Narayana Hrudayalaya: a noble route to quality and affordable healthcare

It’s a business approach which runs counter to the conventional logic in the hospital business – if you focus on quantity then quality is bound to come down and that could eventually kill the business. Infact hospitals go to the extent of invest significant money on the appearance to communicate exclusivity and hence quality – a la hospitality sector.

But Narayana Hrudayalaya is turning, infact already turned this logic on its head with its ‘manufacturing sector type / conveyer belt’ approach to run the hospital. Surprisingly for everybody, especially for peer group hospitals in the private sector, it is delivering profits which are better than the industry average.
And the person behind the success is 54 years old, talkative and lanky man who goes by the name Dr. Devi Shetty. It’s single handedly his vision and passion which has created such a hospital of repute. One look at him, it is quite apparent that he is a man possessed. A native of Mangalore, a south Indian city, the eighth of nine children, decided to become a doctor (and that too a heart surgeon) in a moment of inspiration when his class 5th teacher informed the class that a South African surgeon had just performed the world's first heart transplant. For him, his destiny was made then at that moment.

He seamlessly juggles between the multiple roles of a surgeon, a businessman, administrator, and an uncanny negotiator and a deal maker

Hospital offers gold standard medical care in India at a cost which is just a fraction of global cost. His flagship heart hospital charges $2,000, on an average, for open-heart surgery, compared with $5,000 charged by other private hospitals in India and between $20,000 and $100,000 by US hospitals, depending on the complexity of the surgery.

Principle is simple that works in manufacturing: economies of scale. Common to other industries, this principle has never been tried for procedures as sophisticated, delicate and dangerous as heart surgery. With this Dr. Shetty has managed to drive down the cost substantially

Numbers speak for themselves.

Narayana Hrudayalaya Hospital with 1000 beds operates at the occupancy level which is unheard of in other countries. For example, average hospital in US has 160 beds according to the American Hospital Association. In 2008, 3174 bypass surgeries were conducted by 44 surgeons of the hospital, which is more than double the 1,367 done by Cleveland Clinic, a leader in the U.S. In the same year, it operated on 2,777 pediatric patients, more than double the 1,026 surgeries performed at Children's Hospital Boston.

Dr. Devi Shetty and his fellow cardiologists perform about 600 operations a week.
At that volume, he says, he would be able to cut costs significantly more by bypassing medical equipment sellers and buying directly from suppliers. His family-owned business group, Narayana Hrudayalaya Private Ltd., reports a 7.7% PAT margins, or slightly above the 6.9% average for a U.S. hospital, according to American Hospital Association data. Even in India, PBIT margins of the listed hospitals is in the range of 9-10% and for unlisted it is less than 2%. Clearly he has hit the right formulae.

The group raised $90 million last year through private equity. The money would be used for setting up four more "health cities" under construction around India. Over the next five years, Dr. Shetty's company plans to take the number of total hospital beds to 30,000 from about 3,000, which would make it by far the largest private-hospital group in India.

This model offers business insights to other hospitals in India and worldwide which are struggling with the soaring cost of equipments and other costs.
"Japanese companies reinvented the process of making cars. That's what we're doing in health care," Dr. Shetty says. "What health care needs is process innovation, not product innovation."

Now he is eyeing presence in Cayman Islands, where he plans to set-up a 2,000-bed general hospital, which is an hour's plane ride from Miami. Pricing would be half of what it is in US and Dr. Shetty hopes to attract Americans who are either uninsured or need surgery their plans don't cover.

He has got international endorsement for his business model as well. Jack Lewin, chief executive of the American College of Cardiology, who visited Dr. Shetty's hospital sometime back, says Dr. Shetty has used high volumes to improve quality. As some studies also show that quality rises at hospitals that perform more surgeries for the simple reason that doctors get more experience. And at Narayana, says Dr. Lewin, the large number of patients allows individual doctors to focus on one or two niche cardiac surgeries. For example, Colin John, a Narayana surgeon has performed nearly 4,000 complex pediatric procedures known as Tetralogy of Fallot in his 30-year career. The procedure repairs four different heart abnormalities at once. Many surgeons in other countries would never reach that number of any type of cardiac surgery in their lifetimes.

