Narayana Hrudayalaya-Group 8

8/4/2019 Narayana Hrudayalaya-Group 8

1/26

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


2/26

Narayana Hrudayalaya (NH)

Better known as..

WALMARTIZATION of Healthcare in India

Robin hood of Healthcare The Henry Ford of Heart Surgery


3/26

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


4/26

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


5/26

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


6/26

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


7/26

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


8/26

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


9/26

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


10/26

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


11/26

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.


12/26


13/26

13

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


14/26

NH in 2011NarayanaNethralaya Narayana

Thrombosis

ResearchInstitute

ProposedInstitute ofNeuroscience

ProposedWomen &

ChildrensHospital

ProposedInstitute ofGastroenterology


15/26

Group Learning from Case


16/26

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 /


17/26

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."


18/26

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.


19/26

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


20/26

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.


21/26

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


22/26

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.


23/26

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.


24/26


25/26

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.


26/26

Most of the things

worth doing in the

world had beendeclared impossible

before they were

done.

Documents

Narayana Hrudayalaya-Group 8