God’s Compassionate Home
Quality healthcare can be made affordable in countries such as India, even for those who have no means to pay for it. To accomplish this task one needs but a dream – and an innovative approach to building business processes. Devi Shetty, a cardiologist and founder of the Narayana Hrudayalaya hospital in South India, succeeded on both counts.
I leave the terminal of the recently-built airport in Bangalore and head for the taxi stand. I ask the driver to take me to the Narayana Hrudayalaya hospital, to see Dr. Shetty. He happily nods in response and rushes to open the door for me. One minute later we hit the road. As we leave the airport area I notice billboards advertising luxury flats for Rs20 million (roughly $40,000). Contrasts in India never cease to amaze me. We quickly reach Bangalore city but find ourselves immersed in typical Indian traffic chaos, which gives me a moment to stop and think about the purpose of my trip.
Outside observers would never be able to tell that the Indian healthcare market is going through a veritable boom, yet it is. While in 2010 the market was estimated at $46 billion, this year it is forecasted to reach $64 billion. Private practices and hospitals, as well as the medical education received by Indian students, are among the main drivers of these advances.
However, despite the rapid growth, a significant percentage of Indians – primarily those living in rural areas – still have no access to quality medical care. Several factors account for this phenomenon. State hospitals are few and far between and they are unable to cope with the influx of patients. Against the backdrop of India’s struggling health insurance system, private clinics, which account for 70% of healthcare services in the country, are simply too expensive for the poor and disadvantaged.
Healthcare facilities themselves are not immune to problems either: they are plagued by staff shortages, high capital expenses, shortages of medication and many other issues. In rural areas the situation is exacerbated by the ‘local environment’: the harsh living conditions, lack of hygiene or regular medical check-ups, population growth, and specific diseases such as malaria or complications caused by snakebites.
Still, India can offer numerous examples showing that quality medical care can be made affordable for the poorest people in the country. Aravind Eye Care, an ophthalmological company, and Life Spring, an organization offering inexpensive pre-natal and childbirth support, certainly stand out. But the most striking example is Narayana Hrudayalaya, a center providing state-of-the-art medical assistance free of charge or at affordable prices. Its name translates from Sanskrit as ‘God’s compassionate home’, and this is precisely where my driver is taking me, to meet Dr. Devi Shetty, the man who founded this facility.
The Health Colony
In the traffic jam, I sit and count the time I have left until my appointment – half an hour… then fifteen minutes. I was hoping we would make it there in two hours, but that is clearly not going to be the case. It is time I placed a call to the Narayana Hrudayalaya center and let them know, but I cannot seem to get through. Suddenly, I receive a call from Dr. Shetty himself. I apologize for being late. He assures me that it is perfectly all right, and I continue my journey.
Dr. Shetty is a person worthy of the highest admiration. He was the eighth child in his family. He had wanted to become a doctor since he was a little boy. When he was in the fifth grade his teacher told him that a South African surgeon had performed the first ever heart transplant. It was at that moment that Devi Shetty decided to become a cardiac surgeon.
He graduated from university in India and went on to complete an internship in the UK. He returned to his home country in the late 1980s, having been invited by an influential Indian family to head up a cardiac center they had built. He quickly became famous for his skills as a surgeon. One day he received a phone call right in his surgery room. The caller begged him to come and help a patient. That patient turned out to be Mother Teresa. After performing heart surgery on her, he became her personal physician.
Meeting Mother Teresa turned Shetty’s life around completely. He decided to build a hospital of his own so that he could perform surgery for everyone who needed help – and not just those who could pay. His father-in-law, who shared this dream, financed the construction of a cardiac center on the outskirts of Bangalore, which opened its doors in 2001.
In time, several other Narayana Hrudayalaya facilities were built nearby: oncological, neurological and ophthalmological centers. Dr. Devi Shetty and his colleagues refer to their center as the ‘Health Colony’. But the story does not end there. Narayana Hrudayalaya now operates or owns hospitals in 14 other cities in India, and its doctors often provide medical advice to colleagues as far away as Africa, via telemedicine. Every Narayana Hrudayalaya surgeon has a laptop with Skype installed.
Efficiency and Technology
As I enter the hospital I instantly notice a bas-relief of a deity. After all, how could one perform serious surgery without praying first? I am shown to Dr. Shetty’s office and watch him receive his patients for about half an hour. On average he receives around a hundred patients, and performs two operations, every day. He shows genuine concern for every patient. Despite the enormous foot traffic in his office, he remembers patients he has treated before and even the particulars of their diagnosis. Dr. Shetty invites me to talk over lunch and then rushes off to the operating room, leaving me in the “capable hands” of his business development manager.
