“A solution is not a solution, if it is not affordable.”
The quote is simple and ambitious — and it also characterizes its author perfectly: A cardiac surgeon of repute and a successful entrepreneur, Dr. Shetty heads the Narayana Health Group, one of India’s largest and world’s most economical healthcare service providers.
He disrupted the medical field in India driven by the belief that nobody should be denied healthcare because of their financial status and by challenging some of the paradigms in the health industry.
His visionary leadership to make quality healthcare accessible for all has drawn global recognition. Driven by an objective to bring down the cost of healthcare delivery by harnessing economies of scale, Narayana Health has been an interesting case study for the likes of Harvard and The Wall Street Journal.
Since its inception in 2000 as a 225-bed cardiac hospital in Bengaluru, the NH Group of hospitals has grown to a healthcare conglomerate with a network of 32 multispeciality and superspeciality facilities, with close to 6,500 beds spread across 20 locations across India and the Cayman Islands.
When meeting Dr. Shetty, he is usually either coming from surgery or going into the next one. But apart from still working as a surgeon, he is one of the most radical innovators in healthcare worldwide. We had the pleasure of meeting him with several of our clients and it always is a highlight of our programs.
In our visits, we witnessed firsthand how engineering and innovation have radically transformed the way healthcare and surgical procedures are delivered.
No patient is turned away
Most Indians cannot afford tertiary and specialty health care. One of the biggest reasons for them falling below the poverty line is an illness in the family.
Dr Shetty’s mission has been to create health centres where every patient can be looked after at an affordable price. He also started an affordable micro health insurance scheme for over 3.4 million rural poor.
Narayana Health never turns away patients who cannot afford world-class surgery. Instead, it cross-subsidises their treatment using full cost prices recovered from those patients who can afford it.
Doctors are given a full-time salary, meaning they are not paid per procedure. At the same time, the hosital has different packages to make cross-subsidies possible. The amount of non-paying patients that need an operation will determine the number of paying patients that will need to be scheduled in too.
Dr. Shetty explains some of it in this short presentation:
Using technology to cut cost
To bring costs down, every process and consumable is re-evaluated. For example: Re-evaluating the cost of linen in operating theaters eventually led to Narayana Health setting up its own company to make disposable drapes. In three years, they reduced costs by 50 percent.
But the biggest wins over the last years have come from innovating processes through the use of software.
Custom-built software in hospitals has historically been complicated and burdened with legacy issues. With the rise of mobile and simpler user interfaces, this is changing drastically — and it is making hospitals much safer and more efficient.
One initiative lets health-care employees use tablets to access patients’ health status information in real time. By using wearable sensors and connected medical equipment that measure vital functions such as blood pressure and blood count, the staff can do more than just make their rounds.
“The impact will be a 50 percent reduction in mortality. Did you know that one in 200 patients who spends a night in US hospitals dies due to medical error and not negligence?”
Narayana Health has partnerships and investments for software (from Oracle and SAP) and cloud computing. It allowed them to have a daily updated P&L account (he calls it a cardiac monitor for operating their hospital) to react short term to operational imbalances and their implications on the financials of the hospital.
“Charity is not scalable but good business principles are.”
Dr. Shetty has innovated more than just hospitals. He founded a micro-insurance scheme that is covering over half a million farmers and allowed over 50,000 of them to get life saving heart surgeries.
Dr. Shetty’s contribution to health care is the focus on innovation and rethinking, which has inspired many to follow his lead.
He is an inspiring leader and visionary who is relentless in not accepting the status quo. And he succeeds by applying very simple principles to complicated problems.