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India's healthcare heiress - Sangita Reddy

She is writing the precise prognosis for her business.

K.R. Balasubramanyam & Nitya Varadarajan        Print Edition: January 13, 2008

Sangita Reddy - Executive Director, Apollo Hospitals
Sangita Reddy
As a Student, Sangita Reddy had an irresistible desire to pursue medicine. That was quite natural for somebody who had grown up under the overarching influence of a successful cardiologist, her father Dr Prathap C. Reddy, the Founder-Chairman of the Apollo Hospitals Group. Her performance in the entrance test did earn her an MBBS seat under merit quota in Chennai in 1980. But much to her surprise, that was not what her father wanted her to do. He dissuaded all his four daughters from joining medicine. Though she initially resisted and sulked, Reddy later gave up her MBBS seat and joined Chennai’s Women’s Christian College to pursue a degree in BSc (Hons). She later did courses in health administration from the US and along the way picked up prowess in information technology.

However the lady, who was not destined to be a doctor, is writing copious prescriptions for the future course of the healthcare industry, led by a group that is the largest healthcare provider in Asia with 7,750 beds and 4,500 consultant doctors. Reddy is the Executive Director of Apollo Hospitals, but has gone many steps beyond to perform an assortment of roles with equal ease. And that is what sets her apart from her sisters.

While Preetha, Sunita and Shobana followed in the footsteps of their father in running the Group with Preetha in the lead, Sangita set out to chase her own business ideas that included a BPO arm. The Apollo Health Street or simply AHS, the Hyderabad-based pure-play healthcare BPO that she founded at the cusp of the new millennium, leverages the strengths of the Apollo network. AHS, in fact, took shape first as a dot-com before it transformed itself into a BPO in less than a year; thereafter it rose unfettered.

 Rivals to watch

Healthcare

Escorts, Fortis, Wockhardt & Manipal Group

Reason: Indian healthcare market today is around Rs 1.36 lakh crore ($34 billion) and is expected to touch Rs 1.60 lakh crore ($40 billion) by 2012, according to PwC’s Emerging Market Report 2007 on Healthcare in India. The present-day healthcare spend of Rs 1,360 ($34) per capita will reach Rs 1,600 in four years. The private sector accounts for more than 80 per cent of total healthcare spending in India.

Healthcare BPO

Payer (US Insurance Cos): HTMT, IBM Daksh, Wipro BPO, Patni BPO and WNS Global Services
Provider (US Hospitals): Accenture, Deloitte, Perot Systems;
IT Solutions: Cognizant and ACS

Reason: In developed markets, the focus is shifting from disease control to health management. This, in turn, requires better data management. The cost of healthcare has been increasing and players are looking at rationalising costs. This translates into growth for services like tele-radiology, remote diag nostics, medical transcriptions, among others.

And not without good reason. In the US, for every dollar spent on healthcare, 30 cents go for administrative processes. That is huge, and cutting it even by five cents translates into a sizeable saving for the $2-trillion US healthcare market and a sizeable revenue for offshore hot spots like India. A $75-billion turf is available for BPOs to address.

Today, Reddy is among the leading faces of this global healthcare BPO industry jet-setting between India and the US. She spends one week in the US for every six weeks in India. “We are no longer just an Indian BPO. We are a global company,” asserts the lady who has so far clinched four acquisition deals (see The Snapshot). “The US acquisitions have added domain knowledge, scale and bandwidth,” she declares.

Post acquisitions, Health Street has turned out to be the largest ‘focussed’ healthcare BPO in India with 100-plus customers and over 2,500 employees. Top five US commercial players are among the BPO’s clientele.

“Our average revenue per employee is much superior to any of the BPO companies,” the Health Street MD says. Her goal is to take her BPO revenues to $500 million (Rs 2,000 crore) in the next three years from $120 million (Rs 480 crore) projected for the year to March 2008. The IPO slated for early 2008 is only expected to accelerate that process.

The eager learner

Reddy’s ascent to corporate heights did not happen overnight. She stepped into the family business in 1983 at the age of 21 as a management trainee and worked in every department of Chennai’s Apollo Hospital, India’s first corporate hospital which went public two years later. She was also the Executive Assistant to the Chairman in charge of Special Projects.

“That’s how I got an overview of the entire organisation,” she says, sitting in her office in the 33-acre boulder and grass-carpeted Apollo Health City campus in Hyderabad’s upscale Jubilee Hills. The one constant all this while has been her relentless adoration for her father. “I continue to be astounded by his continuous positivity. He sees things ahead of others,” says the doting daughter. Dr Reddy, too, does not hide whose side he is on. “Being the youngest, she is my favourite daughter,” he says fondly.

Reddy, however, is not the one to be smug about being a worthy heiress or about the 70 per cent CAGR (compounded annual growth rate) in revenues that Health Street is clocking organically. She is always on the lookout for acquisition opportunities in the US as part of inorganic growth strategy.

