BENGALURU, India—Dr. Devi Prasad Shetty draws a Jamieson sucker-dissector along the pulmonary artery of a patient at Narayana Institute of Cardiac Sciences, a 718-bed hospital that’s part of Narayana Hrudayalaya, a chain of 32 hospitals he founded and chairs. Dissecting the artery so he can open it and remove the blood clots that have formed inside is the most delicate move he will perform during this six- to eight-hour pulmonary thromboendarterectomy: If the plane of his instrument turns even half a millimeter, he could breach the artery wall. The injury would be difficult to detect, as the patient’s circulation is halted for the surgery, and it often results in death.
Shetty doesn’t allow such thoughts to distract him. He appears relaxed as he completes the dissection and then, using his gloved fingers, removes the clots blocking the artery. “Surgery happens in three phases,” he says. First in a surgeon’s mind prior to the operation, then on the operating table, and then again in the mind postsurgery, when the doctor evaluates how performance could be further improved. “For other surgeons, the next opportunity for improvement is after a few months, but in our case, because of the numbers involved, it is the next day.”
The high volume of surgeries Shetty refers to is a big reason PTE surgery is done at all at Narayana Health City, the hospital where NICS resides. Because of the level of difficulty and consequential mortality rate for PTE, only 10 medical centers in the world offer it. Yet here, in a country with one of the lowest concentrations of doctors and hospital beds, where just 1.3 percent of GDP goes to public health spending—health care’s share of the economy in OECD nations averages 9.3 percent—the NH chain has performed more than 400 PTEs in the past 10 years. The mortality rate for the procedure at its Bengaluru facility has dropped to 4 percent.
“We realized that while operating, an injury to the wall of the pulmonary artery causes blood to enter the alveoli,” Shetty says. That can be fatal. “We have developed a technique to identify the injury so we can plug it during the surgery.” This technique has been published in the Annals of Thoracic Surgery and is now being used by surgeons around the world.
India can become the first country in the world to dissociate health care from affluence. We can prove that the wealth of the nation has nothing to do with the quality of health care.
Dr. Devi Prasad Shetty, founder and chairman, Narayana Hrudayalaya
After starting a cardiac hospital with 250 beds in Bengaluru in 2001, Shetty, 62, began expanding NH the following year with the aim of making heart treatment more accessible. Coronary artery disease is the leading cause of death in India. Of the approximately 2.5 million Indians who need surgery for heart disease every year, between 120,000 and 130,000 get it. The rest, unable either to reach a specialist or to pay for treatment, succumb to the disease. Expensive pharmaceuticals and surgery are within reach of relatively few Indians, even among the 30 percent that have medical insurance. Many sell everything they own to pay for treatment.
Through economies of scale, administrative innovations, and the embrace of new technology, NH can offer surgeries at a small fraction of their cost in the U.S. and less than half the cost at other Indian hospitals. NH has recently expanded beyond cardiac care, operating 23 hospitals focused on such specialties as neurology and oncology, eight heart centers, and 24 primary care facilities. It plans to expand nearly six-fold in the next few years and is bringing its model of high-quality, low-cost health care to the West, having opened its first hospital overseas, in the Cayman Islands, in February 2014.
The goal, Shetty says, is to divorce health from wealth: “I believe that India can become the first country in the world to dissociate healthcare from affluence. We can prove that the wealth of the nation has nothing to do with the quality of health care.” If he can bring down the cost of quality health care in India, there’s reason to believe the same methods can be employed elsewhere. In the U.S., that would reduce a significant drag on the economy.
Every patient who walks into the outpatient department at Narayana Health City hears the same soothing promise from a staff member: “Don’t worry—we will make you well.” This is the first place patients see and a key component of NH’s low-cost strategy. Whereas most hospitals admit patients a few days before surgery for pre-op investigations, at NH they are done on an outpatient basis, reducing the number of costly overnights per admission. The marble and other high-end materials seen in many other Indian hospitals can’t be found here, where tile flooring and cut-rate furniture dominate. The building is designed to benefit from natural lighting where possible, and many of the central areas function without air conditioners. Shetty claims no one has ever been refused treatment at an NH facility for inability to pay.
NICS prices the most common heart surgery in India, the coronary artery bypass graft, at as little as the clinic’s break-even cost of $2,661. A micro-insurance plan conceived at NH and now offered by the state government, or one of the similar plans NH offers on its own, covers part of the expense; a premium of $3.60 per year pays $1,307 toward any surgical expense. If a patient is unable to cover the rest of the bill, the hospital either reaches out to donors or absorbs the cost. The 60 percent of patients able to pay for NH’s much more expensive private wards and suites offset expenses other patients can’t meet.
The volume of patients coming through the OPD shows the economy of scale that helps keep NH’s costs down. The network of hospitals performs an average of 48 cardiac surgeries a day, which it says is the most anywhere. The 16 cardiac surgeons at NICS each conduct at least one to two surgeries a day and 400 to 600 per year, compared with the 100 to 200 that is the norm for U.S. cardiac surgeons.
