Clinical Innovators | Making Cardiac Surgery Affordable: Interview with Devi Shetty, MD
Devi Prasad Shetty, MD, is chairman and founder of Narayana Health, a multi-specialty hospital chain in India renowned for its low-cost and high-quality health care services. With its unique business model, Narayana Health has become a global health care and Harvard Business School case study for its success in reconciling quality, affordability, and scale. Narayana has expanded its presence to 23 hospitals in 14 cities since being founded in 2000. Prior to creating Narayana Health, Dr. Shetty completed his medical training and post-graduate work in general surgery at Kasturba Medical College, followed by a fellowship in cardiac surgery at Guy's Hospital in the United Kingdom. He returned to India in 1989 and initially worked at B.M. Birla Hospital in Kolkata, where he served as Mother Theresa's personal physician. The Wall Street Journal has called Dr. Shetty "the Henry Ford of heart surgery" for his work in making care more affordable.
What inspired you to improve the affordability of health care in India?
When I was a young student in medical school back in Mangalore, my entire exposure to patients was at a government hospital where people simply didn't have money to buy even medicine, let alone surgeries.
I could see them suffering and dying because they couldn't afford medicine worth a few hundred rupees [$5 USD]. That is when I realized that if a solution is not affordable, it is not a solution. It is pointless to talk about advances in health care if the price is beyond the reach of 90% of the world's population.
When I came back from England and settled down in Kolkata, I used to see over 100 patients each day who needed heart operations. Few got the surgeries they neededthe rest couldn't afford it. I realized that something needed to be done.
For you, that something became Narayana Health and formed its core.
Yes, our core values are making quality health care affordable and delivering health care with compassion. Human beings are not robots. It is pointless for a hospital to be boasting about its academic and clinical excellence without looking at its patients holistically, and this includes an awareness about their backgrounds and their ability to pay. This is essential for reducing disparities in health.
For example, I know from my experience that parents will mobilize money for a baby boy at all costs in Indiabut the same is not true for a girl. This is a reality that we have to accept. So, when I see a baby girl with a heart problem and the parents are bargaining hard, I agree to do the operation with whatever money they will pay. Having said that, we do believe in quality. None of our patients ask for Joint Commission International [JCI] accreditation. In fact, they don't know what "JCI" means. But we spent lots of precious resources and got our hospitals accredited, because we believe in quality as the best way to reduce cost. We also believe in the power and efficiency of technology.
We believe that technology is going to reduce the cost of health care by at least 25% and reduce post-operation complications by at least 50%. This may sound like an exaggeration, but this is what is going to happen.
What lessons can other health care systems learn from Naryana Health?
Other health systems can learn something from us, and we need to learn from other systems as well. Essentially, we are mindful about the cost of everything. We have invested heavily in Oracle's Enterprise Resource Planning [ERP], which is cloudbased, and we have 26 hospitals in different locations in India. By noon every day we get an SMS on our mobile phone with the previous day's revenue expenses and EBITDA margin (earnings before interest, taxes, depreciation, and amortization).
For us, looking at our profit and loss accounts at the end of the month is akin to reading a postmortem report. We use our profit and loss accounts as a diagnostic tool on a daily basis so that we can make a mid-course correction if necessary. We are always trying to ensure that the care we deliver is financially viable and sustainable.
What are Narayana Health's plans for expansion, and how will this affect health care from a global perspective?
The best place on the planet for a hospital to be built is on a ship parked outside US waters. The United States charges maximum rates for procedures; US regulations make it very difficult for hospitals to innovate and control cost. That is the reason why we chose to expand to the Cayman Islands it is almost like putting a hospital on a ship just outside the United States.
We would like to be in any part of the world where we can reduce costs to make health care affordable. However for this to happen, the government has to be supportive. It must prioritize the lives of patients rather than the greed of vested interests. So, besides the Cayman Islands, we are developing cardiac services in Malaysia and we are actively looking at Africa.
Charity is not scalable, whereas good business principles are. We believe that quality will prevail in the end, and every day we should try to be better than the previous day. We also believe that technology is going to dramatically change the way health care is delivered. Hospitals across the world should invest in technology so that the cost of technology will come down and health care will become safer for patients.
What have been your greatest obstacles in making care more affordable?
There is a shortage of skilled cardiac surgeons, cardiologists, neurosurgeons, gynecologists, and anesthetists across the world. Also, there is a shortage of skilled nurses and shortcomings in the current methodology of training skilled manpower. You don't need to be a graduate in computer engineering to open a desktop and repair it. However, to touch a human body you need to have specific degrees and credentials. Unfortunately, there are very few degree-giving bodies since medical education itself is controlled by vested interests. We cannot meet the demands for providers with the current system, so we should really look at a global university that can train health care workers across the world.
What are your goals over the next 10 years or so?
In the coming decade, our goal is to add 30,000 beds across India and to reduce the cost of heart surgery to $800 from point of admission to discharge. We also would like the entire African subcontinent to have access to affordable, high-tech health care. We would like to support a global university that will offer medical, nursing, and paramedical degrees across developing countries so that graduates can practice in any of the affiliated countries without having to go through the licensing exams of every individual country. This is the best way to democratize health care so that there will be free flow of skill within and across countries.
Should clinicians take a more active role in reducing the cost of care, and how can they do so?
Clinicians must be involved in the administration of hospitals as well as in controlling costs. The most expensive medical equipment is not a CT/ MRI/PET scanner, but a doctor's pen. Doctors prescribe a lot of things while knowing that the prescription may not make a big difference to the patient's outcome. Affordable health care will only become a reality when doctors become conscious of the cost of health care.
It is difficult to teach a finance person about medicine, but a physician can be taught a lot about finance in 5 days.
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