It’s just not that. Success rate at Narayana is as good as those of other hospitals abroad. It reports a 1.4% mortality rate within 30 days of coronary artery bypass graft surgery, one of the most common procedures, compared with an average of 1.9% in the U.S. in 2008, according to data gathered by the Chicago-based Society of Thoracic Surgeons. Even this is not a ‘fair’ comparison as Narayana doesn't adjust its mortality rate to reflect patients' ages and other illnesses, in what is known as a risk-adjusted mortality rate. India's National Accreditation Board for Hospitals & Healthcare Providers asks hospitals to provide their mortality rates for surgery, without risk adjustment.

Dr. Lewin believes Dr. Shetty's success rates would look even better if he adjusted for risk, because his patients often lack access to even basic health care and suffer from more advanced cardiac disease when they finally come in for surgery.
The inspiration to do something like this happened to Dr. Shetty in 1989. After training in cardiac surgery at Guy's Hospital in London, Dr. Shetty came to India and joined Birla heart hospital in Kolkatta as its first director.
Though he performed the first neonatal heart surgery in the country on a 9-day-old baby, he also confronted the reality that almost none of the patients who came to him could pay the $2,400 cost of open-heart surgery. After hearing the price they would just disappear

At that time, Mother Teresa had a heart attack, and Dr. Shetty operated on her. Later on he became her personal physician. And then he came across a profound statement of hers, "Hands that serve are more sacred than lips that pray." This statement inspired him enough and still adorns the wall of his office, of course with Mother Teresa picture.

Dr. Shetty set about on his mission duly helped by his father-in-law, who ran a construction company, who financed and helped build the hospital in Bangalore, his wife hometown. The dream was realised in 2001 and hospital came into being. A giant statue of a many-headed deity -- representing gods in the Hindu pantheon -- stands in the center of the lobby.

Since then quality and cost efficiency has been a relentless pursuit for him. For example, how he slashed cost of sourcing sutures. Four years ago, the sutures would have been bought from a Johnson & Johnson subsidiary, now they are made by a Mumbai company, Centennial Surgical Suture Ltd. His bill earlier being $100,000 and growing by 10% is now cut by half.

As he says, "In health care you can't do one big thing and reduce the price, we have to do 1,000 small things."

He is trying to reduce cost for medical equipment as well. Chinese makers have brought good quality, cheaper machines but don't yet have adequate local support for regular maintenance. So Narayana still buys equipment from General Electric Co. He pays $60,000 for echocardiography machines, and $750,000 for cardiac catheterisation labs. But he is set on reducing these costs.

Till than, Dr. Shetty takes more out of each machine by using them upto 20 times a day, compared to four times usage in a typical U.S. hospital.
There is, however, no compromise on the salaries paid to surgeons. They are paid at the going rate between $110,000 and $240,000 annually, depending on experience. Dr. Shetty himself was paid almost $500,000 last year, according to the group's audited financial statements.

But here too, Dr. Shetty drives efficiency. Surgeons at Narayana perform two or three procedures a day, six days a week. They typically work 60 to 70 hours a week, they say. Residents work the same number of hours. In comparison, surgeons in the U.S. typically perform one or two surgeries a day, five days a week, operating fewer than 60 hours. Dr. Shetty says doctor fatigue isn't an issue at all, as generally, surgeons take breaks after three or four hours in surgery.

While doing this, he has not lost sight of his other vision of making healthcare affordable for really needy people. Like one morning, Dr. Shetty operated on an 11-year-old boy whose father is a sugarcane worker. The boy was born with a congenital heart defect. Boy’s father says he can't pay for the surgery, but the cost is covered by a farmers' insurance plan that Dr. Shetty began several years ago in partnership with the government of Karnataka.

Nearly one third of the hospital's patients are enrolled in this insurance plan, which costs $3 a year per person and reimburses the hospital $1,200 for each cardiac surgery. That is about $300 below the hospital's break-even cost of $1,500 per surgery. The hospital makes up the difference by charging $2,400 to the 40% of its patients in the general ward who aren't enrolled in the plan. An additional 30% who opt for private or semi-private rooms pay as much as $5,000.

