An interview with Ratan Jalan

Citation

by Guru Prabhakar, I. (2010), "An interview with Ratan Jalan", Leadership in Health Services, Vol. 23 No. 2. https://doi.org/10.1108/lhs.2010.21123baf.001

An interview with Ratan Jalan

Article Type: Talking Heads From: Leadership in Health Services, Volume 23, Issue 2

Interview by Guru Prabhakar

With a billion plus population and a largely unorganized healthcare industry, there is a huge gap between demand and supply for healthcare in India. Corporatization and retailing of healthcare is turning into a big business with a fast-emerging middle class population which is increasingly quality conscious.

This issue of Talking Heads features an interview with Ratan Jalan, former CEO of Apollo Health & Lifestyle Limited, India. The interview was conducted in 2002 by Guru Prabhakar, Bristol Business School, UK.

Today the organization is known as Apollo Hospitals and boasts over 8,000 beds across 46 hospitals in India and overseas. Combined with neighbourhood diagnostic clinics, an extensive chain of pharmacies, health insurance services and clinical research divisions, Apollo is recognized as a healthcare powerhouse.

Guru Prabhakar (GP)

What was your vision when you came to Apollo care?

Ratan Jalan (RJ)

When I joined Apollo we talked about setting up a chain of clinics. We discussed tertiary care and an advanced care hospital where people came when nothing else would work. Apollo is in Madras, Hyderabad, Delhi. It is a top-end hospital for complex heart surgery, neurosurgery, organ transplant and so on. If you can’t get treatment elsewhere then you come to Apollo. That was the Apollo institution, and I was given the brief that we needed to set up a chain across the country. There are two or three things to note. One is that we were actually talking about retailing, the retailing of healthcare. I often give the example of ICICI (Industrial Credit and Investment Corporation of India), which talked about financial institutions, to corporates, to universities. So you may have 100 or so clients across the country, each of them being a high net worth individual. That was one way of looking at it, talking about every Indian being the customer. I looked into the clinic concept as retailing because one is actually talking about large numbers of patients and customers to deal with. The value per transaction would actually be much less. A person would pay two to three thousand pounds for open-heart surgery, but when it comes to consultation or a blood test, you are talking about a transaction of a few pounds.

GP

What is the value addition that you thought that basic kind of concept could do to perhaps, the consumers staying in Delhi, considering the fact that we have such a large number of nursing homes?

RJ

This is what I call organized versus cottage industries. It was fragmented like a cottage industry and more importantly, we don’t have adequate governmental control on quality. So, if you talk about quality you leave it to the promoter and entrepreneur himself, which is certainly not the best thing to do. So, you actually talk about places, which are not quality focused, and it still remains a key concern, because if you talk about healthcare in India it is an entity where an average person has no rational framework to make an intelligent decision.

GP

Except the fact that a particular doctor is perhaps good and his reputation is great?

RJ

Which also is more word of mouth. You trust X and X says that Y is good. So you trust him. But you don’t make a spreadsheet or you don’t get attributes, the way you do buying a television or car for that matter. You don’t know who is a good lawyer, who is a good physician, which is a good hospital, which is the best treatment and so on. Everything gets guided by trust and that’s the way it happens all over the world. We felt that trust was the key consideration. Apollo today has phenomenal brand equity; we stand for trust as far as healthcare is concerned. We asked ourselves whether we could create institutions and clinics that are clinically very competent. Clinically means the best doctors, best treatment, the most reliable lab reports, x-rays, diagnostics, and pharmacy/tele-medicine. They should be clinically perfect and focus on what I call customer delight in the sense that you don’t treat the patient as a patient: he is an individual and he is a customer. So, don’t just focus on the medical components, he has got a family that will often come with him. Make him feel important, make him feel cared for, make him feel good and focus on customer delight. We talk about consistency in terms of quality, we also talk about value for money. We have created a place that makes money because of volume, not because of margins. I would rather do more x-rays at lower cost rather than charging more. That was the philosophy we started thinking about, and if you talk about day-to-day healthcare, we have to establish a large number of places across the country. We are interested in setting up a large number of clinics and realize that our expertise is not in the area of managing these smaller units, instead, it is in brand equity. Our expertise is knowledge of healthcare as a discipline – as well as the business – and we should actually look at franchising as a business model. It was seeing it on a global scale, which is very innovative and very bold and it was a challenging task to create a benchmark. That’s the mandate with which we started.

GP

How does this franchise model operate? Do you go to a given town or city and find the most competent doctor?

RJ

Again, in terms of success I think that one of the critical components of this model is the quality of the franchise you have. If the quality is not right then nothing will help you, so we are very clear that we have to be very particular and choosy when it comes to the kind of franchisee we are looking for. He can have a medical background, he can be a doctor, but it is OK if he is not a doctor, because we bring in the healthcare expertise and we guide him along the way. But we are looking at people who obviously have ability to invest as it’s a 20 million rupees (approx £260,000) investment. He should strongly believe in healthcare as an industry, and he should be a people person, because service quality won’t happen without people. He should have some degree of vision and must have seen the world, know what culture is all about, what corporatization is all about, and what healthcare should be in the future. We should be able to create markets in that sense. So, that’s the kind of person we look for. What we typically do is release an advert in a newspaper in the town we want to go to introducing the concept. Further, we go through a fairly rigorous process to explain the concept to people and explain what we will do for them, what the financials are, and at the same time we go through the screening process. To find out whether a person has the kind of attributes we are looking for will take us at least five or six meetings and about 10 to 12 hours in total.

GP

Do you have any consistent strategy followed in terms of geographical segments you intend to penetrate, or region-specific strategies in the country?

