Delivering affordable world-class health care

Australia, a nation that once looked to the west for guidance is fast becoming a innovative leader in the future of healthcare.

As healthcare systems in Europe and the US appear stagnated, inspiration can be found in the ways some Indian Hospitals are operating. Although the ability of the nation as a whole to meet the needs of its citizens is poor, there are some examples of its hospitals “providing world-class health care at affordable prices”, says study authors, Vijay Govindarajan and Ravi Ramamurti.

Their study, published in the Harvard Business Review, found 40 hospitals responsible for innovation of one kind or another. They picked nine of the best performing hospitals for an in-depth study. Two of the hospitals were not-for-profit and seven were for profit, four specialised in a singular service and five had multi-specialties.

These hospitals all target well-off patients which require them to meet global quality standards. However, their main purpose is to serve everyone – including patients with very low incomes; therefore the hospitals are under pressure to lower their costs dramatically. Understandably, the combination of high quality at low cost is appealing and therefore the hospitals have a high volume of patients which still allows for the enterprise to be profitable.

These hospitals are able to sustain themselves through their revenue alone. The selected hospitals charged as little as 5% of similar procedures in the US. This was not due to a lack of quality; in fact, all the hospitals made global standards. Healthcare company Aravind Eye Care System (AES), for example, paid for all its expansion projects from its own profits, even though two-thirds of its patients receive free or subsidised care.

How did they do the same job for a fraction of the price?

It is true that Indian hospitals have much lower expenditure in wages but these gains are offset by costs such as equipment, urban land and pharmaceuticals. When these factors are taken into consideration – Narayanga Hospital (NH), for example, still operates open heart surgery at costs of 4-18% of the US equivalent.

To do the same job that other hospitals are doing but for a fraction of the cost, they employed three different organisational techniques. These are: the hub-and-spoke configuration of assets, an innovative way of determining who should do what and a focus on cost-effectiveness (rather than cost-cutting).

The hub-and-spoke model

The hub-and-spoke model works differently to US systems. Whereas the US spokes act as “miniature hubs” that offer duplicate services, India’s spokes act as a “gateway”.

By having less-specialised doctors and equipment they are able to spend less money on services that would otherwise take up experts’ time. One such time-saving method is remote delivery of healthcare. Examples include over-the-phone services such as remote readings of x-rays and discussing findings with patients. By reducing barriers like these to treatments, NH is able to perform more open-heart surgeries than any hospital in the world. On average, there are 400 – 600 surgeries by each NH surgeon compared to the 100 – 200 in the US. Similarly, AES can perform 1,000 to 1,400 compared procedures to US’s 400.

As the volume of patients rise, the doctors, equipment and facilities can be used more effectively. Better performance allows for greater savings and better allocation of money on machines increases productivity.

Another benefit of the concentrated volume of patients is that it serves for an excellent training ground for doctors and trainees, which in-turn affects the quality of new recruits and continues the excellence of care. This leads to a faster process when developing and updating protocols which saves further time. The numbers seen increase the chances of doctors experiencing rare cases and the practice allows for them to become experts in the field.

Rethinking who does what?

Matching skills to jobs looks at the workforce as a resource and uses it more efficiently. An example can be seen in the employment of recent high-school graduates in rural areas as ‘visual technicians’. They offer cheaper, less-trained labour and allow the skills of specialists to be used to greater effect. In fact, over 60% of AES’s staff are local girls trained from villages whose job it is to admit patients, maintain records and assist doctors.

Two further examples of optimising specialist’s time:

The families of patients who undergo heart operations can learn from prerecorded DVDs and look after the patient for the three days after the operation, consequently lessening the burden of nurses.

AES reduces the amount of time the operating theatre is empty. By using two surgical stations side by side, the surgeon works between them whilst the other station is being set up for the next patient.

Cost effectiveness

Cost effectiveness is a way to adapt the existing services to have less wastage of time and money. The studied hospitals maximised the number of patients treated rather than the number of patients operated on – this focuses on value to the patient.

Five examples of cost aversion:

Avoiding purchases of new machinery and equipment. If working life can be prolonged through careful maintenance then fewer purchases will be required and greater frugality achieved.

The reuse of single-use items (as long as adheres to strict regulations). Some of the current procedures that are operated include the reuse of some items but not of others – by reassessing these rules there can be more savings.

Self-production of supplies – by cutting out the middle man, they can pass on the profits to the rest of their efforts.

A tight budget for non-necessities such as decorations.

Hospital managers have been known to share rooms, allowing greater space for operating theatres (an important factor considering India’s expensive urban land).

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