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Submitted By
Tonmoy Purkaystha (103)
Vaidya Vinit Vasant (104)
Venkataramana G (108)
Vipin Jamwal (111)
Vishal Gupta (112)
Manoj Jindal (114)
Narayana
HrudayalayaHospital- Cardiac Care forthe poor
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Narayana Hrudayalaya (NH)
Better known as..
WALMARTIZATION of Healthcare in India
Robin hood of Healthcare The Henry Ford of Heart Surgery
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Brief Overview
First of its kind heart hospital in India
Founded in 2001 by Dr. Devi Prasad Shetty
Provide affordable cardiac care to the masses
Unique business model to subsidize procedures performed for
the poor from the surplus revenue generated Benevolent thoughts of Dr Shetty were ignited while he was
treating Mother Teresa
Relentless focus on lowering operational costs wherever
possible Vision to create Health city with multiple specialties within
geographical proximity to further bring costs down
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Healthcare in India
Lowest public healthcare spending levels in the world@ 1% of
the GDP
Access to healthcare limited by inconvenient and expensive
travel
Understaffed and under equipped public hospitals
Less than 14% supported by health insurance
Actual no. of physicians 0.5 per 1000 with 70% of doctors located
in urban areas
Emerging as medical tourism destination India requires 2.4 million heart surgeries a year,
although only 60,000 heart surgeries were performed
25% of heart attacks occurred amongst under 40 population
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Service Landscape @ NH
10 fully commissioned operation theatres, 2 catheterization
labs, blood and valve banks
Circular chapel at hospital entrance Unity of human faith
Pediatric intensive therapy unit with 50 beds in addition to 500
beds Mix of general and executive wards
90 cardiac surgeons and cardiologists with experience in top
class international institutions
Leverage on technology to its advantage Concept of Telemedicine & Mobile Cardiac Diagnostic Lab
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Wal-Martization of Health care
Drive unit costs lower through high level of capacity utilization and
productivity
Identified Manpower & Equipment as the 2 major cost driver in
healthcare industry Negotiate better deals with suppliers due to huge volumes
Lean administrative team
Leasing of expensive medical equipment
Cartels with pharmaceutical companies Monitoring funds / cash flow on daily basis
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Wal-Martization of Health care
500 blood tests a day per machine
30-35% discounts on medical supplies
No. of procedures performed at NH almost 8 times the average at
other Indian hospitals Increase in efficiency with use of hospital management software
for its operations
Staff salaries only 22% of revenues due to fixed salary structure
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Pricing model @ NH
PROCEDURE Break Even Costat NH
Price(General ward)
Price
(KarunaHrudaya
package)
Average price at
other private
Indian Hospitals
OHS 90,000 110,000 65,000 250,000
Angioplasty 40,000 65,000 N/A 90,000
Angiogram 4,500 4,500 4,500 12,000
* all prices in INR
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Telemedicine A joint venture of ISRO, Asia Heart foundation, Narayana
Hrudayalaya and various state governments To provide cardiac care to the rural poor
9 coronary care units setup across India
NH trained the general practitioners at CCUs to perform
checks on patients and administer treatment
Largest telemedicine network in India to offer free
service
To become self sustaining for few rupees per patientwhen done at large scale
Technology gives the rich what they already have but it
gives the poor what they can never dream of having
TelemedicineTrans Telephonic ECG NetworkDigital X-ray a Joint Venture with Texas Instrument
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Mobile Cardiac Diagnostic Lab
Outreach camps for cardiac diagnosis and
care
Completely equipped buses with three
doctors, 1 cardiologist, and two
technicians
Screening of 400 people a day in each
camp
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Yeshasvini Scheme
A comprehensive Health Insurance Scheme, which was introducedby Dr Shetty in Karnataka, with the help ofits State Govt
A premium of Rs. 5 will be collected from each member per month
Designed to cater the health care service to the 1.7 mn poor
farmers of Karnataka Access to 150 hospitals in 29 districts for any treatment upto Rs.
100,000
Poor people in isolation are weak but together they are very
strong Only 8% of policy holders required medical procedures
Dr. Shettys dream to cure worlds poor at less than $1 a day
Successfully emulated by many states including Andhra Pradesh,
Gujarat, etc.
