Case Study: Dr Devi Shetty
Founder and Chairman, Narayana Hrudayalaya Group
of Hospitals
Education
|
West Midlands Cardio-Thoracic
Rotation Program (Trained in Cardiac Surgery)
Kasturba Medical College,Mangalore, (1982) St. Aloysius Mangalore |
Years active
|
1983-present
|
2003: E&Y entrepreneur of the year
2001: Karnataka Ratna Award
Devi Shetty to leverage frugal engineering for medical fraternity
We will prove the poor can access healthcare: Dr Devi Prasad Shetty, Narayana Hrudayalaya
ET Awards 2012: Devi Prasad Shetty is Entrepreneur of the Year
Celebrated With:
2012: Padma
Bhushan
Childhood
He grew up in
Mangalore and is the eighth of nine children. Doctors were gods in the Shetty
household, swooping in to save his restaurateur father who suffered from
chronic diabetes and fell into diabetic comas several times in the young boy's
life. He had already resolved to be a doctor when his fifth-grade teacher told
the class that a South African surgeon had just performed the world's first
heart transplant. In that moment, Dr. Shetty says he decided to become a heart
surgeon.
Early-life
On finishing
his training in heart surgery from Guy’s hospital in London, Devi moved to
Bangalore and worked at B.M Birla hospital. He then started with the Manipal
heart foundation at Manipal Hospital. After graduating from medical college in
India, Dr. Shetty trained in cardiac surgery at Guy's Hospital in London, one
of Europe's top medical facilities. He had been operating there for six years
when the Birla family, leading industrialists in India, decided to start a
heart hospital in Calcutta. Dr. Shetty was brought in as the first director.
Achievements
He is the first
heart surgeon in India to enter into neo-natal open-heart surgery, the first
doctor in the world to perform open-heart surgery to close a hole in the heart
and the first user of an artificial heart in India.
ü
How he made an
impact on the lives of those around them?
Narayana Hrudayalaya: The hospital that made a
difference
Dr. Shetty set
about pursuing a heart hospital big enough to make a difference in a country
where most of the people needing heart surgery couldn't afford it. His
father-in-law, the owner of a large construction company, agreed to build and
finance a heart hospital in his wife's hometown of Bangalore.
His most important contribution to medicine
is not his surgical skill but his determination to make this huge industry of
healthcare more efficient by applying Henry Ford's management principles. He
believes that a combination of economies of scale and specialization can
radically reduce the cost of heart surgery. His flagship Narayana Hrudayalaya
Hospital in the “Electronics City” district of Bangalore, not far from GE,
Infosys and Wipro, has 1,000 beds (against an average of 160 beds in American
heart hospitals), and Dr Shetty and his team of 40-odd cardiologists perform
about 600 operations a week.
The sheer number of patients allows surgeons to acquire
world-class expertise in particular operations, and the generous backup
facilities allow them to concentrate on their speciality rather than wasting
their time on administration. Dr Shetty has performed more than 15,000 heart
operations and other members of his team more than 10,000.
As a leader Dr Shetty has been successful to motivate and
instill the same drive which he has towards his vision, in his team. At Narayana
Hrudayalaya Hospital, 1,000-bed, surgeons operate at a capacity virtually
unheard of in the U.S., where the average hospital has 160 beds, according to
the American Hospital Association. Narayana's 42 cardiac surgeons performed
3,174 cardiac bypass surgeries in 2008, more than double the 1,367 the
Cleveland Clinic, a U.S. leader, did in the same year. His surgeons operated on
2,777 pediatric patients, more than double the 1,026 surgeries performed at
Children's Hospital Boston The hospital charges an average of $2,000 for open-heart
surgery, compared with $20,000-100,000 in America, but its success rates are as
good as in the best American hospitals, making it economically feasible for the
underprivileged, who could never have afforded such a surgery otherwise.
He also founded Nerayanma
Nethralaya health city which was the center for neurosciences, a children
hospital and cancer research center. He founded Rabindranath Tagore International Institute of Cardiac Sciences in
Kolkata. He later signed an MOU with
Karnataka Government for building a hospital with 5000 beds in a budget of
1000 crores, close to the airport. His hospitals
make use of economies of scale and perform heart surgeries for one tenth a cost
of what it takes in United States. In Karnataka, Shetty has also crafted a unique, low-cost insurance program, Yeshasvini, estimated to be the world's cheapest comprehensive health
insurance scheme. Launched in tandem with the state government, it covers 4
million people who pay a premium of Rs 10 per month. "There is no point in
an innovation or a magic pill that is not affordable," says Shetty, who is
melding the charitable ideals of his role models Mother Teresa and Mahatma Gandhi with
hard-headed business sense.