Despite the high volumes, Harvard Business School case studies in 2005 and 2014 on NH’s cardiac care found that the infection and mortality rates for CABG procedures at Narayana Health City were 1 percent and 1.27 percent respectively, essentially matching the 1 percent and 1.2 percent rates in the United States. Procedures and surgeries are accredited by the U.S.-based Joint Commission International, which helps health care centers improve performance.
High patient volume also enables NH to strike hard bargains with suppliers. With the network performing 12 percent of all heart surgeries in India, pharmaceutical companies and equipment manufacturers are content to reduce their margins to capture such a large share of the market. The majority of NH’s imaging and laboratory equipment is not purchased but operated on a pay-per-use basis. To sustain revenue, suppliers ensure that their equipment at NH facilities is always in top condition. “Most Indian hospitals have their own team of engineers to look after equipment, but we prefer to focus on medical expertise, which is our core competency,” says Joseph Pasangha, facility director at NICS.
The cost-cutting business model also relies on sharp divisions of labor among staff. Assigning basic tasks to junior surgeons and bringing in the expert for only the most sensitive parts of the procedure, and shifting responsibilities from doctors to nurses and from nurses to critical care assistants, frees specialists to focus on their areas of expertise.
In one OR in February, nurses and paramedical staff prepared the patient by initiating artificial pumping of the heart before a junior surgeon came in to open the chest. Once this was done, the senior surgeon joined to perform the main surgery. This left him time to perform more surgeries that day, the additional experience helping him improve performance.
Technology is also leveraged to reduce labor costs. Software called iKare, installed on an iPad connected to each ICU bed, automatically updates patient records as they are generated. iKare’s decision-support system informs the nurse on duty of any problems and instructs staff on the next action in the sequence of care. Even an inexperienced nurse can respond effectively before more-costly staff need to be involved.
While such innovations reduce expenses at NH, administrators also believe they improve quality of care. Though the notion of an iPad making care decisions might cause some Americans to squirm, mistakes by staff are a leading cause of death at U.S. hospitals, and Dr. Ashutosh Raghuvanshi, NH’s CEO, maintains that iKare “has reduced human error and helped in bringing a lot of accountability, since every step gets recorded.”
While many American hospitals and HMOs struggle to digitize patient records, NH’s cloud-based hospital information system, enterprise resource planning, and electronic records connect all its 32 hospitals. Financial and human resource systems, imaging, lab results, and more can be accessed by any hospital on demand. Each time a new hospital comes online, it can be added to the system at virtually no cost.
After a patient undergoes surgery, NH takes measures to reduce the time spent recovering in the hospital. A typical post-op stay for a CABG surgery is one to two days in intensive care, followed by three or four days in the ward. While waiting for their kin to recover, families watch a video (developed with Stanford University), supplemented with a lecture by a nurse, to learn to check vital signs, any drug side effects to look for, and more. These practices “reduce postsurgical complications and therefore the number of readmissions,” Pasangha says. NH is now working on training staff for home care so patients don’t need to stay several days just for IV infusion, physiotherapy, or observation.
Shetty’s team would like to expand NH beyond population centers such as Bengaluru, a city of almost 8.5 million that is known as the home of India’s technology sector, but realizes that cost will be a factor. “Smaller towns can be fed [specialty] services only if we build more hospitals that are affordable,” says Raghuvanshi. Facilities are built in partnership with companies looking to add value to a residential-commercial development by including a hospital, or with foundations that may have property and funding but lack know-how. Prefabricating parts of the buildings and designing them to include more general-ward beds reduce construction costs by nearly half.
Telemedicine represents another way of expanding health care to poor and rural parts, reaching patients who can’t afford transportation costs or loss of wages during time spent traveling to a hospital. From its headquarters in Bengaluru, NH’s free, 24-hour telemedicine services is used by 856 centers across India for consultations, radiology reports, electrocardiogram services, and second-opinion clinics, all delivered via Skype. Working round the clock, telemedicine services’ doctors read 700 ECG reports and 1,800 to 2,000 radiology reports a day.
Although barriers such as “regulations, fee-for-service incentives, pharmaceutical lobbies, trade unions, medical malpractice lawsuits, and investments in extensive hospital infrastructure” exist, write Vijay Govindarajan, a professor at the Tuck School of Business at Dartmouth, and Ravi Ramamurti, director of the Center for Emerging Markets at Northeastern University, in Harvard Business Review, hospitals in the U.S. should still be able to adopt elements of NH’s model.
Until that happens, NH’s only overseas facility, Health City Cayman Islands, which is JCI accredited and offers surgeries at 40 percent of the cost at U.S. hospitals, places NH’s model on display for a Western audience. An hour from Miami, the hospital is beginning to draw notice, says Dr. Binoy Chattuparambil, senior cardiac surgeon there: “We have seen a surge of patients from the U.S and the Caribbean” since fall 2015.
V. Kasturi Rangan, a marketing professor at the Harvard Business School and a coauthor of the 2005 case study, thinks NH’s achievement can be replicated—if its facilities’ placement of patients at the center of care, rather than only its cost-cutting measures, gets transmitted. “It is not just the system innovation that a center of excellence like NH has mastered,” he says. “There is a deep human empathy and a culture of care and commitment to the patient that it displays. While the former is possible to replicate, the latter is very hard.”