Healthcare is a unique industry that creates millions of jobs for millions of households, both skilled and unskilled. Unlike manufacturing, healthcare is not dependent on any finite components. It is dependent mostly on human skill. And human skill is replenishable. We can technically reduce the price of any service to any level we want: Surgeons are like technicians – the more surgeries they perform, the better they get at it. But behind every skilled doctor you need to have at least two highly skilled nurses, at least four or five technicians, and good administrators.
By 2022 India needs to have 200,000 specialists, 450,000 doctors and over 1.2m nurses. If every country has an adequate number of surgeons, radiologists, anaesthetists and cardiac surgeons, believe me, costs will come down by more than 50%. It is a question of demand and supply.
In global forums everyone talks about reducing the cost of healthcare. But no one knows how much they are spending today. At Narayana Health we have invested in technology. Every day at noon I get an SMS on my cell phone with yesterday’s revenue, expenses and EBIDTA (earnings before interest, depreciation, taxation and amortization) margin. For us looking at a profit and loss account at the end of the month is like reading a post-mortem report. You cannot do anything about it. Whereas, if you monitor it on a daily basis, it works as a diagnostic tool. You can take remedial measures.
The principles that we have developed and refined in India can certainly be applied elsewhere. We have developed what some see as a ‘frugal’ innovation approach to several healthcare challenges and hence have proven design solutions for low-income populations. These solutions can also be applied to higher income economies with even greater efficiency benefits.
As an example of how the Indian approach can provide more efficient high quality healthcare, you can look at Health City in the Cayman Islands that we opened in 2014. Health City is not only a lower cost alternative for patients needing heart, cancer and eye surgery in North and South America, it will make clear how over priced and inefficient hospitals in the US really are. Health City in the Cayman Islands will show that lower costs and better outcomes can be done outside India just as well as in Bangalore. In the US it currently costs approximately $1.25 million per bed to build a hospital. Health City is costing only $250,000 per bed. Furthermore, in the Cayman facility prices are less than half the average US costs for surgical procedures with quality outcomes matching the very best.
Global healthcare affordability will not come from the Unites States or any of the current world leaders, but rather from those nations of the world that have little today and have no choice but to perform at the highest levels possible in the future.