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Dr.Prathap C Reddy, Chairman, Apollo Hospitals Group on the Apollo GEN NEXT!

Date of Interview: 09 Oct 2014

Featured Article:

Express Healthcare - 9th October 2014

Seated in his spacious Jubilee Hills office, atop the Apollo Health City premises, Padma Vibhushan Dr Prathap Reddy, the patriarch of Apollo Hospitals Enterprise Limited (AHEL), exudes an enthusiasm that belies his 80 plus years. Maintaining a ramrod straight posture, he shows no signs of slowing down even though he anointed his eldest daughter, Dr Preetha Reddy as his successor in July.

He is still driven by his dream, of providing world class healthcare in India to every section of society. A dream that led him to set up a hospital named for the Greek god of learning, staffed by world class doctors and run meticulously to the best operating standards.

And that is Dr Reddy. A deeply religious man, with the focal point of almost every room on the top floor of the corporate office, devoted to artistic representations of a pantheon of deities. And a doctor to the core, a man driven "not by numbers (of patients) but by outcomes," as he puts it himself.

There is no doubt that the gods must definitely be smiling on Dr Reddy over the past three decades and he must be fervently hoping that they will continue their benevolence. But he is leaving nothing to chance. The July reorganisation is a major milestone but not the culmination of a process that started a long way back.

The evolving vision

Leaving behind a flourishing practice in Boston, uprooting his young family, Dr Reddy came back to India in 1971 because his father asked him to. It was almost a decade later, in 1983, that he set up his first hospital in Chennai, inaugurated by the then President of India, Giani Zail Singh. This was the first step in building the foundation of what was to become India's first integrated corporate hospital chain. This was at a time when healthcare delivery was, by default, either a government-run or trust-run facility. Almost single-handedly, he nursed and nurtured both AHEL as well as the fledgling healthcare industry, coaxing and cajoling the politicos in Delhi and later financiers, to become part of his vision and invest in his blueprint.

Dr Reddy takes pride in saying that in the 80s, most patients had to travel abroad for complex surgeries. Today, every procedure can be done within the country and at a much lower cost. Be it heart surgeries or liver transplants, Dr Reddy points out that all these can be done in our country at sometimes one-tenth of the cost. Building teams of qualified doctors and staff and having them work to strict SOPs was the mantra; this too at lower costs with no compromise on the outcomes.

As SOPs improved, outcomes improved and consequently, so did costs. He points out how today, a heart patient can leave hospital five days after surgery whereas previously he had to stay for nine days. He predicts that a constant drive to improve clinical applications will continue to drive down costs and improve outcomes.

The next phase of this mission, is to increase access to these services, or as Dr Reddy puts it, to make healthcare more inclusive. He is disappointed that we, as a country, have a long way to go on this parameter. To ensure this happens, he lists three factors that will play a big role in this phase: technology, media and the four Ps: partnerships between the public and private sectors as well as patients.

He is very forthright in his messages to these stakeholders. Individuals have to be made aware that they first need to take care of their own health and for that media must play a big role in creating this awareness. For the government, he believes that they need to relook our current healthcare system but rather than looking for lessons from systems like US' ObamaCare or UK's NHS, we need to have a bottom-up approach and involve people and society in these decisions. He also underlines the need for holistic healthcare. Ironically, we turned away from our traditional systems of health, and now find that we have to revive our ancient traditional ways of Ayurveda, medication, etc to cope with 20th century ills like non-communicable diseases (NCDs).

Dr Reddy is happy to see the focus of current policy makers like Prime Minister Modi and Health Minister Harshvardhan, to bring 'health for all' through the distribution of free medicines. He is also pleased that health, along with education is one of the national priority areas on PM Modi's agenda. But he points out that the Finance Ministry has done nothing much for the sector. The sector's long standing demand to be given priority infrastructure status has been ignored, and he feels that agreeing to this, would not cost the Finance Ministry much in terms of tax outgo but would encourage promoters like himself to tap long term funds, and thus make better investments and ultimately grow faster. He concedes that the REIT scheme is going to make a huge difference but here too there are many hitches which need clarifications.