It seems Mother Teresa is continuously blessing her personal physician and must be contented to see that what she said is being practiced diligently by Dr. Shetty and it still adorns the wall of his office. While other private sector hospitals in India and the world can take a leaf out of Narayana Hrudayalaya chapter to take their business to greater heights

Event: Pharmacovigilance 2010

Date: Thursday January 21, 2010, to Friday January 22, 2010, 05:00PM
Event Type: Conference
Location: Sheraton; Mumbai, Maharashtra

Conference Info
In India, there is a critical need for a watchful and fully functioning pharmacovigilance system. It is fourth largest pharma market, and has more than half a million doctors. Thus chance of something going wrong is always there. Additionally, it is emerging as the hub for clinical trials.

Even if few patients here and there gets suffered due to ‘in-appropriate & wrong’ medicine, it causes huge harm to the credibility of the medical & healthcare system. Therefore there is an urgent need for a progressive and proactive pharmacovigilance strategy. And the time is now. As timely pharmacovigilance intervention will help identify such risks in shortest possible time

This conference will help you get answers to such issues and more

Event: Medical Fair India Conference

Date: 12 - 14 March 2010
Venue: Bombay Exhibition Centre, Mumbai, India

Event Profile
The Medical Fair India 2010 conference will bring together representatives from industry, accreditation, financial, and institutional bodies, and Government to address the issue of bringing quality healthcare to the masses while enabling a viable business for hospitals and medical companies.

Growing tremendously with increasing income, the liberalising trade regime and entry of global players in the country, India’s healthcare segment offers tremendous business potential for all players from India and overseas.

There is an opportunity for medical equipment companies to set up manufacturing bases in India to take advantage of the low-cost conditions. Additionally there are collaborative opportunities for companies and medical practitioners from all over the world.

Ideal conference for companies & individuals who are associated with either of these industries - Clinic, laboratory, and hospital administrators; Disinfection and waste management systems; Distributors and importers; Diagnostics; Doctors, surgeons, and para-medical professionals; Emergency / critical care equipment suppliers; Hospital – Infection control and Purchase departments; Hospital furniture manufacturers; Medical disposable manufacturers; Pathologists; Rehabilitation aids

Event: Healthcare World 2010

Date: Thursday January 21, 2010, to Saturday January 23, 2010
Event Type: Tradeshow / Convention
Location: Bandra Kurla Complex
Mumbai, MAHARASHTRA IN

Healthcare World 2010, a medical exhibition is being organised by Express Healthcare.

Federation of Hospital Administration (FHA) and The Association of Hospitals (AOH) are the supporting associations for this tradeshow.

Manipal Hospital, Bangaluru, Jaslok Hospital, Mumbai, PD Hinduja Hospital, Mumbai, Dr LH Hiranandani Hospital, Mumbai, Kerala Institute Of Medical Sciences, Thiruvananthapuram and Max Healthcare are supporting Healthcare World 2010.

Hosmac is a knowledge partner and BOC, a member of The Linde Group, is associating with Healthcare World 2010 as a Green Zone Partner. Come and be a part of Healthcare World 2010

A great opportunity for knowledge gain, tapping into business opportunity and networking with the peer group companies and individual

Strong wind of change in pharma retail

It’s a revolution waiting to happen. May be its happening little late, but better than not happening at all

For long, we have been going to corner pharmacies and have had varied experiences. There have been umpteen numbers of stories that instead of trained chemists, pharmacies are actually being manned by completely un-trained individuals who have that much link with drugs as Taliban has it with peace! One of my most memorable personal experience has been of buying a serious Rx medicine from a Halwai (Sweet maker)…I mean a sweet maker masquerading as a pharmacist.

Not to forget the menace of counterfeit drugs. It is claimed that 20% drugs sold from pharmacists in India are fake. They are nothing but WMD (Weapon of Mass Destruction).

