India's Mars Orbiter Mission last week was remarkable in many respects. India was the first country that successfully sent a spacecraft into Mars' orbit on its first try. The mission took only two years to accomplish from announcement to execution. However, one of Mars Orbiter Mission’s most remarkable aspects was its sticker price. The mission cost $74 million, about three quarters the amount it took to make the Hollywood movie, 'Gravity'.
Health care can learn a few lessons from India. Although healthcare in the U.S. is highly innovative, it is also highly unaffordable. Like technology and manufacturing, the healthcare industry has been experiencing offshoring for the past few years. According to the Centers for Disease Control and Prevention, about 750, 000 Americans travel abroad annually for medical care. A small, but growing number of these patients travel to foreign countries for procedures that are at least partially paid for by their U.S. health insurance plans.
The U.S. and Indian healthcare systems share several similarities. Both large democracies have private and public components to healthcare delivery and finance. Public healthcare is managed by individual states. There are significant urban-rural and socio-economic disparities in healthcare access. Noncommunicable diseases, such as cardiovascular disease and diabetes, are leading causes of death. Special interest groups actively lobby to influence healthcare policies. Medical expenses drive a significant proportion of the population into poverty each year.
There are also significant differences. Even after adjusting for clinician salaries, procedures cost five to ten percent less in Indian hospitals compared to those in the U.S. Out-of-pockets costs for healthcare are far more transparent in India. Defensive medicine is rare. However, India’s infant mortality rate is seven times higher than that of the U.S. Less than five percent of the 2 million Indians who require heart surgery actually receive it. Seventy percent of India’s 8 million blind people would see again, if they could access and afford cataract surgery. Only 36% of the population has sanitation facilities, creating significant public health hazards.
A Harvard Business Review case study of nine innovative hospitals in India, highlights their use of manufacturing and quality improvement principles to reduce costs. Eighty percent of Indians pay for medical care out-of-pocket, compared to ten percent in the US. So keeping costs low is necessary to allow more patients to utilize and pay for healthcare. Indian hospitals purchase costly equipment much less frequently than U.S. hospitals do. They send patients from spoke to hub sites to access resources, reducing equipment idle time and duplication of resources.
Frugality is the mother of innovation. When one of these nine Indian hospital found that surgeons used only a third of standard length sutures, it ordered packages with shorter sutures. When a hospital was unable to negotiate volume discounts for disposable surgical gowns and drapes, it imported bulk fabric and manufactured its own gowns and drapes, reducing costs by less than half. Expensive single use instruments were rare. Nurses and other staff undertook routine responsibilities, allowing physicians to focus on complex issues. Hospitals developed and performed procedures that cost less. They eliminated unnecessary pre-operative testing. They chose to use cloud-based software for electronic records, rather than building individual computer systems at each hospital.
Now, Indian medical care may be coming to a hospital close to you. Narayana Hrudayalaya, one of the exemplars in the HBR case study, performs open heart surgeries in India at a price of $1500 (compared to $100,000 for the same procedure in the U.S.). Earlier this year, it opened a hospital in the Cayman Islands in partnership with Ascension Health that offers cardiac surgery, joint replacements and neurosurgery for close to half of U.S. prices. Ascension is considering duplicating the model in the U.S. following its Cayman Islands pilot - which seems like an idea worth trying.
- Ulfat Shaikh