Dr Reddy's penchant for pushing policy makers for change is once again evident when he says that he has told the PM that his patients would get India a seat on the US Security Council! All thanks to tremendous good will that international medical tourists take back with them when they return to their own countries. Which is why he hopes that the current regime will slowly bring in more rational medical tourist visa rules, especially since these tourists end up spending a lot more than the usual tourist. He reasons that it's a win-win for all: affordable health for the international tourist, more foreign exchange for the country and more revenues for healthcare players which in turn will see more investments in hospitals and thus more jobs for doctors and nurses right here in India.

Handing over but still at the heart

Dr Reddy decided this July that it was time for the next phase of growth and for that, AHEL needed to redefine its focus. And with this, came a rejig in the responsibilities of his four daughters, previously designated as Executive Directors, in line with expanded roles. Each has carved a niche for themselves in the areas where they have proven to have a special talent.

It is most definitely this clear delineation of roles and responsibilities, with just the right amount of overlap and divergence between the father and sisters team, that has ensured the smooth growth of AHEL. Many founder-driven enterprises are plagued by in-fighting which finally leads to a division of assets and erosion of the brand. In most cases, these fissures become more evident as organisations transition to the next generation. AHEL has managed to steer clear of this and it is clearly due to Dr Reddy's vision and planning.

Speaking about his four daughters, Dr Reddy says, "They are what they are today first and foremost because each of them had their own passion. We gave them a clear direction on how they should get involved and evolve as healthcare players but their passion is their biggest strength. All of them gave a great level of commitment so I have no way of saying that one is better than the other."

Demonstrating the firm balance between a father's fondness and a savvy business leader, he says firmly, "I cannot give each one marks. Can I give Preetha 51 and the others 49? No. All get 50. But yes, you need a team leader and that is a role Preetha has already played. She is well accepted by her sisters." The leadership will pass on to each daughter, after a Board-approved term (of probably three to five years) so that there will be continuity of vision as well as infusion of fresh ideas and management style at regular intervals.

Dr Preetha Reddy: Focus on clinical excellence

In line with her role of taking the lead, Dr Preetha Reddy assumed an expanded role and was redesignated as Executive Vice-Chairperson, AHEL. She is entrusted with Apollo's core strength, of maintaining a leadership in clinical outcomes. In line with this, she will work closely with AHEL's 8000 clinicians to review global medical advancements and introduce contemporary protocols to further enhance clinical outcomes.

As she says, putting in place and maintaining quality standards was the portfolio she was given when she first joined the AHEL and she would like this to be her contribution to the legacy of the Group. "Our business model depends on clinician-consultant engagement and that is why we reorganised ourselves in such a way that we can be more focused on this goal." To her, the challenge of the future is to deliver quicker, faster, affordable, smarter, more efficient and more cutting edge.

"People come to us sometimes after trying out other options, because they trust us, and to live up to this trust, we need to focus more and more on clinical outcomes. We innovated in the way healthcare was delivered; whether is cutting the time between a person needing an intervention to the time it's given or taking the point of care closer to the patient,"" explains Preetha Reddy.

She will also spearhead AHEL's ambitions in the international space, to make the company a global healthcare destination. "We were the first to predict that people would come to India for quality medical care. No one believed us but today, it's an accepted business model."

In addition to catering to international medical patients, they also do a lot of consulting for overseas hospitals and governments, some of them even from developed nations. She sees this revenue stream growing as such clients are increasingly looking to India to provide answers to their problems. On the possibility of AHEL setting up more overseas facilities, to add to the ones in Dhaka, Bangladesh and Mauritius, she says though they are looking at this opportunity, there is still so much to be done within the country so they feel that the focus should be India rather than the overseas market. She indicates that the capital allocation will be for the domestic market, at least for the next couple of years.

Beyond AHEL, her role also sees her engaging with industry bodies and state and central governments on policy matters concerning healthcare issues. Here, she follows the example set by her father, who has consistently worked closely with policy makers, be it on the transplant and cadaver laws which came into being or more recently, making the case for the healthcare industry to be given infrastructure priority status. In the same vein, she makes the point that there needs to be a rationalisation in healthcare costs which is skewed in many ways. To meet the government's diktat for free care, providers may cut corners and compromise quality or inflate costs in other areas. A solution needs to be found; for instance, how much of a role can health insurance play in addressing this problem, she muses.

