Apollo Hospitals slow down new bed addition

Apollo Hospitals Enterprise Ltd (AHEL) is expected to add 765 beds through brown-field and green-field in the next 5 years across three hospitals, with an investment of `6.2 billion. This step will help expand its overall network to 73 hospitals. The hospital chain, which added over thousand beds a year in the past, has last year announced that it would bring down the speed of building up infrastructure and look at consolidation and profitability. The new beds that are to be added come as part of its expansion plan which has been executed in the last few years. This addition of new beds would add to the already existing 10,000 beds it has across 70 hospitals, reported as on March 31, 2018. The company has added 13 new hospitals with over 2400 beds in the last few years with a capital investment of `19.30 billion.

As part of the expansion plans, the company is coming up with a Proton Therapy Center as part of a Comprehensive Oncology Referral Campus at South Chennai which is expected to be operational by the end of FY 2018-19. This project is planned in two phases – where the first gantry is scheduled to be installed by December 2018 while the second and the third gantry will take another 6 months before getting commissioned. This treatment facility is claimed to be available only in two countries in the whole Asia-Pacific region, that is, in China and Japan. It will provide treatment to a population segment of around three billion people across the globe. The company has been marking a 12 percent compound annual growth rate in terms of bed count addition from the financial year 1995.

The strategy for the future growth include strengthening its presence in the key strategic markets (such as Chennai, Hyderabad, Kolkata, Bengaluru, New Delhi, Ahmedabad, Mumbai, and other cities), geographic expansion by setting up hospitals in tier II and III cities through its smaller hospital model reach, increasing patient touch points by way of multiple formats including primary and specialty clinics, optimization of asset utilization in mature facilities, compressing time-to-maturity of new facilities, and increase in capital efficiency, among others. In order to improve profitability, the company is also looking at improving average revenue per occupied bed per day through investment in latest medical technologies and skilled physicians and surgeons, while reducing the average length of stay (ALOS) using technologies like minimally invasive surgeries and maximizing efficiencies through better supply chain management and human resources development.