- Category: Strategy
- Published on Tuesday, 13 November 2012 19:20
In the first of a series of articles on ‘The Great Indian Healthcare Factories’, featuring stories in healthcare that are exemplary and worth emulating, Gp Capt (Dr) Sanjeev Sood, Hospital Administrator and NABH empanelled Assessor, chooses Narayana Hrudayalaya and traces the reasons that contributed to its success
|Gp Capt (Dr) Sanjeev Sood|
Dr Devi Shetty’s vision for affordable healthcare led him to start the Narayana Hrudayalaya ('Temple of the Heart') in Bengaluru in the year 2001. Since then there has been no lookingxe back and the Group has now expanded into ‘health cities’, a series of larger-than-usual centres specialising in cardiology, eye, trauma, orthopaedics, neurosciences, dental and cancer care; comprising of 16 hospitals and 5700 beds. It expects to expand the chain to 30,000 low cost beds by 2020 and is also looking at creating three or four health cities around the US border. What makes this venture tick and achieve efficiencies that others can only envy? To answer this question, one has to examine the visionary leadership, strategic management, organisational culture, unique business model and other key attributes of Narayana Hrudayalaya.
Man behind the mission
Dr Devi Prasad Shetty, Founder and Chairman of Narayana Hrudayalaya, is a medico-entrepreneur and a philanthropist crusader with a missionary zeal –all rolled into one. Influenced by the philosophy of Mother Teresa, he blends compassion with care and has a vision to provide quality healthcare for the masses worldwide.
Known for his unconventional ideas, Dr Devi Shetty has innovative solutions for most of the ills afflicting the Indian healthcare sector. He believes that if each one of the 800 million Indian mobile subscribers, contribute Rs 10/- as premium out of their monthly bills to a micro insurance health scheme, their healthcare needs will be taken care of. To achieve this, the government needs to perform the role of the insurance provider rather than being healthcare provider. To overcome the shortage of medical manpower, he suggests that the government should open 100 medical colleges with upgraded district hospitals every year for the next five years. Narayana Hrudayalaya also plans to adopt 2000 children every year from rural West Bengal and other states and mentor them to become doctors by offering soft loans.
He also believes in empowerment of paramedical staff and involving them in delivery of care. He proposes an equitable distribution of world class healthcare for the masses at an affordable cost.
Recently awarded with the Padma Bhushan, Dr Shetty has been called as the 'Henry Ford' of heart surgery and ‘King of Hearts’ for having performed over 15,000 heart surgeries. The RBI has asked banks to emulate Narayana Hrudayalaya - to increase their relevance to consumers.
Creating focused factories of healthcare
One of the startegies of Narayana Hrudayalaya has been to focus on a limited number of core competencies and bring in factory-like efficiencies in each hospital. This is the best way to compete effectively, by dedicating to a manageable set of services with greater standardisation, rather than being multi-purpose. The core competencies, precisely defined by the organisation’s strategy and its humane approach, is backed by its technological and economic strengths.
Size does matter
Narayana Hrudayalaya has adopted a unique principle of economies of scale for lowering healthcare costs and increasing accessibility. It has created ‘health cities’ with huge capacities in terms of infrastructure. Today, these hospitals perform about 12 per cent of all cardiac surgeries in the country; the maximum number of dialysis than any hospital chain in India at the modest cost of Rs 400; highest number of surgeries on children in the world; and the highest amount of bone marrow transplants at Mazumdar Shaw Cancer Centre in India. By handling greater volumes, the organisation has been able to hone its physicians towards greater proficiency levels, and also negotiate better prices for inputs directly from vendors. This helps to streamline the organisation’s workflows, processes and build systems with better efficiency and cost–effectiveness.
Achieving best outcomes
Since the super specialists at Narayana Hrudayalaya hospitals see large volumes of cases and perform no more than two to three types of procedures, they excel in their domain. Most of these hospitals attain clinical and quality outcomes that are among the best in the world.
Reaching the grassroots
To meet the healthcare needs of the masses, Narayana Hrudayalaya had launched a micro health insurance scheme, Yeshaswini eight years ago in collaboration with the Karnataka State Government. The scheme now has close to four million farmers as members contributing Rs 12 per month. It covers the expenses of 1650 different varieties of surgeries. In the first 20 months of scheme, 85,000 farmers had free medical treatment, 22,000 had free surgeries, and another 1400 had heart surgeries. Dr Shetty also founded ‘Arogya Raksha Yojana’, a joint venture of Narayana HrudayalayaPL, Biocon and ICICI to provide free OPD consultation, cashless surgical facility, and diagnostics at discounted rates.
Reining in costs by all means
To rein in their costs and provide quality yet affordable care, Narayana Hrudayalaya critically examines its entire supply chain and processes-from cost of land, technologies used and manpower employed; so as to get the best value for money. Narayana Hrudayalaya partners with the Governments and real estate owners to get land at subsidised rates and procure medical technology at lease or convince the vendors to park their machines in the hospital instead of outright purchase and buy consumables from them, thus saving on capex. Thus, Narayana Hrudayalaya is able to commission large-scale projects and scale them up across the country. “The focus is how can you scale faster and deliver cheaper while adhering to the highest standards of clinical outcomes,” says Shetty. To attract and retain the best manpower, Narayana Hrudayalaya pays compensation at par with the best. However due to longer work hours, lower TAT and downtime; they are able to perform more surgeries per day, thus reducing the cost per procedure.
Hybrid and dynamic pricing
At Narayana Hrudayalaya, approximately 40 per cent of patients pay a reasonable price for their treatment, a small percentage - those who want the comforts of private rooms - pay a premium, the majority pays less than the market rate and 10 to 20 per cent pay virtually nothing. For the indigent patients, the hospital's charitable trust raises money to help compensate for the material costs of their treatment, thus, dissociating healthcare from affluence. At Narayana Hrudayalaya in, Bengaluru, 40-60 per cent of paediatric heart surgeries are done free of cost. Narayana Hrudayalaya follows a dynamic pricing policy, wherein it daily examines the profit and loss account and monitors the average realisation per procedure and profitability. Then, it works out how much concession they can afford to offer the next day without impacting the margins adversely.
Best inventory management
Narayana Hrudayalaya bulk purchases all medical stores and consumables, at discounts, directly from the manufacturers and manages all inventory efficiently by forecasting demands and eliminating wastage. Within the ‘Health City’, various specialties share expensive imaging equipment and other facilities like laser, cyber knife and blood bank,. They are run round the clock instead of 7-8 hours daily, thus increasing asset utilisation.
Reaching out to the last mile
A distinctive rural healthcare service, “Hrudaya Post”, was launched with Karnataka postal circle to enable rural heart patients to scan and send their medical records to Narayana Hrudayalaya for consultation. After perusing, the hospital would revert with a detailed report and advice to the patient, within 24 hours, free of cost. This arrangement saves time and money needed for visiting consultants.
Through telemedicine and other ICT applications, Narayana Hrudayalaya automates processes and shares medical expertise with remote parts of India and other countries. It has migrated to digital radiology for better throughput and image quality, while working in a filmless and paper light environment.
Thus, by embracing best practices and business principles in cost containment, rationalising manpower utilisation, adopting innovative pricing, Walmart’s inventory management practices, the scale of Ford Motors, efficiency of McDonald and Toyota; Mayo Clinic’s professional excellence, Mother Teresa’s compassion and dynamic leadership of Dr Devi Shetty, it has woven a great success story that is truly Indian and worth emulating and replicating as a benchmark.
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