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Training the next Generation
To enable higher proportion of the population to have access tocardiac care
Training program for pediatric cardiac surgery
19 post graduate programs for doctors and medical staff
First diploma in cardiology in collaboration with IGNOU
Lowering cost of access to treatment with more doctors able to
offer treatment to patients
Also co-ordinated training of nurses in cardiac care
NH also housed college for nursing
i 20
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NH in 2011NarayanaNethralaya Narayana
Thrombosis
ResearchInstitute
ProposedInstitute ofNeuroscience
ProposedWomen &
ChildrensHospital
ProposedInstitute ofGastroenterology
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Group Learning from Case
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Group Learning
1. Mission, vision, and strategy of a team of entrepreneurs
2. Unique dimensions of scaling up in the model
1. High volume, low cost model
3. Price discrimination by service providers
4. Cross-Subsidization
5. Organizational innovation
6. Knowledge development
i h li /
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High-quality/ Low-cost Henry Ford of Heart Surgery
This combination requires supporting organizational
innovation.
NH Heart Hospital, has developed an efficient turnover of
operating rooms and cardiac catheterization facilities,
allowing for much higher volumes of services with only
moderate investment in capital equipment.
What health care needs is process innovation, not product
innovation."
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High volume, low cost Henry Ford of Heart Surgery
The sheer volume of procedures conducted gives NH
considerable negotiating power with suppliers.
Machines are leased as opposed to bought out-right and reagents are
continuously purchased for each of these machines.
NHs demand for reagents is so high, that suppliers offer the Hospital
excellent lease rates as the profit is made up for with the reagents.
NH refuses to sign long-term contracts and instead negotiates each
deal individually.
In order to avoid corruption, NHs administrative team is kept
extremely lean.
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Lower Operating CostsWal-Martization of health care
Costs are minimized by choosing cheaper alternatives
whenever possible (e.g., using digital x-rays as opposed to x-
rays with film).
Adopting a high quality, low cost approach to heart disease Eight times more procedures per day than the average at other Indian
hospitals.
NH runs approximately 500 blood tests a day while many other
hospitals run two.
Working with other hospitals to achieve better bargaining
power is another strategy used
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Lower Operating CostsWal-Martization of health care
NH has also developed relationships with pharmaceutical
companies, which provides the Hospital with drugs that are
much cheaper than the market rate.
At the core of NHs financial success is the fact that only 22%of revenue is spent on staff and doctor salaries as compared
to 60% in the West.
It is important to note that NH doctors and staff are not paid
less overall, but rather work more hours.
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Price Discrimination
Adopted the practice of price discrimination (differential
pricing) to target multiple segments of the ever-changing
Indian population
Deployed a "multi-tariff" system for the provision of standard
services, charging higher fees for comparable services to
higher-income segments of the patient base.
Tiered pricing model is one of the cornerstones of the Care
business model, allowing the organization to provide services
either with minimal margins or below full cost (but abovevariable cost)
C b idi ti
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Cross-subsidizationRobin Hood of Modern India
The mix of paying and non-paying patients has always been
sufficient to support the viability of NH.
Target multiple segments of the ever-changing Indian
population
The surgeries are performed at subsidized rates for people
with low income and free in some cases.
The daily accounting system allows them to know the extent
of subsidization that can be given each day.
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Longevity and Expansion
NH has been operating since 2001 with the help of initial
capital funding from Asia Heart Foundation, but they are
looking for ways to make their model sustainable.
They are considering adding revenue generating projects and
attracting investors.
Further building on the success of a low cost, high quality
model,
Expanded low cost model to other areas of health care
beyond cardiac care.
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Knowledge Development
Having high-tech, efficient machinery on-site has allowed NH
to seamlessly run numerous tests each day.
Finding efficiencies in the way patients are treated and
diagnosed is pivotal to maintaining high patient volumes.
There is also a daily accounting system that accounts for all
revenue and costs for the day, including prorated salaries and
medical supplies.
All daily financial information is provided to scheduling
doctors. As a result, they are able to assess how many below-
cost surgeries can be performed on any given day.
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Most of the things
worth doing in the
world had beendeclared impossible
before they were
done.