When we compare with China, which has approximately 2 lakh outlets for a domestic market of $15 billion, the Indian Pharma retail with approximately 5.5 lakh retailers for $8 billion market appears highly over-proliferated with complete fragmentation. Possibly this is the cause of various maladies ailing the pharma retail

Onset of organised pharma retail chains was supposed to address these issues. However, even after many years they have a limited reach. There share is around 3% of Indian pharma market. While in US, top three chains control 40% of the market

Situation may change for better if what AIOCD is attempting actually succeeds. All India Organisation of Chemists & Druggists (AIOCD) has 550,000+ chemists and 60,000 wholesalers as its members. This representative body of chemists is corporatising itself. In a way it is changing its colour. From a trade body with a ‘unionistic’ mindset to a corporate body with a professional mindset. Or think of it this way – 550,000 entrepreneurs coming together to become a part of a single company. And its name will change to AIOCD Ltd. with its corporate office at Mumbai

It will have a complex structure of a holding company with various subsidiaries at the state level. Individual Chemists would be the shareholders and the share capital would be created from their contribution. Creating the legal structure is probably the easier part. Making it work as corporate entity with a definitive revenue would be the tougher part.

The four key service areas for the company would be:
– Organized retailing
– Organized distribution services - single point end to end supply chain services
– Sales & marketing services
– Electronic stock & sales data – branded as AWACS (probably inspired by US!)

To offer these services with high standards, company is banking upon its financial muscle, strong relationship with the government and the industry, and the distribution might (besides 95%+ share of pharma market, close to 30% FMCG sales is controlled by this entity) and the distribution depth (presence right upto district / thesil level)

Company has stuck gold right at the beginning. It has finalised brand promotion alliance with Lupin (for OTC Products), Novartis (for OTC Products), Disney Baby Products, Amar Remedies (for FMCG Products), and Grass Root Nutrition (for OTC/FMCG products) to name a few. Under this arrangement AIOCD Ltd. will actively promote brands from these companies at the retail level

Besides they have finalised distribution alliance with Aventis, MSD, Sandoz, Lotus Sutures, and Amar Remedies. Under this arrangement, AIOCD Ltd. would be the single point contact for these companies for the distribution instead of them dealing with many individual wholesalers. This will help companies with optimal and adequate distribution of their products. AIOCD Ltd. would be able to provide this facility as it will take all the wholesalers under its fold.

To ensure that all these services are functional smoothly without any glitches need is to have a robust IT infrastructure. Towards this end, AIOCD Ltd. has partnered with Siemens for SAP implementation and with IBM as the technology partner. The central server would be located at Airoli (Navi Mumbai)

Probably the big ticket offering from AIOCD Ltd. is its PharmaTrac, branded as AWACS. It would monitor sales & stocks at each of the chemists in a minimal time. The key feature of this product would be speed and accuracy. It will reduce by half the time required to capture the data from each of the chemist, thus giving a more realistic & real time data to the pharma companies. Eventual aim is to provide day data trends to the pharma companies every 10 days. Accuracy would be ensured through personally supervised data collection. Eventually (by late next year), pharma companies would have sales data Rx wise, pin code wise and doctor wise, helping them to do better marketing planning

In the next three years, AIOCD Ltd. expects AWACS to have a revenue generation of Rs 250-300 crore.

The top management of the company led my Mr. Jagannath Shinde is assuring pharma companies that they would offer a thoroughly professionally managed set-up. Whether it will remain a cliché or a welcome new reality only time will tell.

In the meanwhile, for the people the key indicator of change would be to get to interact with a real chemist rather than a make believe one and that too a smiling face.

The task for AIOCD Ltd. is cut-out. For it the challenge is with itself

Pharma Companies and Social Media: Forbidden Fruit or Passion Fruit

Nobody can stop the forward march of an idea whose time has truly come and not only has come but has already become an integral part of the ‘now’ generation. That is social media. It has become a huge psychological and social human experience

It has become the preferred mode of engaging, networking and building relationships among the individuals, institutions and organisations. So much so that it is being used by the corporates to connect with their various stakeholders and in some cases, also empowering them to create their own content and engage in conversations

If it is said that content is the king, then conversation is the queen! And social media helps in marrying both king & queen

Leading names in Social media are Twitter, Facebook, YouTube, and Linkedin. As per Nielsen Social Media survey (2009), 2/3rd of world internet population visits online communities and spends at least 10 mts on them everyday. And the time spent on these websites has increased 3 times the rate of overall internet growth. It has caught the fancy of both young and ‘old’ in equal measure. As per the Nielsen survey, people aged 35-49 is the fastest growing segment on Facebook. In the last year, Facebook has added twice as many 50-60 year old visitors (14 million) as it has 18 year olds. One third of Facebook audience is 35-49