But echoing her father, besides cost and access, she feels the larger problem is the looming NCD epidemic and the fact that there is a tremendous lack of awareness, from both patients and government, about the impact. So also, the lack of healthcare education facilities, in terms of medical and nursing colleges worries her, because this is the root cause of the lack of trained manpower.

When quizzed why none of the four siblings became doctors, she fondly recalls that she and her youngest sister, Sangita Reddy, did secure admission to medical school, but bowing to the conservative social mores of the time, their father decided against putting them through the rigorous routine of medical school. But she is quick to add that today, all four of them work 24x7 for healthcare, and on a much larger canvas. (And there is always hope that at least a few of the next generation will be medics but more on that later)

Suneeta Reddy: Balancing inflows and outgo

Commenting on the July announcement and the fact that each daughter will get a chance at the helm, Suneeta Reddy, Dr Reddy's second daughter, says, "For the past 30 years, it's always been the four of us and dad as the Chairman. It's never been one single person. I think this structure will keep the energies of all of us committed to Apollo Hospital. In terms of leadership, I think it's a good idea to get new ideas and perspective at least every three years. So it's an opportunity for the whole organisation to invigorate itself. Each of us might share a common DNA, passion and commitment for the organisation, but each of us have different perspectives, different strengths. The one thing that we are cohesive about is that we must grow in the healthcare space. For patients, this means delivering best clinical outcomes and for people working for the Group, ensure sustainability and prosperous growth."

Suneeta Reddy's forte has always been the fine balancing act between funding and spending and she is credited with AHEL's strong financial framework. Now as MD, she will lead the corporate strategy, corporate finance, funding and investments as well as leverage M&As to achieve the accelerated pace of growth and optimise profitability. She will be in direct control of the hospital vertical, overseeing its consolidated in Tier-I markets following the cluster model as well as into the Tier-II and III markets. On the branding and marketing side, she indicates that this will evolve as the market demands.

In September, AHEL announced the acquisition of the retail assets of Hetero Med Solutions Ltd (HMSL) Rs 146 crores. Currently in due diligence phase, if the deal goes through, AHEL's existing network will reportedly expand by 320 stores across Telengana, Andhra Pradesh and Tamil Nadu. Explaining the rationale and strategy behind this deal, Suneeta Reddy says, "We were committed to expand in the health retail space. The pharmacy business already has a considerable network and we wanted to consolidate the performance. By acquiring this chain, not only do we add more stores - a physical presence is important in retail - but the second part is the ability to drive margins. This acquisition is of larger format stores, where we can sell private labels (where the margins are much higher) and therefore after five to six months, we can exploit the synergies of location." She predicts that margin improvement in the pharmacy space (due to this deal) will be seen in about a year's time.

In the pure play hospital space, she says the focus is on consolidating AHEL's presence, using the cluster strategy in the cities where they are the strongest. They have also created around 12 Tier-II models, which as they roll out, will be improving efficiencies so that they can break even much faster. A new initiative is to look at the preventive and wellness space, see what AHEL can do to keep people healthy rather than falling sick. AHEL's play in the wellness space too has different formats like clinics, etc.

She indicates that they are looking at models like wellness centres, gauging what activities can be offered out of these centres and then add them to the existing products.

Though most of these newer initiatives have not yet reached the scale where numbers can be shared, Suneeta Reddy gives an idea of the final vision when she talks of a mobile app, which was recently launched by AHEL, so that patients are seamlessly connected to all parts of the organisation and do not need to wait for appointments, etc. "It's a whole new different world, using technology as an enabler," she sums up.

Did she ever feel the burden of her father's achievements? "No, it was never a burden; rather it was foundation which we built upon," she says. And as some members of the next generation make their entry into AHEL, she indicates that they will be active in exploring and adding new verticals to the Group. Commenting on the fact that there have been no acrimonious disputes between the four sisters, Suneeta Reddy feels that it's because they take care of each other, and also being in the business of healthcare, which is all about nurturing, this has carried on into their relationships.

