Religion & Liberty Online

What India’s $800 Heart Surgery Can Teach Us About Healthcare in the U.S.

Health_Shetty-MainIndia’s best-known heart surgeon was interrupted during surgery to make a house call. “’I don’t make home visits,’ ” said Devi Shetty, “and the caller said, ‘If you see this patient, the experience may transform your life.’ ” The request came from Mother Teresa, and the experience did change his life. Shetty’s most famous patient inspired the cardiac surgeon and healthcare entrepreneur to create a hospital to deliver care based on need, not wealth.

In 2001, Shetty – who the Wall Street Journal has given him the title of Henry Ford of heart surgery — founded Narayana Hrudayalaya (NH), which Fast Company magazine describes as “Walmart meets Mother Teresa.” Today, NH is one of India’s largest multi-specialty hospital chains and has created a record of performing nearly 15,000 surgeries on patients from 25 foreign countries. The hospital group believes it can soon cut the cost of heart surgery to a mere $800 per procedure.

If it can be done in India, why can’t it be done in the U.S.?

It could — maybe — but we’d need to learn the following lessons from India’s most innovative hospital:

To keep costs low, you have to keep costs low – What may seem to be a tautological claim is an insight that most Americans all but ignore. Consider, for example, the no-frills approach taken by NH’s ultra low-cost facilities: They use pre-fabricated buildings, air-conditioning is restricted to operating theatres and intensive care units, ventilation comes from large windows throughout the ward, and visitors and trained to help with post-operative care. Relatives or friends visiting in-patients undergo a four-hour nursing course and are expected to change bandages and do other simple tasks.

The building are also built as cheaply as possible. A hospital in Mysore, India, was built in 10 months at a cost of about $7.4 million dollars. As Shetty says,

“Near Stanford (in the US), they are building a 200-300 bed hospital. They are likely to spend over 600 million dollars,” he said.

“There is a hospital coming up in London. They are likely to spend over a billion pounds,” added the father of four, who has a large print of mother Teresa on his wall — one of his most famous patients.

“Our target is to build and equip a hospital for six million dollars and build it in six months.”

Focus on efficiency — “More than 100 years after the first heart surgery, less than 10% of the world’s population can afford it,” says Shetty. “That’s why we concentrate on the mechanics of delivery. It’s the Walmart approach.” Like Walmart, NH negotiates better prices by buying directly from manufacturers. The hospital group also buys expensive items such as heart valves in bulk, reducing the per unit cost. A large support staff handles most of the paperwork for the surgeons, allowing them to focus on performing surgeries.

Fixed salaries + Increased production = Lower Cost — Shetty and his colleagues perform about four cardiac surgeries a day – many more than the typical American surgeon. They also get paid a fixed salary rather than per operation. “Essentially we realized that as you do more numbers, your results get better and your cost goes down,” says Shetty. Fixed salaries and increased production are the primary reason NH is currently able to keep cost at an break-even of $1,800 per patient, a third of what it costs elsewhere in India and a fraction of what it costs in the U.S. (Some patients are charged more than the average, but some of the poorest are treated for free.)

All patients receive the same level of care, but not all patients pay the same price – Some industries, like no-frills airlines, are able to keep the average cost low by charging for extras and upgrades. Customers who are less price sensitive help to subsidize travelers who cannot or will not pay full price. NH takes a similar approach. The patients who can afford to pay the full price or who opt for extra perks are helping to cover the cost of the poor patients.

For instance, many foreigners consider a $7,000 heart operation, access to an experienced specialist, and a deluxe private room, to be a bargain. But their higher cost helps to pay for those who cannot afford the surgery. “This hospital is for poor people, but we also treat some rich people,” says Shetty. “So we’re mentally geared for people who are shabbily dressed and have trouble paying. We don’t look at them as outsiders. We look at them as customers.”

Keep an eye on the balance sheet — Every day, surgeons at NH receive a profit and losss statement of the previous day that describes their operations and the various levels of reimbursement. The data allows them to add more full payers, if necessary (unless urgent health issues dictate otherwise). “When you look at financials at the end of the month, you’re doing a postmortem,” says Dr. Ashutosh Raghuvanshi, NH’s CEO. “When you look at it daily, you can do something.”

Treat healthcare as a business, not a charity — “We believe that charity is not scalable. If you give anything free of cost, it is a matter of time before you run out of money, and people are not asking for anything free,” says Shetty.

Rethink everything from regulation to strategy — “The current regulatory structures, the current policies and business strategies (for healthcare) that we have are wrong. If they were right, we should have reached 90 percent of the world’s population,” adds Shetty.

Unfortunately, these lessons are not ones Americans are currently willing to learn. Even if we were to accept recovery rooms without air-conditioning and having our spouse change our bandages, government regulations and a litigious malpractice culture make such simple, cost-saving innovations nearly impossible to implement.

However, Christians who care about our neighbors having affordable access to healthcare — which should include all of us – can help to create a climate where such innovations can eventually be received. We desperately need to develop new ways of thinking about the issues (e.g., such as developing a theology of government regulation) in order to promote and champion effective change.

While it won’t happen quickly or easily, we may someday be able to develop such a system in the U.S. If so, future generations of middle-class Americans may some day have access to the same affordable high-quality healthcare that is available today to the poorest people in India.

Joe Carter

Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).