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Increasing real estate price a challenge for affordable hospitals: Apollo

The company is looking at overcoming some of these challenges through digital technologies and others

Gireesh Babu  |  Chennai 

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Increasing is a challenge for setting up quality, affordable infrastructure in the rural area, says Prathap C Reddy, chairman of Group. He said that its Reach initiative, aimed at affordable for rural population, has been finding it difficult to get adequate real estate at affordable cost. 

While it would have required below Rs 100 crore to establish a small hospital in rural area when the concept was announced, now the costs have gone up, he said.

However, the company is looking at overcoming some of these challenges through digital technologies and others. 

“Previously the advantage was the land price was low. Even in districts the land prices has gone up high. Rajasthan we were looking for a property priced at at Rs 90 crore for three acres. That means how much I should charge the patient? It will become Rs 1.5-2 crore a bed and it should at least break even by third year. This is where telemedicines, day care centres and such things would now we will commonly look at,” he said.

“Cost per bed is a main problem. The advantage earlier was, when we bought Nellore property, the whole property was for Rs 2.5 crore for three acres and the entire hospital we completed in Rs 90 crore, we started with top class equipment. Now, if we spend Rs 40-50 crore for land, then your cost per bed is going to go up and the patient's affordability is going to suffer. My aim is to make it accessible and affordable for the patient,” he added. 

He said that the hospital chain will not compromise on the quality across rural and urban areas and it will establish only the start-of-the art, best in class technology of the day in its hospitals. The company is looking at adding a couple of more hospitals under the Reach concept. 

Suneeta Reddy, managing director of said that the company has so far opened around 14 to 15 hospitals under the Reach Concept and the segment has a good potential. Currently, there are Reach Hospitals in Mysore, Madurai, Nellore, Karur, Karaikudi, Nasik, Trichy, Gauwhati, Indore, Kakinada, Karim Nagar, Bhuvaneswar and Bilaspur, among others, she said.

“These hospitals has the potential to contribute around Rs 300-400 crore of Ebitda. While right now they are half, will ramp up next year. The market has the capacity to pay, I think we faced a little bit of challenge to getting good doctors there,” she added. 

The company has started various digital initiatives including One Apollo Digita, which integrates 12 customer facing businesses of the Group, to offer access to the patients in different locations. It has also invested heavily into setting up infrastructure in the past and is in the process of setting up more beds including a Proton Therapy Centre for cancer treatment, which is the first in South East Asia. 

First Published: Tue, October 10 2017. 01:13 IST