.Next door to
Narayana, Dr. Shetty built a 1,400-bed cancer hospital and a 300-bed eye
hospital, which share the same laboratories and blood bank as the heart
institute. His family-owned business group, Narayana Hrudayalaya Private Ltd.,
reports a 7.7% profit after taxes, or slightly above the 6.9% average for a
U.S. hospital, according to American Hospital Association data.
What made Dr Devi Shetty effective?
·
Goal in life: Not only become a great surgeon but use his skill
and talent for the greater good.
·
Created turning points in his life: Narayana Hrudayalaya
Hospital, Yeshasvini Health Insurance scheme
·
Recognize strength and leverage them: He used his talent and
business acumen to create a business model that changed the face of affordable
healthcare in India.
·
Think Positive: Even though he did not get
financial backing from the government in his earlier attempts, he did not give
up and later with the help of his father in law started Narayana Hrudayalaya
Hospital.
Referances
First break all the rules
(http://www.economist.com/node/15879359)
The third way to cut costs is to apply mass-production
techniques in new and unexpected areas such as health care. Devi Shetty is
India's most celebrated heart surgeon, having performed the country's first
neonatal heart surgery on a nine-day-old baby, and numbered Mother Teresa among
his patients. Yet his most important contribution to medicine is not his
surgical skill but his determination to make this huge industry more efficient
by applying Henry Ford's management principles. He believes that a combination
of economies of scale and specialization can radically reduce the cost of heart
surgery. His flagship Narayana Hrudayalaya Hospital in the “Electronics City”
district of Bangalore, not far from GE, Infosys and Wipro, has 1,000 beds
(against an average of 160 beds in American heart hospitals), and Dr Shetty and
his team of 40-odd cardiologists perform about 600 operations a week.
The sheer number of patients allows surgeons to acquire
world-class expertise in particular operations, and the generous backup
facilities allow them to concentrate on their specialty rather than wasting
their time on administration. Dr Shetty has performed more than 15,000 heart
operations and other members of his team more than 10,000. The hospital charges
an average of $2,000 for open-heart surgery, compared with $20,000-100,000 in
America, but its success rates are as good as in the best American hospitals.
Dr Shetty has devoted much of his energy to boosting his
customer base, largely for humanitarian reasons but also because he believes
that higher volumes lead to better quality. He has established video and
internet links with hospitals in India, Africa and Malaysia so that his
surgeons can give expert advice to less experienced colleagues. He also sends
“clinics on wheels” to nearby rural hospitals to test for heart disease. He has
created a health-insurance scheme, working with various local self-help groups,
that covers 2.5m people for a premium of about 11 cents a month each. About a
third of the hospital's patients are now enrolled in the scheme. A sliding
scale of fees is used for operations so that richer customers subsidize poorer
ones. The entire enterprise is surprisingly profitable given how many poor
people it treats. Dr Shetty's family-owned hospital group reports a 7.7% profit
after taxes, compared with an average of 6.9% in American private hospitals.
The group has recently built three other hospitals next to the
heart clinic—a trauma center, a 1,400-bed cancer hospital and a 300-bed eye
hospital. They all share central facilities such as laboratories and a blood
bank. Dr Shetty is also setting up “medical cities” in other parts of the
country. Over the next five years his company plans to increase its number of
beds to 30,000, making it the largest private-hospital group in India and
giving it more bargaining power when it negotiates with suppliers, thus driving
down costs further.
(http://www.business-standard.com/article/companies/devi-shetty-to-leverage-frugal-engineering-for-medical-fraternity-112082800078_1.html)
The
frugal engineering on which reputed cardiologist Dr
Devi Shetty has
made healthcare accessible at 14 of his hospitals across India, would now be
available for the healthcare fraternity to tap into.
In
a move to make healthcare accessible for many more, Dr Shetty is set to
institutionalize many of his innovations into a separate company, in which
US-based TriMedx, a subsidiary of
multi-billion dollar Ascension
Health will
be a joint venture partner. TriMedx specializes in reducing expenses, maximize
utilization and drive profitability through innovative management programs
centered on medical technology assets.
Speaking
to Business Standard, Dr Shetty, chairman and founder, Narayana Hrudayalaya, said there
are immense possibilities through this joint venture, all aimed at taking
healthcare to every nook and corner of the country. Many medical equipment
companies start to offer an upgrade once every five-seven years to the
hospitals and many of them may not be in a position to go in for upgrades for
many a reason. “What we intend to offer is how we can extend the life-cycle of a
costly MRI or any other major equipment and almost double the life of the
equipment with our joint expertise,” Dr Shetty detailed.
