Saturday, November 21, 2009

WSJ: The Henry Ford of Heart Surgery

You don't have to be a healthcare policy wonk to appreciate the achievements made at the Narayana Hrudayalaya Hospital in Bangalore, India. It's a hospital that has a higher success rate, performing far greater volumes at a cost that's a 10th of what a typical American hospital might charge for open heart surgery. As founder Dr. Devi Shetty notes, "What health care needs is process innovation, not product innovation."

Here's a graphical summary from the WSJ (makes you wonder what the Christina Yang's (Wikipedia) of the world are doing in the US):

For the bleeding hearts out there, here's an anecdote of how Dr. Shetty makes healthcare affordable:

K. Parashivappa, the boy's father, a sugarcane worker from a village eight hours away, held a cup of water to his son's lips. He says he's known his son needed surgery since he was born with a congenital heart defect. The boy has never been able to run and play cricket like other children, hobbled by chronic shortness of breath and weakness.

Mr. Parashivappa says he can't himself pay for the surgery, but it is covered by a farmers' insurance plan that Dr. Shetty began several years ago in partnership with the state of Karnataka, which includes Bangalore.

Nearly one third of the hospital's patients are enrolled in this insurance plan, which costs $3 a year per person and reimburses the hospital $1,200 for each cardiac surgery.

That is about $300 below the hospital's break-even cost of $1,500 per surgery.

The hospital makes up the difference by charging $2,400 to the 40% of its patients in the general ward who aren't enrolled in the plan. An additional 30% who opt for private or semi-private rooms pay as much as $5,000.

The father, in an untucked brown shirt, raised both hands to offer the traditional Indian greeting, "Namaste," to Dr. Shetty as the hospital head stopped by his son's bed. "Thank you for giving my son his life back."

Read the whole thing (WSJ). While I'd be somewhat uncomfortable with whether the level of subsidization is sustainable, the hospital has a higher level of profitability than its American counterparts. With any luck, Narayana Hrudayalaya Hospital will do for healthcare what Compartamos is doing for microfinance. Of course, the ideas here aren't exactly new but probably executed far better than the US system allows.

The term "focused factory" in healthcare was termed and popularized by US researcher Regina Herzlinger (I first learned of her work with her book Market Driven Health Care). Perhaps I'm burying the lede here, but there's a healthcare revolution already happening in the US and while I've worried that healthcare legislation winding through both Houses would crush innovation, stories like this show that if the US doesn't lead the world, others will.

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