Apollo Hospitals' Shobana Kamineni: 'India Is a Nascent Country in Terms of Health Care'Published: March 26, 2009 in India Knowledge@Wharton
By continually adopting cutting-edge technology and entering new sectors such as health insurance and pharmaceutical retailing, Apollo Hospitals, Asia's largest health care provider, has helped to shape India's medical landscape. At the recent Wharton India Economic Forum in Philadelphia, India Knowledge@Wharton spoke with Shobana Kamineni, the company's executive director of new initiatives, about Apollo's recent ventures and what the future holds for health care in India.
India Knowledge@Wharton: Apollo is Asia's largest health care provider. Could you give us a sense of its scope of operations?
Shobana Kamineni: Whenever we take stock, there is always something new. But broadly, we are in tertiary care hospitals -- we have about 42, owned and managed. We have 8,500-plus beds and 60,000 employees. Apart from hospitals, we are in [the] retail [pharmacy sector]. We have 900 pharmacies today. By June, or well before June, we will have 1,000 pharmacies. We open one a day -- that is the kind of count we have been doing for the last two years.
And we have clinics. We have a BPO and IT [services unit]; the headquarters is actually quite close to Philadelphia. In health insurance, we have a new company, about a year-and-a-half old. It is a joint venture with Munich Re, which is the world's largest reinsurance company. That is a new initiative for us.
Apart from that, we have several other businesses. We are incubating the Health Highway. We have an ambulance service. We do a lot of insurance for the underprivileged in rural areas, where we manage the health insurance programs for them.
India Knowledge@Wharton: What is the "Health Highway"?
Kamineni: TheHealth Highway is a new project, with IBM as the technology provider, where we are creating a linkage between hospitals -- not just ours, but hospitals across India -- and also doctors, [so that] patients' records [can be accessed]. [It encompasses] all aspects of information technology, whether it involves managing a hospital, managing procurement or even finding resources in terms of human resources -- many, many things. This is what we would provide: Scientific information, teleradiology, telemedicine -- everything would be part of the Highway Initiative.
India Knowledge@Wharton: This initiative would reach into rural areas?
Kamineni: Definitely.We are already quite robust [in terms of] the network we have.
India Knowledge@Wharton: What would you say are the major problems with medical infrastructure in India today?
Kamineni: The short answer is that there is a huge shortage of quality beds. It is a little skewed: You find a lot of competition for beds in cities, in urban areas, and that is why Apollo is moving to tier-two cities, where we are establishing, again, tertiary care hospitals. We think that there is a lot of growth [potential there], and that the rural population can afford good quality medicine. It is going to take a trillion dollars of public and private money over the next 10 years to even try and catch up to what the public actually needs.
The other day, I read a statistic. It is clinically proven that Indians are prone to heart disease and, unfortunately, we have been tagged as the diabetes capital of the world. Nearly 12% [of Indians] are diabetics, and [experts] are saying that the cost of preventive medicine by 2015 is going to be around US$50 billion. We are seeing it happening; it is quite frightening.
India Knowledge@Wharton: With the kinds of technological advances -- both medical and informational -- that are taking place, some of which you have cited, how do you see the Indian health care landscape transforming over the next few years?
Kamineni: Our hospitals have always been very technologically advanced. [One example is] the Cyberknife: Dr. Adler, who invented it, was in India last week, and we bought the first Cyberknife in the region.... [It provides] advanced radiology for cancer treatment. There are very few in the world. It is so much more precise, and the radiation used is one-tenth of what a normal machine uses. We have PET-CT [scanners] in our hospitals. We have always believed in technology: When our first hospital opened in 1982, we had the first CAT scan in the country. And we have continued to [believe that technology] plays an important role.
There are some doctors from the U.S. who have come to visit us, and they are actually shocked that 95% of our open-heart surgery cases are done with the heart beating. That is cutting-edge technology. In the U.S., they probably use that technology for maybe 50% to 60% of cases. And so I think that India -- and by and large, Indian doctors -- are well known. We have been fortunate to have a lot of them come back [to India to practice]. So, one [element] is technology, and [the second] is the ability to harness the people with the talent who can use that technology. India is definitely proving itself as a center for that excellence.
India Knowledge@Wharton: Are you seeing a higher number of doctors coming back to India following their medical training than you saw previously?