RJ

Indeed, we are very clear about the cities and towns we would go to. We finalized this very early on in terms of if we were talking about 250 odd clinics, why were we talking 250 and where would they all be located.

GP

What were the criteria for that?

RJ

To create a comprehensive family health centre we need to plan the kind of equipment it has to have, the kind of services it has to offer, and the kind of space it may require. Our calculations told us that it would be a figure of around £250,000 for each clinic. If it is £250,000, for it to be viable we need to know the kind of returns it needs, and to that extent the pricing structure and the volume expectation. That’s how we came to a conclusion that a clinic of this kind can’t be in a town that has population of less than 400,000. That was the cut off we talked about. It also meant that as far as Delhi was concerned, we said that we couldn’t have more than 10 to 12 clinics. We conducted an exercise where we decided how many clinics could be in a city, where we could base it on population, income profile, and the demands supply gap. For example, in certain cities, states or regions there are a fair amount of healthcare facilities. In UP (Uttar Pradesh, a North Indian state), one felt that the area could sustain a lot more than others. So, we graded and prioritized and that’s how we arrived at our numbers. During the period we realized that if we could expand we could go about it in a very plain geographical fashion. But during the course of time, we realized that there were people who were approaching us from different parts of India. For example, somebody approached from Guwahati, somebody else from Kolkata (Calcutta), Ahmadabad, Ranchi and so on, and things became spread out earlier than we had anticipated. However, we also felt that if we were getting a good franchise from a distant location we should go ahead with it. Of course, it would require a certain amount of strength from our side to reach, support, and service and to make things happen. That’s the price to pay at this juncture, because it cannot be as neat as one would have ideally expected it to be.

GP

What are the major barriers for the kind of vision that you have set out for primary healthcare?

RJ

A couple of things spring to mind. I would imagine that at times one does get the feeling that things can be a little tactical in a total context. When talking about strategic initiatives, one has to look at it in a medium to long-term context as strategy consists of a lot of tactics. Second is that franchising and retailing of healthcare is a very different discipline in itself. In fact, I often tell people that in a manner I am actually not in the healthcare business, but instead I am into retailing and franchising. It has got its own science, its own philosophy and its own way of doing things. There is a certain amount of knowledge that can be extrapolated from healthcare, but a lot of it is completely different, completely new. There are times when you find that since the organization has not got exposure to retailing or franchising it does become a bit of barrier, because it takes a certain amount of effort for you to make people understand what are you talking about and why this is the only way, and the right way to go about doing things.

GP

Coming back to your organization, which I guess is creating so much, are there any particular organizational changes you are planning?

RJ

If you are creating a new concept or a new organization then a lot happens in parallel. You are planning things, you are doing things. You are building a team and a lot of it doesn’t even have a proper sequence in the sense that you recruit a person and from day one he is in the field and there is no time for training him. We don’t create HR manuals; it’s just kind of happening. It is obviously a little chaotic, but we have people who understand and that is the only way we can create a company. It can’t happen in a very leisurely kind of fashion. One of the key changes I am envisaging at this stage is to take a pause for a couple of days and sit back and reflect. Is our thinking absolutely common on what it is we are trying to create? What is our mission? I want us to note it down and be absolutely clear about what it is, and at the same time what our value systems are. I would imagine that there is a fair amount of clarity already, but a pause will help to reach a consensus. So that’s something that I think I need to do because to me it would make a lot of difference to the company.

GP

Coming to you, what do you think are your strengths in achieving your goals?

RJ

I think I am a people person and I also think that people make all the difference in an organization. But at the same time I would like to qualify that by saying that likeability or liking somebody is not the end objective. You may be a people person, but you can’t forget the task orientation, which is so important. People are there to deliver things that they should deliver, but you need to create an environment that makes things possible. Whenever I recruit people I always tell them that they are going to work extremely hard, but while doing this they must have fun and must enjoy what they are working on. I say that if you actually enjoy what you are doing then even a 16-hour day is not painful. On the other hand if you don’t, then two hours is torture. That’s something that must happen and is the function of job responsibility, ambience and organizational culture.

Second, what I feel very strongly about is the clarity of the mission. If I know what I am going to do and if I am very clear about it, it gives me a phenomenal amount of conviction. If you don’t have that I don’t think you can actually perform. Unless you can see in your mind very clearly what you are going to achieve and how you are going to achieve it, I don’t think you are going to be there and I don’t think you will be able to have that conviction which makes so much of a difference. If you know 2+2=4 then you just say it and you say it all the time and you believe in it, irrespective of who believes you or not. Speaking personally, I have never done anything where I haven’t felt convinced enough. I have to have the clarity and conviction; because only when you have that are you willing to go through the struggle. I know what I am asking for is extremely difficult to that extent, I don’t expect it to be a cakewalk and the whole struggle is what adds to the fun. I am not going to do something easy, which other people can do.

GP

It’s going to be a challenge in trying to develop a high quality culture in India, isn’t it?

RJ

Absolutely. It will require a high degree of excellence, and it makes me feel sad when in India we think that export quality means better quality. When you say export quality rice, it means better quality rice. Can you imagine that as a country we say that if it is for us it can be of low quality, yet if it is for another country then it means better quality? It is as frustrating as that. So to that extent, creating an awareness of why you shouldn’t expect anything which is not good and why we should not deliver anything that is not good is a difficult task, and an enormous challenge.

The good news is that things are changing. For example, there was a time when you had a person waiting ten years to get a scooter. Now you have a scooter company, which probably waits for ten months or so to make deliveries to a customer. Things are changing in the manufacturing and service sectors. Today you don’t have to wait two years for a telephone connection, it can happen overnight. The average person today is a lot more demanding than he or she has been, which I think is the best thing that can happen because it pushes the service provider.