Healthcare for Pennies on the Dollar

Posted on May 21, 2013

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If anyone wonders what healthcare could look like if a publicly traded retail giant dove head-first into healthcare, let me offer this article.  Efficient healthcare, Walmart-style—imagine the possibilities!

The subject of the article, Dr. Devi Shetty’s Narayana Hrudayalaya hospital, might ring a bell for readers, as it was featured in Fast Company as one of 2012’s Most Innovative Companies.  And the good doctor continues to innovate, as my previous post made no mention of the $800 cardiac surgery he hopes to achieve.  To put some perspective on that number, that same level of incredulity is what people were voicing to Nicolas Negroponte (of MIT Media Lab fame) about a $100 laptop almost eight years ago (which evolved into the One Laptop per Child effort).

True, this brand of cut-to-the-bone healthcare might be a tad too spartan for American culture (limited air conditioning? bandage swaps by family?) but appealing in many ways (low-cost facility infrastructure! aggressive scheduling!).  Dr. Shetty has been at this a while, as this WSJ article notes, and is likely here to stay:  the drastic cost cutting he offers is simply too tantalizing to ignore as quackery if he ultimately delivers improved health ($2000 vs. $40,000 for heart surgery).  There will always be a market for luxury healthcare, but I have a hunch many of us will be more likely to gravitate to the ‘no frills’ version Dr. Shetty is experimenting with—especially once the real costs of PPACA are felt by all.

As a subplot, I am intrigued with the conspiracy theory angle to pricing, which I feel has some parallels here between the $100 laptop and the $800 heart surgery.  Negroponte correctly proved that obscure pricing and branding (in microprocessors, for instance) was getting in the way of delivering better value to the consumer.  Corporations could still make a profit on their components with a severe price cut, and be rewarded with massive scale opportunities; in his case, potentially supplying hundreds of thousands, maybe millions, of laptops to children in African countries.  Shetty could be proving similar market inefficiencies (likely in pricing and insurance) are getting in the way of delivering better value to the patient.  Hospitals can still likely make a profit off their surgeries despite a severe price cut, and be rewarded with massive scale opportunities:  far more patients!

Walmart is clearly interested in healthcare, and a few months ago I rattled off Walmart’s attributes which could lead to its massive success, given an all-out assault on the market.  To this point, I think it has merely dipped its toe in the water.  Now a Dr. Shetty / Walmart collaboration?  That’s an absolute killer whale.

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