Kamineni: I would think so, because for every new hospital that we open, we have quite a few applicants -- not as many from the U.S., but definitely from England and other [countries], and most of these are Indians. But surprisingly, we have [some] expats also working with us.
India Knowledge@Wharton: Your first hospital opened in 1982 in Chennai, and it had only 150 beds. To what do you attribute Apollo's phenomenal growth over the years?
Kamineni: I think that the greatest growth has actually taken place over the last 10 years. We had the advantage of the previous 15 years to prove, test and get the model right. [From the start,] I think we believed that the quality of the patient service and, particularly, outcomes are critical at Apollo. If you compare us to anywhere, whether it is for open-heart surgery or even a liver transplant, we have world-class outcomes in all our hospitals. I think the focus on that has helped us to grow and [helped] people to have the confidence in us.
The phenomenal growth over the last 10 years in many of these sectors has been because of the ability to access capital much more easily, and the fact that we have two or three levels of management who have grown with us and who were able to take on the mantle to move into new projects -- right from doctors to nurses to management personnel, in all fields. I think that is a great combination.
India Knowledge@Wharton: I imagine that one thing that could hamper Apollo's growth is India's infrastructure. Globally, you compete with hospitals from Thailand, for instance, where infrastructure is not so much of an issue; people can fly in very easily and get to where they need to go. How does Apollo compete, then, with that competition?
Kamineni: You know, 15% of all our major hospitals have international patients. A lot of them are there for higher-end treatments, and I think they come because of the quality of the outcomes. Our doctors in Chennai, for instance, have done the largest number of cementless hip replacements in the world. So, people will come from the U.S. and Canada for them. Thailand [sees patients] for the regular types of procedures where there is a cost arbitrage, but they come to India for open-heart surgery and for the more difficult surgeries.
When it comes to infrastructure, there is very little I can say in India's defense, except that I think we have been able to overcome that problem within our little island of a hospital ... but we cannot take it on outside. But the government has now understood. They have gone to Thailand. Everybody has studied Thailand as a model in the whole region. Singapore has, Malaysia -- everybody is trying to replicate that model effectively. I think that the numbers are telling us that it is not just Thailand that dominates the region, but the other hospitals in the region are benefiting from this sector opening up.
India Knowledge@Wharton: And do you see improvements in infrastructure that are either happening now, or that are planned, which will help to improve the situation?
Kamineni: [In terms of] connectivity, yes. We have privatized airports in India. Three of our major airports are private. I think that there has been a sea change in the number of flights that come in, the connectivity. In terms of roads, India has embarked [on building a larger network] -- not maybe on the scale that China has, but [comparable to] what the U.S. did in the 1950s and 1960s, and during the Great Depression.... We still have issues in terms of electricity, but I think it does not really affect the hospital as much as it is a state problem.
India Knowledge@Wharton: Have these types of issues contributed to some of the health care innovations you cited earlier -- for example, the adoption of teleradiology and telemedicine?
Kamineni: It's a good observation that the advancement that we've had in telemedicine is in response to a need. We actually have diagnostic vans which have satellite connectivity with ISRO, the Indian Space Research Organization.... We go into the rural and remote areas where we are able to diagnose people with heart ailments, and do ultrasounds and x-rays. The information gets beamed into our main hospitals. And this is on moving vans. So I think that, yes, innovation has been there in response to a need.
We use telemedicine extensively. After the  tsunami in Asia, we had an outpost on Andaman, which is the island that got hit. It was completely submerged. The first thing that the government linked up was our telemedicine station, and so we were doing consults across the ocean into this area. It was a huge need that was served.
India Knowledge@Wharton: You have been branching into retail pharmaceuticals and into health insurance as well. Where do you see Apollo in five or ten years in terms of its strategy?
Kamineni: India is such a nascent country in terms of health care that we are providing for every need. It is like the Wild West -- we've put our stakes in every part of health care, but I think that there are enough players and competition coming in that we have to choose which are the areas that we will continue to dominate and be really good at. [One] is definitely health insurance, where we feel that access for people is going to come from.The need in India is probably the size of the U.S. population; [there are] 300 million people who can afford health insurance, so we just need to be able to make them aware [we have it].
For Apollo, hospitals will always remain the core of our business. I think the pharmacies are a means to an end. We got into the retail space. We are quite good at it. By next year, that project will break even and start doing well, so there is definitely strength in that. And we will continue to expand across our own geographic borders into other markets.