Shobana Kamineni: Exploring new projects

Of the four sisters, Shobana Kamineni calls herself "the most politically incorrect," the most likely one to argue with her father but claims her father encourages her to question him. In fact, she points out that this is the spirit of AHEL; the AHEL site has a prominent feature for patients, exhorting them to 'Ask us: Anything, Anytime.'

Her explanation for why the sisters work well together is that there is a healthy but "loving competition" between them. "They might not admit it but it's there. I may be the most aggressive but they too are competitive in their own way. And this competition has made us better than what we'd each be individually. Because without competition, we'd be complacent. This competition (between us) has got the best results for AHEL."

Perhaps this competitive streak has seen her set a blistering pace of growth in the pharmacy business, which is presently the fastest growing business within AHEL: in Q1FY15, revenues in stand alone pharmacies were up 27 per cent, EBITDA was up by 33 per cent. It has grown to become not just the largest pharmacy chain in the country but also acquired a unique position among the top five retail companies in India due to the sheer size of its retail operations and geographic presence. Which explains why Shobana Kamineni was redesignated as Executive Vice-Chairperson, AHEL with additional responsibilities to oversee the planning, design and execution of new projects and lead the Apollo Global Projects Consultancy Division. All while continuing to spearhead Apollo Pharmacy related initiatives. She also remains a Whole Time Director on the Board of Apollo Munich Health Insurance, the company she founded, yet another business with a very strong growth potential.

A national level squash player, Shobana Kamineni recalls her initial days in the organisation when she used to decline early morning meetings because she liked to put in two hours on the squash courts. And in her father, she sees the best teacher-mentor, right from the time he taught them to swim when they were children. His method was to give them a 10-minute lesson and then push them into the pool, completely believing in their ability to achieve anything. And in the same vein, he empowered each daughter when allocating them responsibilities within the Group. His immense belief in their abilities gave them self-confidence to perform and live up to his expectations.

Sangita Reddy: The HR - IT backbone

If strategy, finance and new projects are taken care off by the elder siblings, it fell to the youngest daughter, Sangita Reddy, to steer the human resources (HR) initiatives of AHEL. Healthcare, like any service-oriented sector, is manpower intensive and finding the right talent, managing their expectations and grooming them for the evolution at AHEL has been her mission.

Today, after the July reorganisation, as Joint MD, she has even more on her plate. Her responsibilities have expanded beyond HR and de facto operations to include IT, and retail service formats of AHEL. These include the Group's foray into the wellness segment through wellness centres (which offer a blend of modern and complementary medicine like aromatherapy, pranic healing, yoga, and meditation), Apollo Health & Lifestyle Limited (AHLL) Clinics (family-focused primary healthcare services), and Cradles (boutique-birthing centres). In addition, she continues to be the Chairperson of Apollo Knowledge, the education vertical of the group.

She believes that the reorganisation will enable AHEL to understand and respond to the changing healthcare ecosystem where customers (patients) are demanding the same level of service from healthcare providers as they get from other service industries like banking etc.

She sees the change at three levels, "Firstly, today we have an impatient patient; one who is more empowered and enlightened and has access to a large ecosystem of knowledge as well as other patients who have been through the same procedure."

At the treatment level we no longer have one doctor treating one patient, but teams of doctors treating a single patient. So she feels the future of healthcare lies in the concept of care teams at multi-speciality hospitals, who are empowered by care pathways and capabilities of multiple doctors and multi-disciplinary teams. And technology will enable this seamless transition.

The third level of change is geography, where the care is moving from the hospital to the clinic to the home because patients want care closer to home in a less scary, more familiar environs. Which is why home-care is going to be big, she points out. But even home-care will change from just having a nurse or caregiver basically 'patient-sitting' to become more enabled and empowered, thanks to connected health devices, etc.

Sangita Reddy's area of responsibilities, HR and IT, will play a key role in implementing AHEL's response to these changes. Because these changes will change the way healthcare employees work. They too will have to be empowered and have greater awareness. As she says, on one hand we have a shortage of skilled manpower and on the other, there is a need for skills in newer areas like geneticists, statisticians, population disease analysts, IT specialists in robotics who can train clinicians to perform robotic surgery and the like.

