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Treat everyone well

rashmi pratap | Updated on January 24, 2018 Published on February 20, 2015

Radiating out:HCG Oncology relies on telemedicine to take affordable and quality cancer-care to smaller cities and towns

Large hearted: Dr Devi Prasad Shetty, founder and chairman of Narayana Health

Line of sight: Dr S Aravind, Director — projects, Aravind Eye Care

From sweating assets to assembly line surgeries, hospitals are applying management principles to make healthcare accessible and affordable

In Karnataka, more than 70,000 farmers have received free heart surgeries over the past decade. As many as five lakh farmers underwent other surgeries without incurring the lakhs that these complex treatments normally cost.

In and around Hassan and Bijapur, patients no longer have to travel to Maharashtra for dialysis. Instead, they go to a centre in Hassan set up by a hospital chain focusing on tier II and tier III cities. On offer are paediatric, general surgery and other medical services too.

And in Bengaluru’s Koramangala area, a group of radiologists are examining the X-ray of a cancer patient in faraway Cuttack, Odisha. In another room, doctors are finalising the treatment for a patient in Ranchi. Without stepping out of their small towns, the patients are receiving the kind of cancer care that would cost seven times more in the US or UK.

Indian healthcare providers are innovating to cover the length and breadth of the country. From sweating their assets (medical equipment and other facilities) to assembly line surgeries, they are applying management principles to make healthcare more accessible and affordable.

The results speak for themselves: India is one of the most cost-effective destinations for the treatment of cancer, cardiac ailments and a host of other diseases. People from rural areas and economically weaker sections can afford these treatments as health institutions subsidise them using the full rates they charge the affluent section as well as financial support from trusts.

“There are two industries in the world that don’t have a price tag on their product — ammunition and healthcare. The price depends on who is buying,” explains Dr Devi Prasad Shetty, the founder and chairman of Narayana Health (earlier Narayana Hrudayalaya).

Remedy in numbers

He has revolutionised cardiac surgeries in India through economies of scale — the cost per surgery reduces as more surgeries are done.

Nearly 12 per cent of all heart surgeries in India take place at his hospital. “By working with us, they (medical equipment and pharmaceuticals companies) straightaway get 10-12 per cent share of the Indian market. Imagine the number of people and other resources they would have to deploy to reach this figure otherwise,” says Dr Shetty, who started NH as a 225-bed hospital in 2001. Today it boasts 7,500 beds in 29 hospitals across 17 cities.

“As we buy more products, we have a higher bargaining power,” he says. The savings from bulk buying at lower prices are passed on to patients in the form of affordable surgeries and medicines.

HCG Oncology’s founder-chairman and CEO Dr BS Ajaikumar relies on the hub-and-spoke business model — the hospital’s four hubs in Mumbai, Bengaluru, Ahmedabad and Chennai have specialised doctors and high-end equipment like cyclotrons and PET-CT scanners; the ‘spokes’ have less-specialised doctors, who use two-way audio-video interaction with the hubs to complement their consultations.

“We have created a centre of excellence (in Bengaluru) where we have highly-trained oncologists and radiologists. We don’t need expert physicians in every place, as that would increase costs. Through telemedicine and virtual tuner board, the specialists can discuss reports as well as the treatment for a patient in Hubli or Nasik,” says Dr Ajaikumar.

Vaatsalya Health, on the other hand, married affordability with quality healthcare by confining to smaller cities with no-frills services. Founder and CEO Dr Ashwin Naik says the high initial investments and operational costs involved had kept him away from urban areas.

“Vaatsalya, being a start-up, lacked the financial resources our bigger counterparts could command,” he says. It leased facilities in tier II and III cities, rather than owning them, and offers Spartan but clean facilities. No centralised air-conditioning or flat-panel TVs maybe, but certainly well-ventilated rooms.

Dr Naik banks on capacity utilisation to improve profitability. This he does by offering a range of services — paediatrics, gynaecology, general surgery and general medicine, which together tackle 70 per cent of healthcare needs — to attract a larger number of patients. Orthopaedics, diabetes management and nephrology are offered as add-on services based on local demand for them.

Dr Shetty too swears by capacity utilisation. “If you are willing to work for 12-14 hours a day, your infrastructure gets utilised better and costs will go down,” he says. So NH’s blood bank, laser unit, test labs and other facilities run almost round-the-clock instead of 9 to 5.

As does Aravind Eye Care with its assembly-line eye surgeries. “We have two operating tables and one surgeon in the centre,” explains Dr S Aravind, director — projects. Even as the surgeon completes one surgery, the support staff ready the second patient. This surgery is taken care of, the surgeon sterilises his hands and turns to the first table all over again. Not surprisingly, Aravind eye hospitals perform over 3.8 lakh surgeries a year. With its infrastructure and staff utilised to the fullest, the hospital is able to lower its fees.

Subsidy as cure-all

Additionally, it offers subsidised and free services to the poor. It has created two types of hospitals — low-cost, no-frills clinics; and air-conditioned facilities that offer privacy as well as extensive choices of treatment.

Needy patients are charged ₹750 for cataract removal surgery, which can cost between ₹6,000 and ₹10,000 elsewhere.

“People know what they want and what they can pay. We let them select the hospital... outcomes are the same. There is no differentiation,” says Dr Aravind.

To utilise assets optimally, it is important to work with governments and NGOs, says Dr Shetty. He conceptualised Karnataka’s rural health insurance scheme, Yashaswini, in 2002. By contributing ₹5 per month (now ₹12), people in rural areas can access healthcare facilities at affordable rates. The government acts as a re-insurer, to fill shortages if any.

HCG has appointed medico-social workers to assess the subsidy needed by an individual, besides setting up a foundation to raise money for free or subsidised care.

As more people from all cross-sections of society seek medical services, the rising volumes will help lower costs. HCG’s doctors see about 45,000 new patients annually and provide radiation treatment to 2,500 every day. NH performs about 150 major surgeries every day. This ensures that while bypass surgery in the US costs between $60,000 and $100,000 on average, NH can break even at $1,400.

Vaatsalya charges ₹1,100 for each dialysis session, compared with ₹2,000 at most other hospitals. Similarly, normally delivered births attract a bill for ₹10,000 to ₹12,000, compared with nearly ₹50,000 in urban areas.

Importantly, the affordability does not come at the cost of quality. “We are specialised in high-technology and high-quality outcome. We don’t compromise on treatment and give the best to ensure the disease does not come back,” says HCG’s Dr Ajaikumar.

NH and HCG have received international accreditation from the Joint Commission International (JCI) for their standards, training and processes. This prestigious tag, in turn, keeps doctor turnover rates under check.

“We have academic institutions that conduct super-speciality training programmes. At any time, we have more than 25 residents in cardiac surgery alone and they are only paid stipends. We have a huge workforce keen to work, and you don’t pay market salary to these passionate workers. So your salary burden goes down and you also build a succession plan,” explains Dr Shetty.

Vaatsalya’s strategy to stem attrition is to hire local doctors who cannot afford to start their own practice. “Most doctors have a revenue-share agreement, which fetches them an income comparable to a city practice. We also provide independence to doctors and recruit support staff to assist them,” says Dr Naik.

As Dr Shetty says, the healthcare sector is extremely sensitive to numbers. “As you do more operations, tests and examinations, you get better and your results get better.” Indian medical service providers have, by all accounts, uncovered a panacea to expensive and inaccessible healthcare services.



Published on February 20, 2015
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