 Future plans

  • To set up a national grid of telemedicine where various hospitals can exchange expertise
  • To take Apollo Health Street revenues to $500 million in three years from present $120 million
  • To generate more overseas business for Apollo Health Street
  • To develop capabilities to service outpatient insurance products and emergency assistance
  • Family Health Plan has entered Kuwait through a joint venture; to expand into other Gulf markets
For, healthcare off-shoring may no longer be limited just to medical billing, coding or claims processing. Global healthcare providers and insurers, says Shashwat Sharma, Associate Director, KPMG, are paying more attention to efficiency and affordability for their consumers. “At a projected growth of above 30 per cent over the next five years, Indian off-shoring majors will handle patient case management and medical analytics in a significant way,” adds Sharma.

Not everyone, however, agrees with Reddy’s recent buyout adventures. Vijay Kedia, MD, Kedia Securities, for instance, feels the recent acquisition was unnecessary at a time when dollar was depreciating. In the last two to three years, Apollo Hospital has been slow in expansion though the industry demand is robust and new entrants like Fortis are growing rapidly.

At 23 per cent employee attrition levels and the 800-member US workforce accounting for 70 per cent of HR costs, it is not a cakewalk for Apollo Health Street. Anish Zaveri, Associate Director, KPMG, too, believes that rupee and talent pool very much remain a challenge for healthcare BPOs.

But an effusive Reddy says the rupee’s impact on margins has been minimal all these days because of the adequate forward cover and is confident that the constant innovation within the BPO will always keep it ahead.

Prudent optimist

The self-belief and conviction that Reddy carries, echoes in her team’s perception of the lady. Says Dr. K. Hariprasad, CEO, Apollo Health City: “I am amazed at her insight and understanding of the healthcare sector. When we talk to her about a clinical issue, we talk in medical jargon like we do to a doctor.” With her around, the CEO says, they feel empowered and go about their work with ease. If something goes amiss, she is always there to sort it out.

Agrees Malathi Manohar, Senior Executive Assistant to Apollo Chairman for close to three decades, who has seen the daughters closely: “The greatest trait about her is she is her father’s daughter. She has understood her father’s vision and has imbibed it to drive Apollo forward.” Dr Reddy himself got to hear about Sangita’s abilities when Jamie Rubin, MD, One Equity Partners, mentioned to him about the way she impressed Tenet Healthcare Corporation’s President and CEO Trevor Fetter with her dynamism.

According to Dr Vikram Chatwal, CEO, Reliance Health, Reddy has the great ability to identify potential opportunities, and put together a team that will deliver. “She carries the burden along with the team,”says Dr Chatwal, who was the first CEO of Apollo Health Street.

 The snapshot

  • Sangita Reddy is Executive Director (Operations, HR and IT), Apollo Hospitals: The Group posted a net profit of Rs 23.6 crore for July-September 2007 quarter as against Rs 50.2 crore for the same quarter a year ago.
  • Reddy is MD, Apollo Health Street, Hyderabad: The BPO and IT solutions arm of Apollo Hospitals Group has executed a string of buyouts: EMedlife, a health care services company focussed on TPA services in 2001; Heritage Web Solutions in September 2006; Hospital billing and receivables management company Armanti Financial Services-New Jersey in October 2006; and healthcare BPO and Enterprise Support (ES) solutions entity Zavata Inc, Atlanta, in August 2007
  • Reddy is Director, Family Health Plan: A third-party administrator in the field of health insurance. The company said it serviced 40 lakh customers last year
Reddy’s foresight came to the fore early when she founded Apollo Institute of Hospital Administration in Hyderabad in 1995. The government expenditure on public health then was on a decline, throwing up enormous scope for investors to intervene and tap the healthcare market. But as the number of private hospitals increased in the 1990s, healthcare managers were few and far between. In fact, Apollo itself picked up people from FMCG companies and trained them in hospital management so as to meet its manpower needs. Today, private sector accounts for more than 80 per cent of the total healthcare spending in India. And Reddy could clearly see this coming.

Her hunch was that the healthcare sector in India was poised for an explosive growth, aided also by medical tourism potential. Today, not just Indian hospital and insurance majors participate in the campus selection; there have even been international placements too. A PricewaterhouseCoopers study confirms her prognosis for healthcare sector. By 2012, the industry will grow to nearly $40 billion, the study notes in its Healthcare in India: Emerging Market Report, 2007.

Adroit time manager

Ask her about the one thing that she does not like about herself and Reddy quips: “Why just one? But at times I try to do too many things at one go. That makes you less of a perfectionist.” A perfectionist or not, the lady is proficient at multi-tasking and has shown an amazing appetite for IT. Her father says her expertise in IT is driving the vision for the Apollo Super Highway.

The Andhra Pradesh government recognised her skills in IT when it named her Top Woman Entrepreneur in ICT for 2005-06. This hard taskmaster says: “I give free hand and long rope to innovators and risk-takers.’’Amidst her varied corporate activities, Reddy finds time to perform morning puja and visit Balaji temple in the hospital campus. “In a temple, you are able to receive positive vibrations from temple structures, the slokas, the chanting and recharge yourself,” she says, adding: “These days, we are more concerned about recharging our BlackBerry (handsets) than ourselves.”

More a typical Chennai girl despite her roots in Chitoor district, Andhra Pradesh, Reddy is an adept time manager. Maintaining “the perfect work-life balance”, she and her husband manage to squeeze in time to listen to western classical music. As a child, Reddy learnt Carnatic classical music; for now, the young lady is certainly on a song.

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