The Innovation Sandbox

The Innovation Sandbox

more than 490 million people (about 70 percent of the Indian population) live in rural and semi-urban areas. They are difficult to reach, especially in a country where doctors are scarce (the ratio of physicians to total population is less than one per 100,000 people, compared with about one per 160 in the United States). World-class facilities are even scarcer. Rural patients must often travel to cities for treatment, a journey of excessive cost since their family members travel with them. These constraints affect the nature of health care in unexpected ways. For example, in the United States, a customized lower-limb prosthetic may require several fittings spread over weeks. In India, it must be finished in one eight-hour sitting, so the patient and his or her family can return home before their money runs out.

And yet amid all these constraints, a few health-care providers in India are establishing new global standards for cost, quality, and delivery. They do it by bypassing the conventional approaches to medical practice. For example, the Narayana Hrudayalaya cardiac care center, located in Bangalore, is one of the world’s largest providers of heart surgery and other forms of cardiac care, including care for children. A private corporation, it was founded in 2001. Only three years later, in 2004, the company performed 7,500 cardiac surgeries and treated 60,000 outpatients, including almost 2,000 telemedicine patients who received consultation and treatment at remote sites, accessing specialists through satellite- and Internet-based telecommunications links. NH makes no distinction among the quality of service delivered to different patients. Everyone is charged a fixed rate per surgery of $1,500 — one-thirtieth the $45,000 that a typical U.S. hospital might charge, and one-third of the $4,500 that a top-line hospital in India would charge.

It’s important to note that the facility and its parent company, Narayana Hrudayalaya (NH), are profitable. And NH’s cardiac care is far from the only profitable health-care innovation emerging from India. The most famous example (documented at length in my book The Fortune at the Bottom of the Pyramid) is the “Jaipur Foot,” a prosthetic foot made from rubber, intended for below-the-knee amputees, such as people injured by accidents and land mines. The JF (as it is universally called) costs about $30, a fraction of the $8,000 to $10,000 cost of a similar Western prosthesis; if a patient damages, loses, or outgrows it, he or she can simply get a new one. Since 1975, the JF has been distributed by a nonprofit, nondenominational organization called the Bhagwan Mahaveer Viklang Sahayata Samiti (BMVSS), which fits about 16,000 patients per year, with trained paramedics as the primary patient contact. BMVSS also ships artificial feet, calipers, and other aids to thousands of patients worldwide — more than 50,000 in 2004. BMVSS does not charge for its prosthetics and service; it survives on donations from satisfied patients and from philanthropists.

Another example is the Aravind Eye Care system, the world’s largest provider of cataract surgery. This company, founded in 1976, performed 240,000 surgeries in 2004 and treated 1.6 million outpatients. The founder, Dr. G. Venkataswamy, has said that his goal is to “wipe out needless blindness.” Thus, Aravind treats more than 60 percent of its patients free — and continues to operate profitably.

All three health-care innovators, NH, BMVSS, and Aravind, have been around long enough to give us confidence that these innovative health-care efforts represent sustainable businesses. The basic performance of these three systems is captured in Exhibit 1.

Surgical skills, in particular, are improved by frequency of encounters. No surgeon can keep pace with all the subspecialties in the field. Therefore, by disaggregating the medical process, a medical institution can make far better use of its higher-credentialed physicians.

Dr. Devi Prasad Shetty, chairman of NH (and a well-respected surgeon), explains the logic this way: “The task of heart operations has been broken into many tasks. Each is managed by a group of professionals. One of my colleagues conducts most Dor procedures — a complex left ventricular remodeling procedure that is done by only a few experts all over the world. Since he has completed more than 250 of these, we all refer patients for this procedure to him. Similarly, everyone refers patients who need the Ross procedure to me, since I have conducted more than 150 of them with zero mortality. Because we deal so frequently with so-called rare procedures, it is not difficult to standardize them and consistently get good results.”

Surgeries delivered like fast-food orders - brilliant! Such innovations are desperately to drive down astronomical US healthcare costs. Going to a doctor should be like going to Jiffy Lube - for most standardized ailments with an openly displayed price list.