She encapsulates her slogan for what will set AHEL apart from other players in one pithy sentence: clinical differentiation on quality that you can see, feel and touch for the patient and healthcare provider. To a patient this means less pain, smaller scars. For providers, it means pushing the envelope to achieve greater clinical excellence, with zero compromise on quality and better efficiencies. She firmly believes her part of this vision is to lay the foundation for the way AHEL would like to connect with patients, beyond the physical walls of their premises, via emails, cell phones etc.

This, in a sense, will be her contribution to the AHEL legacy. "I would like our legacy to be that we created the way for IT enabled connected health services. It's not just about building health cities but also about providing thought leadership which gets replicated across multiple establishments," she says, explaining how she spent seven-eight years working with the different ministries of the Government of India because she wanted to ensure that India leapfrogged the initial problems US had when it rolled out its electronic health records (EHR) system.

The journey started way back in 2004, when the Union Government tied up with Apollo Hospital Group subsidiary Apollo Health Street Ltd (AHSL) to standardise the capture, storage and dissemination of health information as well as to network all healthcare facilities in the country in an ambitious project called 'Health Unite' inspired by a US legislation.

The AHEL team worked pro bono for the next seven to eight years and the result was that the government, on their recommendation, made the Systematized Nomenclature of Medicine - Clinical Terms (SNOMED CT) available for the country. In a culmination of her and her team's efforts, in August 2013, the Ministry of Health & Family Welfare (MoH&FW) released EHR standards for India as part of its move towards an integrated healthcare system for the country. Today, she has the satisfaction of playing a major role in providing vital direction to the country's EHR framework.

Of all her father's traits, she says she has been influenced most by his innate ability to stay positive, humble and focused even after all his achievements in these past years. She speaks of his vision to increase awareness on NCDs. Translating the scale of his vision into reality will need tremendous investments, but when his daughters ask him how AHEL can fund this plan, he looks them in the eye and says, "When people are dying simply due to lack of awareness, we need to find a way to do it." AHEL is already moving forward to make this a reality and while these moves may not impact AHEL directly, they will impact the health bottomline of the country. Sangita Reddy believes that the day countries start tracking their health indices the same way they track their GDP, will be the beginning of the change of the healthcare scenario.

AHEL remains the first love

All these achievements could not be possible without a passion for the job and the sisters readily admit that their commitment to AHEL has always come first. And as readily give credit to their families for accepting this reality. As Sangita Reddy laughingly puts it, "It's the first love. In fact, the first in everything. Sunday morning rounds at the hospital are an accepted fact of life for my family. But I believe we've found ways to balance our official roles and our families." Preetha Reddy recalls how her father's gentle reminder that ""Sickness has no holiday"" would have all of them abandon their Sunday chores and join him at the hospital.

"Today, this is part of the culture at the Group. It is reassuring for patients to know that we are there, that even on holidays nothing shuts down. It also sets an example for the staff. This is possibly one of the greatest management lessons I have learnt from my father," says Preetha Reddy. She also gives a lot of credit to their mother, who ""has been the binding force of the family. I don't think the family can be what it is or exist without the way she is keeping everyone together within a strong value system.""

Generation next

The next generation is already gearing up to step up to the fore. As Suneeta Reddy puts it, "They are right now in look-and-learn mode." Her daughter, Sindoori, the eldest grand daughter, was involved in setting up the women and children hospital of the Group while Shobana Reddy's daughter, Upasana, is spearheading the wellness initiative.

Likewise, Preetha Reddy's son Karthik too is already engaged in some of the projects in Group. Sangita Reddy's eldest son, Anandit, a mechanical engineering graduate from the US, is a team member on AHEL's medical device project, helping design and roll out a healthcare mobile app. After a year on this project, he plans to head back to the US for an MBA. Vishwajit, his younger brother, is leaving for management studies in the US while their youngest sibling, Viraj, currently in the 11th standard, has expressed an interest in becoming a doctor and could possibly be the first in Gen Next to be a medico.

At the 33rd annual general meeting of AHEL in late August, Dr Reddy revealed that that the family council, constituting of himself, his four daughters, as well as external advisors, are in the process of mapping out roles, based on expertise and aptitude, for the next generation of the promoter's family. Very clearly, Dr Reddy's legacy is in safe hands.

Link to the story: http://healthcare.financialexpress.com/cover-story/3174-gen-next

 

 
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