Apollo Hospitals to join Ayushman Bharat, but only in smaller cities

Apollo Hospitals, the country’s largest chain in the segment, says it will join the Ayushman Bharat programme in tier-II and tier-III cities.

In metropolitan cities, however, it will continue to stay away till the government programme raises the rates for surgery and treatment.

The scheme, also known as Pradhan Mantri Jan Arogya Yojana, completed its first anniversary last week. Around 4.6 million hospital treatments costing Rs 7,000 crore were done under it in these 12 months.

While the scheme is now being implemented in 32 states and Union Territories, large hospital chains have been keeping away. Till earlier this month, when Medanta Hospital signed an agreement to empanel in the project; Apollo has now decided likewise.

Apollo managing director Suneeta Reddy said the chain had allocated allocated five per cent of its bed capacity in hospitals in tier-II and tier-III cities for Ayushman Bharat.

Their participation, she clarified, was still in a testing stage; it was underway in states where local health schemes had been subsumed in the central programme.

As for metropolitan cities, where the costs are much higher, they remain out for this reason. Hospital associations, she said, were in a dialogue with the central government on new pricing guidelines for the scheme. Government rates, said Reddy, did not cover the costs for some of the surgeries under the programme.

That apart, Apollo reiterated its focus for an asset-light model for growth, with a focus on retiring its debt after selling stakes in the joint venture insurance firm and pharmacy business. Earlier this month, Suneeta Reddy (part of the promoter family) sold her 3.6 per cent stake in Apollo Hospitals Enterprises for Rs 748 crore. The funds are being used to pay off debt and reduce promoter share pledges.

“We are not desperate to get more investors," said Prathap Reddy, chairman (and the MD's father). The promoters will not be selling further stake in the chain or at the holding company level, after this 3.6 per cent stake sale.

The senior Reddy started with a single cardiology focused hospital in Chennai in 1983. The group now operates 72 hospitals across the country. Margin expansion from new hospitals and improved asset utilisation will be focus areas for the chain, apart from growing its pharmacy business.

It says it is also focusing on preventive health care. And, aims to double the share of patients from abroad to 20 per cent in the next few years.

"We have invested over Rs 3,000 crore in expansion in the last 30 months and our intention now is on improving asset utilisation and profitability," said the MD.