 2004

Population in the US without Health Insurance(millions)


24



43 million Americans under the age 65 had no health Insurance

Everyday about 8 million of American search the internet for the medical informations .

About 53% of them find it useful for their life.

About 22% of users find it hard to search web effectively.

Source : www.dt.co.kr

http://www.dt.co.kr

http://www.dt.co.kr


24



43 million Americans under the age 65 had no health Insurance

Everyday about 8 million of American search the internet for the medical informations .

About 53% of them find it useful for their life.

About 22% of users find it hard to search web effectively.

Source : www.dt.co.kr

Web-based One-Stop Shop

http://www.dt.co.kr

http://www.dt.co.kr


25


Cooperate with MSN

Web-based One-Stop Shop MSN Health Care Service

Use MSN Messenger for U-Health

Provide Informations by MSN Searching Engine


26

2. Medical Tourism - EU Nations and Canada

British National Health Service Waiting Lists

Waiting Time

0 to 5 months

6 to 8 months

9 to 11 months

More than 1 year

October 2003 793,200 124,300 38,800 109

October 2004 774,400 69,600 33 24


27

They want the Health Care Service that has cost advantages and Conveniences.

It appeared to get easier to Travel Abroad for Treatment in the EU Nations.

Some private insurers had started steering clients to countries with cheaper care.



27

They want the Health Care Service that has cost advantages and Conveniences.

It appeared to get easier to Travel Abroad for Treatment in the EU Nations.

Some private insurers had started steering clients to countries with cheaper care.

Expansion of Brokers to Provide Informations and Services



28

Cooperate with Private Insurance Company

Win-win Strategy for Insurance Companies and Customers

Developing Potential Customer

Private Insurance Company can perform the roll of brokers



29

Expansion of Brokers

Expansion of Existing Brokers in Europe Market.(SITACARE has 7 offices in the EU)

Developing New Brokersby Cooperating with “Tour Guide” Company

Enhancing function of One-Stop Shopping

Potential Customers can find reasonable health care more easily



30

3. After-Care Infrastructure

U-Health

International Clinic


31

3. After-Care Infrastructure - U-Health

Medical Service at Anytime, Anywhere


32

Process of the U-Health



33

U-health can be After-care tool(Cover the weakness of Medical Tourism)

Customer Relationship Management Tool

Save expenditure of health care to Customer



34

3. After-Care Infrastructure - International Clinic

Use to After-care tools in International Market

Cover the limitations of U-Health

Have an Investment efficiency

Use own Human Resources

Franchising International Clinic


35

4. Global Medical Tourism


35

Opportunities in China

Increasing Demands of Premier Health Care.

China opened Health Care Market to Foreign Companies.(Limited Partnership or Joint-Venture)

More than 90 million tourist visited China each year.

(India attracted less than 3 million foreign visitors a year)

China is Potential Market of Medical Tourism.



36


If China Health Care Market grows up, is it Just Crisis to Apollo?


37


It is a huge Opportunity for Apollo!We have to use this Opportunity


38


International Consulting & Projects

33% of consulting revenues, a figure that expected to rise to 50%

Consulting Division contributed only 2.4% to AHEL’s revenue, but 10% for Profits

It is a Market for our Intellectual Property

“We should manage hospitals, we should NOT own them.”


39


Managing Hospitals in China

Contributing China Market Growth using their Human Resource and Intellectual Property

Dominant Position in the China Health Care Market

Doing Medical Tourism Strategy in China(Including Potential Market - Japan, Australia)


40


India


40


+India China


40


+

Ultimately, Apollo Hospitals will be the Leader of Global Tourism Market

India China

THE FIRST PART OFTHE GAME IS OVER

THE FIRST PART OFTHE GAME IS OVER

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[international business]apollo hospitals

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