Apollo Hospital Chain

C: I would like to understand the details of the market and the hospital chain before we can proceed. I would like to understand the geography that we are looking at. Also, could you let me know more about the offerings of the chain and the category they want to enter?

I: Sure, Consider any Tier-2 city in Jharkhand – with a lot of local doctors and government hospitals and keep in mind a chain like Apollo Hospital and make relevant assumptions with that in reference.

C: Ok great. Could you help me understand the reason for entering and the timeframe we are looking at for the entry process?

I: Ok. The leadership feels that there is a huge potential that can be harnessed in the Tier-2 cities in primary and secondary care with the growing income of people. The chain is looking to expand and be operational in 2-year time frame at the lowest possible costs to the chain

C: Thanks that surely helps

C: Thanks for the comprehensive information. (Asked for time). As we know Profits can be thought of as the difference between revenue & costs. So it could be either a cost-side problem like there is an increase in the cost of items or a revenue side like pricing or sales issues. Do we have details along these lines?

I: The costs of materials and across the supply chain have remained the same. Think of it through revenue terms.

C: So, focusing on revenue aspects. Revenue can be thought of as the selling price multiplied by no of customers, which can be further explored in all three baskets in order to pinpoint the issue. Do you want me to focus on anything particular out of these going ahead?

I: Given the constraints and your understanding of the semi-urban markets what do you think should be the focus areas?

C: I believe at top of my mind that the hospital given the poorer infrastructure and awareness of healthcare facilities in hinterlands, must aim for primary service provision 

I: Perfect. Consider that the client wants to enter the pathological testing arena and wants to provide basic clinic facilities to the townsfolk and proceed with your analysis.

C: I would like to discuss the methods the hospital chain can enter the Tier II market going forward and also discuss the barriers to entry and risks that the plan would face.

I: Sure. Sounds good. Go ahead and use the information that was provided till now

C: For pathological & and testing labs, the client needs to first identify the prevalent diseases and arrange for the testing kits and personnel accordingly. At the same time with the goal of frugality in place, considering a joint venture with existing clinic chains can be the way forward to minimize the capital expenditure for setting up the centres. Further, the logistics of tests that need transport and cold chain need to be worked out in the setting up phase.

For clinic checkups, the client can explore setting up doctors with small capital investments across the city serving localities appropriately. The brand name of the client needs to be associated with the checkup services to gain easy traction owing to trust and proof of service quality. The clinics can extract synergy for service bundling by offering test packages/referrals to path labs setup.

I: Excellent job laying it down. Go ahead and let’s discuss the risks associated with the plan proposed

C: The major risks can be classified based on consumer behaviour, technology and labour sourcing. Due to lower awareness, the frequency of the visits remains poor and the pathological business would be hit harder. The absence of basic testing technologies leads to higher logistic and procurement costs which can adversely impact the bottom line. Labour sourcing gets escalated due to a lack of quality new testors and medical support which also leads to cost overruns in the form of salaries.

I: Excellent job.& insights. Let’s close the case now