India as Global Health-care Provider

WSJ looks at another outsourcing which is taking place:

60,000 foreign patients who were treated at Apollo Hospitals over the past three years. Since its start as a single hospital in 1983, Apollo has grown to 37 hospitals with more than 6,400 beds, making it one of the largest private hospital chains in Asia. Apollo’s emergence as a global health-care provider in many ways tracks India’s economic trajectory over the past three decades. The company has capitalized on the high cost of health-care administration in the U.S. and demands of patients elsewhere, for fast, inexpensive treatment.

Hundreds of Apollo’s data processors work late-night shifts providing billing services and processing insurance claims for U.S. hospitals and insurers. Apollo laboratories perform clinical trials for Western drug companies, such as Pfizer Inc. and Eli Lilly & Co. Apollo even remotely evaluates X-rays and CAT scans.

Apollo’s range of medical services — from the back office to the operating room — highlights the contradictions of the global outsourcing debate. In seeking to provide a wide range of services at a large discount to Western competitors, Apollo is yet another Indian company threatening jobs in the U.S. and other countries. On the other hand, Apollo’s relatively inexpensive medical services have benefited patients from numerous countries. It also has helped India’s overburdened health-care system. India has fewer than one hospital bed per 1,000 people, compared with more than seven in developed countries.

“We’re showing that a field like medicine is very much a two-way street,” says Prathap C. Reddy, 72 years old, a physician who founded Apollo and now runs it with his four daughters from Madras, also known as Chennai. “We can all grow from each other’s strengths.”

Apollo and a half dozen other private Indian hospital companies are adding patient rooms, buying new equipment and installing modern telecommunications gear. Meanwhile they also are setting up marketing offices in cities such as London and Dubai to attract patients, many of whom remain wary of seeking health care in the developing world. Few of Apollo’s patients come from the U.S.

The Indian government sees health care as a growth industry. Public and private Indian universities are churning out 20,000 doctors and 30,000 nurses a year, some of them destined for jobs in western countries. That is roughly triple the pace at which nurses were trained during the 1990s.

In the so-called medical-tourism business, the focus is on big-ticket surgical procedures from face-lifts to liver transplants. Asian countries such as Thailand, Malaysia and Singapore have taken the lead in this field. Promoting health-care services alongside tourist destinations, the countries attracted more than 600,000 patients in 2003 alone, according to officials in Thailand and Malaysia.

Apollo offers cardiac surgery for about $4,000, compared with at least $30,000 in the U.S. Apollo’s orthopedic surgeries cost $4,500, less than one-fourth the U.S. price. Consulting firm McKinsey & Co. says medical tourism could become a $2 billion-a-year business in India alone by 2012; the category is so new it previously wasn’t measured.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.