Monday, 27 July 2015

Low cost medicine "made in India"

By Josep Mª Monguet

On 25th February, the first building of the Health City hospital complex which plans to grow up to 2,000 beds and be accredited by the JCI, offer all kinds of advanced tertiary health services and even open their own university, was inaugurated in the Cayman Islands. But what really draws the attention towards all of this is the origin of the initiative, which is none other than innovation in the health business model from India. Between 2001 and 2012, Narayana Health, a project led by Dr. Devi Shetty evolved from a 300-bed hospital in Bangalore to an aggregate of 6,000 beds in 17 hospitals, 80,000 patients and 3,500 interventions per month. And now they have switched their antipodes to enter the global market, offering, via a one and a half hour flight from the United States, open-heart surgery, prosthesis or neurosurgery, for obviously very competitive prices.

In November 2013, four months before opening the hospital in the Cayman Islands, professors Vijay Govindarajan (Dartmouth College) and Ravi Ramamurti (North eastern University) published in Harvard Business Review an openly inspiring article, “Delivering world-class health care affordably”, exposing the what, how, when and why of this brilliant project, which the authors interpreted as a mixture of Sputnik syndrome and patriotic pride. While in Spain it’s politically incorrect to use the terms business and health within the same sentence, the Indians who need it more, came up with the low cost of medicine, which is nothing but a necessity turned into a virtue. In this circumstance, excellence in innovation is largely the result of having to deal with the health needs of a large population, some of whom live in extreme poverty.

It is widely acknowledged that the current model of health care system is unsustainable and that while it seems a contradiction, what we should achieve is to get more and better health services while reducing the cost. Expressed in terms of a business model, this can only be achieved by increasing the value of health activities and, therefore, perhaps we should redefine the concept of value in health, with much more emphasis on the overall productivity of the service. How long can national health systems be kept outside the global market? In practice, health services in western countries have some kind of virtual tariff protection. Surely it’s not a short term issue, but all protected markets sooner or later end up falling, and the success of the Narayana Health project is due, according to experts, to the fact that they have adopted a set of best practices that act in a combined manner:
  • Deploying a highly specialized coordinated hub structure with small rural clinics. This allows them to optimize resources and, as they say, make them boom.
  • Optimize the distribution of tasks between professionals. The few available doctors have a productivity double that of their counterparts in the West. For example, the surgeon only deals with the technical side, while other jobs are for nurses.
  • Promoting savings and the use of resources, which is a widespread custom in India.
  • Developing a compensation model for physicians in accordance with the interests of the system.
What can we do to innovate more and better? What are our strengths? What opportunities are we not seeing? Surely, just like the Indians, we need to find out what our calling is, but for this we must clarify whether we want to go in that direction. Without wishing it, surely we can’t achieve it.

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