He is called the Henry Ford of heart surgery business for democratizing heart care in India. He heads the world’s largest and also the cheapest heart care institute. He has proved that a low cost health care model can also be profitable.
His brainchild Narayana Hrudayalaya, is the first of its kind health city in India. In the campus of Narayana Hrudayalaya, it has the world’s largest heart and cancer hospitals, a specialty hospital for all the plastic reconstructive surgery, an institute for organ transplant, a hospital and also training and research institutes.
Devi Shetty: The Henry Ford of Indian heart care business
Every day 3,000 people make it to Narayana Hrudayalaya and none of them are turned away, even if they cannot pay for treatment. In fact, the hospital does 50 to 60 free surgeries a week. The reason behind the hospital and its services being Dr Devi Shetty; the man who found it with just one mission – quality healthcare for all delivered with dignity.
Dr Devi Shetty’s Narayana Hrudayalaya has a striking simplicity in its business model. The pediatric cardiac unit, for instance, is the largest facility in the world. At any point of time, it handles 50 to 60 cases, probably, the number of cases that other hospitals would handle in a year. Following the simple economies of scale logic; a cardiac surgery that would normally cost Rs 3 lakh to Rs 6 lakh, in any other hospital is done here for a mere Rs 60,000 to a Rs 1.5 lakh.
Muralidharan Nair of E&Y says, “At no cost, high volume model will give me very different operating leverage on man, machine and material. Across the chain, whether it is materials (drugs and consumables), whether it is medical consumables, whether it is purchase of capital equipment (large high value medical equipments) whether it is in terms of ability to exploit your human resources better, high volume model will give me very different operating leverage.”
In simpler words, 200 doctors in this cardiac hospital comduct surgeries that they have mastered. It is therefore, no surprise that Dr Devi Shetty’s Narayana Hrudayalaya has a success rate which is 95% better than the best hospitals in the world.
In an interview with CNBC-TV18’s Shereen Bhan, Dr Devi Shetty, Chairman of Narayana Hrudayalaya speaks about his unique invention of a factory model for heart care in India and the successful ‘Wal-mart-ising’ in healthcare industry.
Here is a verbatim transcript of the exclusive interview with Dr Devi Shetty on CNBC-TV18. Also watch the accompanying videos for the full interview.
Q: When you hear people say that you are the Henry Ford of the healthcare industry, you’re the operating machine, the man who sort of invented the factory model for heart care in India; how does it make you feel?
A: In a way, I feel happy about it. India requires 2.5 million heart surgeries a year. However, less than 90,000 of the privileged people undergo heart operations and the others die. Hence, we have to look at some other model like this.
Q: In the process of building Narayana Hrudayalaya, you have done three other heart hospitals. What was the vision that drew you to start Narayana Hrudayalaya ten years ago?
A: There is only one purpose to democratize hi-tech healthcare. We want every man, women and child in this country who require a heart surgery to be able to undergo the treatment with dignity. Even if I do free heart surgeries I wouldn’t be able to do as many as needed. Therefore, unless, you adopt the business principles, you can never bring healthcare to everyone.
Q: People say that if you peruse wholesale volumes, you may give up on quality. What do you have to say on this?
A: All over the world, it is proved that a surgeon who is doing three operations in a day is better than a surgeon who is doing three operations in a month. If you want better results, you have to depend on the volume. This is not like any other business; it is a business wherein you have to keep on doing in large numbers.
Q: CK Prahalad has said several things bout business model – how you go after skills not credentials, how you can leverage human resources and about how you leverage financial resources. But how do you bring down the average cost of heart surgery from USD 10,000 to USD 20,000 in the US, down to USD 2,000 now at your hospital?
A: Our target is to do a heart operation for USD 800 and in 5 years we will reach there. How do we accomplish this cost reduction? When all the other hospitals are doing about two to three heart surgeries in a day, we do about 35 heart surgeries in a day. Last year, we implanted the largest number of heart valves in the world. Every heart valve maker in America wants to sell his valve to us. Hence, we obviously control the price.