Innovative Healthcare from India

Posted on April 16, 2012


Despite all the focus on American healthcare reform and its constitutionality, some really successful business models are at work outside the U.S. One of them is the Narayana Hrudayalaya Hospitals, #36 in Fast Company’s Most Innovative Companies of 2012.

The hospital admittedly has modeled a great deal of its operations on Walmart.  Some of the progressive aspects of the hospital system:

  • Designed to provide care primarily for the poor, utilizing its strength in cardiac, eye, trauma and cancer care.  It cuts efficiencies out of every scenario possible in order to deliver quality, affordable care to more people.
  • Directly negotiates with manufacturers and cuts out distributors; pays its physicians a fixed salary
  • Has a large support staff to offload paperwork from physicians and surgeons to allow them to see more patients and complete more surgeries
  • Developed a tiered insurance plan for both the poor and wealthy; the wealthy can pay more for more “perks” like personal access to specialists and a private room
  • Hospital surgeons receive a profit and loss statement daily so doctors can optimize their patient mix the next day (full payers vs. self-insured)
  • Operates on a large scale:  3000 beds in main hospital; 25 hospitals in system; 150 clinics in India and Africa with telemedicine access

For me, the scale is not so impressive as the business model to successfully make money off the poor and lesser payers.  This is something I heard at the PDC Summit this year:  hospitals need to be able to make a profit off all kinds of patients—Medicare, Medicaid, private insurance, cash payers—not just cherry-pick the most financially well-off patients and the most lucrative services.

I think groundbreaking innovation in healthcare will not happen on an individual hospital scale; it will happen on a system-wide scale that will dominate the industry through a new business model.  Admittedly, it is most difficult to make money on the least reimbursed patient.  Picking the most difficult to achieve goal…now that is a recipe for innovation.