If such is its power, then how can pharma industry remain untouched by this tidal wave? And more than that, like what any other powerful idea does, splits the industry into supporters and cynics. But as on date, it is the supporters seem to be having an upper hand. Few examples:

Pfizer
Pfizer, maker of the well-known drugs of Viagra and Celebrex, is exploring social by creating a social networking site that will bring together patients and clinical trial researchers. On this site patients will have the opportunity to confidentially post personal health information that will only be made available to researchers studying their particular condition. Trial sponsors can use the site to recruit patients and patients will have an opportunity to learn more about the studies that relate directly to them. Presently following 479 on Twitter, Pfizer has attracted 1425 followers with 72 tweets as on date (There are 479 people / bloggers which Pfizer is following & 1425 people / bloggers are following Pfizer)

Johnson & Johnson
The company's YouTube channel now has over 90 videos. Its corporate blog was built around a simple question that serves as its premise - 'everyone else is talking about our company, so why can't we?'

Videos are also based on human interest stories. For example, when Cindy pregnancy ran long, labor was induced and the baby suddenly began to bleed out from a rare and often undiagnosed condition. Fast action and an immediate blood transfusion saved baby Julia.

Novartis
It has gone on a different track. It has developed a community platform dedicated to Chronic Myeloid Leukemia or CML, which is an innovative Google-like mash-up that interacts with patients, patient groups, and healthcare professionals from around the world.

AstraZeneca US
AstraZeneca US tweets, though only outgoing & one-way communications has 266 following, 1613 followers and 1645updates. Also its product Symbicort has its own presence on YouTube called 'My Asthma Story’.

Bayer
It has probably the most creative and unique presence on the social media. It recently launched a new online community and blood glucose monitoring tool for young people living with diabetes in the United Kingdom.

The tool, named Didget connects directly into the youth's ‘Nintendo DS’ and rewards the user for building consistent blood glucose testing habits and meeting glucose targets. The Nintendo DS tool is supported by 'Didget World’, a password protected social network where kids can interact with other users and build their own profile. Based on the popularity of online 'gaming' with young people, this is an ingenious use of social media to help monitor a health condition.

As Head of Bayer Medical Care, Sandra Peterson says, “The Didget meter is a revolutionary development in healthcare management. Up until now, blood glucose monitors have been created with adults in mind

There are more such examples, like GSK which focuses on creating dialogue on pressing issues, Boehringer Ingelheim has gone more aggressive and made Twitter as part of its communication strategy to engage with its stakeholders, Roche went one step ahead and organised a ‘Social Media Summit’! In this they invited 29 diabetes specialists and bloggers with the intent to ‘listen & learn’ in the area of diabetic care

Even there is a social networking site only for cancer specialists. One can even use it for doing for online survey. Examples are galore and possibilities are immense!

Yet there are nay sayers. They are fearful of running afoul of USFDA regulations that govern the advertising and promotion of prescription drugs. They believe in the adage, ‘safety in caution’. With USFDA, already started the process of inviting industry and other stakeholders for hearing to regulate the communication on social media, they may not be able to avoid it for long. Though it would still require some monitoring as unsubstantiated user generated content may harm a company or drug reputation. It’s the regulatory and legal people who have major concerns.

Social media offers new opportunities to not only activate but also create enthusiasm. It allows one to be both publisher as well as marketers. That is one can use social media as PR tool (unpaid media) as well as a paid communication tool as well. People may not believe what you tell them but they definitely believe what they tell themselves. That’s the power of user-generated content.

There is also a strong financial logic behind using social media. In a world where every media is getting more expensive, the price of digital technology continues to fall and the differences between those two economies is growing. If novelty was a factor sometime ago, saving money is the stronger motivation this time

As some wag said, social media is like teen sex! It’s all around us but no one knows the exact width & depth of it. But it’s part of social conversation. Same is with social media. It’s a good conversation point, but a smart pharma marketer can encourage the right & relevant conversation

May be it’s time for Indian pharma industry to give it a first look