While unparalleled in the provision of intensive lifesaving treatments, US healthcare has only begun to focus on other important aspects of population health. To achieve the triple aim of better health, better care, and lower costs, there needs to be an evolution in payment and delivery systems.
The accountable care movement is central to this evolution, and engagement by cardiovascular specialists can help to shape it. Sustained partnering with policymakers could improve patient care by appropriately directing cardiovascular medicine resources and avoiding unintended harm to well-functioning systems of care
Health system leaders worldwide are searching for innovative care delivery models that lower costs, improve quality, and increase access to services. India’s Narayana Health is one of the best-known examples of a health system that has achieved these goals.
U.K.-trained cardiac surgeon Devi Prasad Shetty, M.D., who served as Mother Teresa’s personal physician after operating on her following her heart attack, founded Narayana Health in 2001 in Bangalore, India. Its mission is to provide high-quality, affordable cardiac care to everyone, regardless of their ability to pay. Changes to Indians’ lifestyle and diet in recent decades have led to an unprecedented increase in heart disease. Around the time Narayana Health was founded, approximately 2.4 million Indians required heart surgery annually, but prohibitive costs and a shortage of providers meant only 60,000 received it. This gap inspired Shetty to create what is today one of India’s largest multispecialty hospital chains, comprising 31 tertiary hospitals across 19 cities. By combining innovative technology and a highly efficient delivery system, Narayana Health is able to optimize productivity and minimize costs. This has enabled it to both increase treatment capacity and expand the number of specialty services offered. In early 2016, the company’s share price rose more than 35 percent in its initial public offering.
The Narayana Health model offers lessons for U.S. healthcare payers and providers on ways to dramatically reduce costs while maintaining high-quality tertiary care. Narayana Health is designed for India, where the majority (58%) of health expenditures are paid out of pocket, given that most people finance their own care. The success of the model is achieved through several complementary mechanisms. These include leveraging economies of scale, using assembly line concepts for surgery, reducing the average length of stay, and reengineering the design, materials, and use of medical equipment to reduce the cost of ownership.
Because of these innovations, the average cost of open-heart surgery, as reported by Narayana Health, is less than $2,000. The same procedure at a U.S. research hospital typically costs more than $100,000.
Narayana Health has achieved savings through smart use of equipment and telemedicine as well as efficient staffing procedures. The health system has built reliable and low-cost supply chains in India over the past decade and leverages economies of scale to further drive down prices. Utilizing a pay-per-use model with suppliers for some diagnostic equipment, it minimizes capital costs. Strict sterilization procedures permitted by the Joint Commission International enable reuse of some devices, such as guide wires and certain cardiology catheters that are typically disposed of after a single use. Centralized purchasing allows the system to take advantage of economies of scale. Bar coding of stock enables precise inventory counts at any time, minimizing storage costs and preventing unnecessary spending.
In addition to offering services at its own facilities, Narayana Health has one of the world’s largest telemedicine networks, connecting 800 centers globally. The system has treated more than 53,000 patients through telemedicine programs, increasing Narayana’s reach without requiring investment in physical infrastructure. Meanwhile, mobile outreach vans increase access to diagnostic and consultation services in semi-urban and rural areas of India.
A production-line approach to surgery, combined with task-shifting among staff, creates an extremely efficient operating theater, resulting in many more procedures completed per day than is typical in the U.S. and elsewhere. Each surgeon performs 400 to 600 procedures annually, compared with 100 to 200 in the U.S. All staff members work at the top of their scope of practice: surgeons perform only the tasks they are uniquely qualified to do, while other clinicians perform tasks such as preoperative preparation, patient education, and charting. This enables many surgeries to be performed in a row, with surgeons completing one procedure and quickly beginning the next on a fully prepped patient. This high volume drives lower costs and better-quality outcomes, with surgeons quickly gaining experience and mastery.
Narayana Health’s well-known brand, social mission, and strong leadership—in addition to competitive compensation and incentive packages—attract and retain highly qualified cardiac surgeons and other tertiary care specialists. The system has approximately 16,000 employees, with 11,000 clinicians spread across the company and 4,000 people subcontracted for housekeeping and security.
Information & Data Monitoring
Use of information technology and data promote efficiency and standardization throughout Narayana Health. A centralized cloud environment connects all the hospitals, helping to streamline administrative tasks and enable performance monitoring.
The finance team generates profit-and-loss statements for executives every day, allowing them to identify and address capital flow issues as they arise. Financial data are reviewed monthly with unit heads and the CEO. Key performance indicators for individuals and departments are monitored daily, and a real-time patient-complaint process provides a simple and powerful tool to identify and quickly correct performance issues.
Philanthropy & Cross-Subsidy
Narayana Health hospitals serve anyone who needs care, regardless of their ability to pay. Each year, more than half of patients receive free or subsidized inpatient care, with an average discount of 15 percent. This is accomplished through philanthropy and a cross-subsidy model, in which higher-income patients pay more for nonclinical amenities, such as private recovery rooms. Since the total charges are still far below the cost of comparable services at other private hospitals, Narayana Health is still an attractive option for such consumers. The health system’s business model is sustainable because of its ability to attract so many patients who can pay full price.
Narayana Health in India truly provides a model with many lessons for the global healthcare system for achieving a balance between cost and care that actually works.