Clinics require smaller investment, build brand equity and can act as spokes, referring patients to the hospital hubs

In corporate clinics, hospitals have a good Rx

Clinics require smaller investment, build brand equity and can act as spokes, referring patients to the hospital hubs

The hub-and-spoke concept, much used by businesses worldwide for decades, is having something of a second coming in India. Like quick service restaurants and apparel brands that are using pop-up kiosks as spokes (read related story in the DNA of October 13), hospital chains such as Apollo and Manipal are seeing much value in creating spokes, in the form of street-level corporate clinics, that can act as the feeder route to the hubs in the region. Besides, clinics help enhance the brand’s visibility and equity. The strategy has become necessary as healthcare in India has come a long way in the last two decades, from a primitive set-up to a $50 billion organised (read corporatised) industry. Stakes are high as industry revenues are estimated to grow to $100 billion by 2015, as per estimates by ratings agency Fitch. Setting up 3000-5,000 sq ft clinics for simple health needs and diagnostics is seen as a quicker way to create pan-Indian reach than building a 400-bed super-speciality hospitals. Corporate clinics address basic health concerns through in-house or consulting physicians, gynaecologists, paediatricians, dentists, internal medicine experts and nurses. “Clinics are meant to undertake health check-ups, blood and sugar tests, dental check-ups, x-rays and ultrasound tests,” said Ravindra Pai, senior vice-president (marketing), Apollo Health & Lifestyle, a 100% subsidiary of Apollo Hospitals. However, corporate clinics are not meant for high-end procedures like CT scans and MRIs as these get referred to hospitals. Typically, clinics need investment of `2-8 crore (minus real estate), compared to `150-200 crore required for a full-fledged hospital. Ankur Bharti, senior consultant on the PricewaterhouseCoopers healthcare team, said such clinics help in attracting patients who would otherwise skip visits to hospitals. “Patients coming to branded clinics can get referred to the main hospital.” Agreed S C Nagendra Swamy, president, Manipal Health Enterprises. “We are planning to set up MCC centres in locations where we have hospitals. This is to ensure that if patients coming to MCC require hospitalisation, they are not left in the lurch and can be referred to the hospitals.” Healthcare experts see the clinics model as a strategy by chains to spread their presence in locations where hospitals cannot be set up for various reasons. “Instead of entering a new location with a 400-bed hospital, the chain could first set up a 3,000 sq ft clinic, create a brand image and then gradually set up a hospital,” said management and healthcare consultant J P Singh. “Clinics can fetch margins of about 15%,” said Bharti. Understandably, Apollo has over 90 clinics which outnumber its 50 hospitals. The 14-hospital Manipal group has already set up three Manipal Cure and Care (MCC) centres. Now, corporate healthcare behemoths are gung-ho about expanding their clinic chains. For instance, Apollo has plans to add 400 more clinics to its chain in the next five years. According to Pai, Tier II centres like Belgaum, Shimoga, Baroda and Mangalore will be considered for setting up clinics. “We will put up at least another three MCCs in Bangalore, and then in locations like Salem, Manipal, Mangalore, Vijayawada and Visakhapatnam where we have hospitals,” said Swamy of the Manipal group. More spokes make the healthcare delivery wheel stable and the hub busier, healthier business-wise, it seems.