Apollo to focus more on tier II, III cities

The hospital chain plans to add 1,300 beds in Tier II and Tier III towns

Apollo Hospitals has said that it will focus more on tier II and tier III towns for future expansions.

The hospital chain said that not only will the capex on setting up hospitals in these locations be less, they will also yield better and faster returns. The hospital chain is planning to add 1,300 beds in tier II and tier III towns.

Speaking to reporters on the sidelines of announcing Apollo’s 30th anniversary celebrations here on Tuesday, Suneeta Reddy, joint managing director Apollo Hospitals group said that tier II and III towns offer better return on investments as well hold huge opportunities to grow over the years. “We expect about 30 per cent of our revenues and profits to come from tier II and tier III cities in the next three to five years, and the hospitals in these areas can breakeven in a shorter span of time,” said Suneeta Reddy.

She added that over the next 36 months, the hospital plans to add around 2,400 beds, of which 1,300 beds will come in these cities through the Rs Reach Hospital’ concept.

“We can add these beds at 50 per cent of the cost of beds in the metros and the investments required in these cities is around Rs 50 lakh a hospital bed, for a hospital with a capacity of 150 beds,” she said.

According to her, one should not judge the hospital’s growth through number of beds, but the way the existing asset has been utilised effectively. She was responding to a question on whether the hospital is slow in adding new beds.

“What one can generate revenue out of two beds we can generate in 1bed and that is our capabilities.”

According to her, Apollo got a balanced growth strategy for faster return on capital employment.  “Our return on capital employment ratio has gone up from 14 per cent to 19 per cent,” said Suneetha Reddy.