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Case Study-Narayana Health

narayan health case study

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79 views3 pages

Case Study-Narayana Health

narayan health case study

Uploaded by

copying74
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Narayana Health-Expanding Access to Low-Cost, High-

Quality Tertiary Care- A Case study on Privitazation of


Health in India

BACKGROUND

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. Its mission: to provide high-
quality, affordable cardiac care to everyone, regardless of 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.
This case study describes the Narayana Health model and the challenges the health
system has faced in opening a new hospital in the Caribbean island of Grand
Cayman. It also offers lessons for U.S. health care payers and providers on ways to
dramatically reduce costs while maintaining high-quality tertiary care.

KEY PROGRAM FEATURES

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
 re-engineering 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.

A TIGHT FOCUS ON EFFICIENCY

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. Mobile outreach vans, meanwhile, increase access to diagnostic and
consultation services in semi-urban and rural areas of India.

RESULTS

The Narayana Health model has been rigorously studied and its impacts on clinical
quality and outcomes, access to care, and costs are well documented in the peer-
reviewed literature. In 2007, the health system was responsible for 12 percent of all
cardiac surgical procedures performed in India, with 25 procedures completed
daily, six days per week. As noted above, its surgeons quickly develop expertise,
resulting in patient outcomes that rival those in the United States. For example,
Narayana Health reports a 1.4 percent mortality rate within 30 days of coronary
artery bypass graft surgery, compared with 1.9 percent in the U.S. It also reports a
1 percent mortality rate for mitral valve replacement, and a door-to-balloon time of
less than 90 minutes for 91 percent of cases; both rates exceed international
benchmarks (Exhibit 1).1

Narayana Health’s operations in India are profitable. Eighty percent of its total
revenue is generated from inpatient visits, 10 percent from outpatient visits, and 10
percent from remote consultations and diagnoses. To identify cost drivers and
support efforts to further increase efficiency, the system is working with Stanford
University researchers to develop a model to measure the time and cost of each
part of the patient encounter, from walking in the door through follow-up.
Colleagues at Duke University are working with HCCI to develop a similar model,
which will allow managers to target specific ways to drive efficiencies.

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