It is with him that I am taken on a tour of the center.
I am impressed most of all by the pediatric ward, where I even see new-born babies coming out of surgery. We are driven quickly between facilities in an electric car. All buildings are clad with marble and kept very clean. There is a sense of gravity in the air.
“Many poor people feel out of place surrounded by all this marble,” my guide admits. Indeed, as opposed to Indian tradition, which mandates that hospitals should primarily target wealthier patients, Narayana Hrudayalaya places greater emphasis on the poor. At the same time it is probably the most efficient hospital in the world. The Narayana Hrudayalaya cardiac center, the flagship facility, can offer up to two thousand beds. Here an average heart procedure would cost around $2,000. For the sake of comparison, a similar operation in the United States would range between $20,000 and $100,000.
Where does the secret of his success lie? Dr. Shetty explains: an innovative approach to management processes is required, more than innovations in surgical methods and techniques.
This approach can be broken down into five components. The first component is that hospital beds should always be filled – here the centers rely heavily on patient waiting lists.
The second component is the optimization of equipment costs. Narayana Hrudayalaya hospitals maintain direct contact with manufacturers of medical equipment, bypassing intermediaries and helping to ensure competitive prices. “After the first cardiac center was built, it became easier for us to talk to manufacturers and branch out to other areas,” says Dr. Shetty.
Equipment is also utilized to a very high degree. Narayana Hrudayalaya has reached an agreement with healthcare equipment service provider Trimedx, whereby equipment is serviced and supported for a period of 14 years, as opposed to the market standard of 7 years, when hospitals usually have to replace their entire technical infrastructure with new equipment.
In addition, the centers lease some of the equipment used in ambulances and electric cars. Together these efficiencies save a lot of procurement money.
The third component is the minimization of personnel costs through high-quality specialist training and narrow specialization, which combine to pave the way to greater productivity.
For instance, due to the high number of operations performed at Narayana Hrudayalaya, local surgeons tend to specialize in one or two operation types, which means they are exempt from doing routine paperwork and can focus entirely on their core duties. As a result, surgeons here perform about 12 operations per week – a number that is significantly higher than the average across Indian hospitals. They receive a fixed wage, which means that personnel costs remain at the same level even though the number of operations is growing.
The fourth component is the outsourcing of everything that is not directly related to patient treatment, including laundry, catering, waste removal and similar services.
The final component deals with the implementation and use of state-of-the-art information technologies across the board. Narayana Hrudayalaya was the first hospital in India to migrate its entire Enterprise Resource Planning (ERP) system to cloud technologies. The move enabled the center to reduce its IT infrastructure support costs and provide real-time access to information.
The Rich Pay Their Way
Cost optimization, however, is not the only way to make high-tech medical assistance affordable for as many patients as possible. Some time ago Narayana Hrudayalaya and the Karnataka State government launched a micro-insurance program enabling Indians to pay 10 rupees a month (roughly 25 US cents) for the right to choose from a thousand different surgical procedures.
To be able to break even, the hospital also performs surgeries for relatively wealthy individuals who can afford to pay more for their medical treatment. For example, a heart surgery for a foreign national would cost on average $7,000.
“We calculate the ratio between the surgeries that are paid and those that are offered free of charge on a daily basis, so that we could scale up the former if the need arises,” Shetty says.
Recently the hospital came up with a new initiative to build a network of low-cost hospitals with 150-300 beds each in suburbs and rural areas of India. The first hospital of this kind was completed late last year and is now able to accommodate 200 patients.
The cost of building such medical facilities is low, as the walls and roofs are assembled from prefabricated parts; no marble. Locally-available materials will also be used to the maximum extent, while air conditioning will be installed only in those areas where it is truly needed, for example in operating rooms.
“The way these hospitals were designed provides for efficient natural aerification and lighting, which cuts electricity costs,” explains Dr. Shetty.
He says paramedical personnel costs can also be cut by giving patients’ families basic training to be able to provide in-patient care themselves.
“Our specialists calculated that it would cost three times less to build this kind of a hospital than a traditional facility of a similar nature.”
Beyond India, Narayana Hrudayalaya has plans to open medical facilities elsewhere in Asia, in the Cayman Islands, and in Miami. Dr. Shetty would not mind treating patients from Russia either.
“Perhaps one day we will open a hospital in your country,” he says, and those are his parting words.
The Narayana Hrudayalaya approach to cutting costs dovetails with its declared set of values that are neatly packaged in the acronym ICARE:
I - innovation & efficiency
С - compassionate care
A - accountability
R - respect for all
E - excellence as a culture