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Apollo Hospitals: IT driving healthcare - Views on News from Equitymaster
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  • Oct 3, 2002

    Apollo Hospitals: IT driving healthcare

    Apollo Hospitals Enterprises Limited (AHEL), the largest healthcare provider in India, has given a new meaning to the term healthcare. With the aim to be an integrated healthcare provider i.e. being able to provide primary, secondary and tertiary healthcare, AHEL has set up a network of nearly 4000 beds and a network of pharmacies and clinics spread across the country. From a single hospital in the early 1980s the company has grown to become the largest healthcare provider in India and possibly the largest in Asia too.

    Apart from initiatives like setting up remote clinics and aggressively increasing the number of hospitals being managed by the company, Information technology (IT) has been one of the key contributors the success of AHEL. This article gives us a perspective on the various IT initiatives taken up by AHEL and the long-term benefits, which could accrue, form the AHELís leverage on IT.

    AHEL has implemented an integrated Hospital information system (HIS), which integrates the various processes and functional areas within the hospital leading to a seamless workflow. The most important function of the HIS is to provide relevant patient information at the right time in order to reduce processing time and hence, save valuable time which can be used efficiently to treat the patient. Implementation of the HIS was primarily a cost control measure as HIS also acts as a kind of Enterprise Resource Planning (ERP) Tool for the hospital. Automation of various back-end areas like financial, accounting and inventory, have been achieved with the HIS.

    AHEL has also used IT to provide quality healthcare services to patients at remote areas. This has been realised with the help of the concept of telemedicine. The telemedicine concept essentially enables a patient and his doctors to interact with specialists based in the speciality centres and receive second opinion or interpretations to complex medical cases. IT plays a major role in this endeavour as it facilitates the whole communication process. This facility is a boon for patients who are situated in far flung areas of the country with no access to good healthcare facilities.

    While it is difficult to determine the tangible benefits of the HIS and the telemedicine projects the intangible benefits are considerable. AHEL has been able to improve its operational efficiency by the implementation of the HIS project. Both the HIS project and the telemedicine project have helped projected the image of Apollo hospitals as a quality healthcare provider. Both these initiatives have gone a long way in establishing a brand name for the company, which no other hospital chain commands.

    However, AHEL has not limited itself as a user of IT. It is now exploring possibilities of offering IT Enabled Services (ITES) itself. AHEL has forayed in to the medical Business Process Outsourcing (BPO) segment of the high growth IT Enabled Services (ITES) industry. For this purpose, the Apollo Group has entered into a partnership with two global players in healthcare, Health Services America, a chain of hospitals, and Medstaff International, an insurance company based in the US. According to sources in Apollo, the two institutions will outsource to Apollo hospital activities like billing, documentation of clinical and administrative records and coding the innumerable medical process.

    The medical BPO segment is a niche area of the ITES industry one which AHEL is in a good position to exploit due to its experience in the field of healthcare and access to low cost labour. With its early entry in to this segment the company is likely to generate sizeable revenues from this segment. The ITES industry in India is currently valued at US $ 1.4 Bn (Rs 69 bn) and is expected to grow by 65% in FY03. Exact figures of the medical BPO market are however not currently available.

    AHEL has set itself apart from other healthcare providers by leveraging on IT to improve efficiency and enter in to new business segments. Though it may be a while before the benefits of these initiatives come to the fore, they are a step in the right direction i.e. towards providing high quality healthcare services.

    The stock is currently trading at Rs 98 a P/E multiple of 14x its annualised 1QFY3 earnings.



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