India hospital group pushes high-volume, low-cost model

by Brendon Nafziger, DOTmed News Associate Editor | April 17, 2012
NH Institute of Cardiac Sciences in Bangalore
An Indian hospital group that started a joint venture with TriMedx to service medical technology in India is pushing a high-volume, low-cost model to make health care more accessible for the poor.

At a World Health Care Congress talk on Tuesday, Dr. Julius Punnen, a heart surgeon with Narayana Hrudayalaya in Bangalore, said his group is pioneering a model that involves hospitals doing more procedures, insurance schemes where patients only pay pennies a month on premiums, and building cheaper facilities.

Founded in 1999 by Dr. Devi Shetty, a heart surgeon, NH runs about a dozen hospitals in India with around 5,700 beds, including a flagship "health city" in Bangalore. It's also at work building similarly run health cities in Malaysia and the Cayman Islands.

High volumes help drive down costs by distributing the salary costs of doctors across more procedures and by using expensive capital equipment, such as CT scanner and cath labs, to their fullest capacity, Punnen said. Last year, NH performed about 9,000 heart surgeries, Punnen said.

But even higher volumes are needed. Currently, more than 2.5 million heart surgeries are required every year in India, but only 90,000 are performed, Punnen said.

However, NH has an ambitious plan to expand health care: creating another 30,000 beds over the next five years across India.

Right now, it's building a 300-bed surgical hospital in Mysore that NH hopes to have commissioned in September. Punnen said the single-floor hospital is built with prefabricated material to save on costs.

"This is a model we're hoping to reproduce in many of the smaller towns in the country," he said.

But even if they succeed in their goal of adding tens of thousands of more beds to the country, it's only a drop in the bucket compared to India's massive medical needs. According to a slide shared by Punnen, India needs 3 million more beds.

Another approach is an insurance scheme, Yeshasvini, developed by NH Group, and launched in 2003 with the Karnataka state government. The plan covers 1,600 surgeries a year with a monthly premium of only 11 cents, Punnen said. The patients generally have no co-pays if the treatment takes place in one of the few hundred hospitals affiliated with the plan.

NH has also partnered with TriMedx, a medical equipment asset company and a subsidiary of Ascension Health, the largest nonprofit and Catholic health system in the U.S. Together, the two groups are offering medical equipment services that can extend the life of costly medical devices from around seven years to 14 years, Punnen said.

As an example of the potential cost savings, Punnen said recently an electrical surge at a hospital blew out nine ventilators. The manufacturer of the ventilators was going to charge 120,000 rupees (around $2,300) to replace each ventilator. But after the service team inspected the devices, they discovered they could fix them for a simple 100-rupee (about $2) charge.

"With this we expect a transformation in the way medical equipment is managed," he said.

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