While Dr Shetty has been at this
mission of making healthcare accessible to one and all, TriMedx has helped more
than 1,000 healthcare providers reduce expenses, increase patient throughput
and profitability through in-sourced health technology management programs.
Delivering 99 per cent uptime, round-the-clock response and unbiased,
total-cost-of-ownership equipment data, TriMedx has saved its clients $166
million to date.
Narayana
Hrudayalaya, Gujarat join hands for health city project
Bangalore,
Jan. 16 Narayana Hrudayalaya, the hospitals conglomerate promoted by Dr Devi
Shetty, said it has signed an MoU with the Gujarat Government to set up a
5,000-bed Health City in Ahmedabad. Mr Viren
Shetty of the company signed the MoU with the State Government in the presence
of the Gujarat Chief Minister, Mr Narendra Modi, and Narayana Hrudayalaya’s
Chairman and renowned cardiac surgeon, Dr Devi Shetty.
Making it affordable
Dr Devi Shetty said the
Ahmedabad project was meant to make medical services and technologies
affordable to the masses. “This project will generate direct employment for
2,000 people and indirect employment for 5,000 people in the State,” he
said.Apart from Bangalore and Kolkata, the group runs 16 hospitals across
Dharwad, Hyderabad, Jaipur, Jamshedpur and Assam.
Khomba Singh,
ET Bureau Jun 25, 2012, 04.41AM IST
If
Dr Devi Prasad Shetty's vision comes true, most Indians will have access to
quality healthcare. Dr Shetty says the cost of healthcare in India can come down by 50% in the next 5-10
years, and this will be forced on the hospitals by the government if service
providers do not get their act together. "If you are going to say the cost
of a heart surgery is 3 lakh for a rich man, it is fine. But for somebody who
has sold his house, it is unacceptable," he says.
Shetty, who pioneered
the low-cost treatment model, said the lower cost is achievable if hospitals
increased the number of procedures by 1,000 times. The volume will be generated
by the poor who cannot afford the current treatment cost, but will soon have a
smart card with the health insurance provided by government.
He says the government
should continue to provide land at concessional rates to hospitals despite some
undesired outcomes. Several state governments have given land at hugely
subsidized rates to companies and trusts for building healthcare centers on the
condition that certain percentage of the hospitals will provide free treatment
to the poor. However, it was found that many hospitals did not.
He
urged the government to have a strong regulatory body to monitor private
hospitals to
ensure that they carry out what they had committed and deserving ones avail the
provision. "Just because you can't monitor does not mean that the concept
is wrong. Clearly spell out the deliverable, and hospitals will have to
deliver."
Dr Shetty plans to
replicate his low-cost model globally. In a step towards that, his organisation
is setting up a 150-bed hospital in the Cayman Islands, and in Miami through a joint
venture with a local firm. In India, it plans to set up hospitals in all Indian
towns with a population of 5-10 lakh.
Narayana
Hrudayalaya currently
runs 5,500 beds across 14 hospitals in 11 cities, all under one brand. Dr
Shetty says the family has no intention of diluting or selling its 75% stake in
the company.
"We are eccentric
people. We are in the business because we want to help the underprivileged and
the cost of healthcare to come down. For that, I need the freedom."
ET Bureau Sep 19, 2012, 05.01AM IST
he model of
providing quality medical care at an affordable cost to the largest number of
patients that was pioneered by the 59-year-old cardiac surgeon is now being
replicated across a chain of hospitals in India and overseas. In the coming
year, six new hospitals across India will offer the low-cost, high-volume model
followed at Narayana Hrudayalaya, the multi-specialty hospital chain in
Bangalore, which he founded in 2001. And in the next seven years, the hospital
chain expects to have 30,000 beds across India, Africa and Asia. Next month, Shetty and his team will
launch the first of a series of low-cost heart hospitals in Mysore.
"Charity is not
scale-able. If you give something free, you will run out of money," says
Shetty, who is convinced that building a large-scale business is the only way
to provide quality healthcare to the masses.
"Twelve per cent of
all heart surgeries conducted in India are done at Narayana Hrudayalaya. So
vendors supply materials to us at a lower cost as they can address a tenth of
the market," he says. His business model also includes a cap on doctors'
salaries, full-service fees for rich patients and philanthropic capital that
helps the organisation generate profits, which can be ploughed back into the
business.
By
drawing on examples of large corporations such as Walmart that also gain from
economies of scale, Shetty has now crafted a health city. At the first campus,
Narayana Health City, on the outskirts of Bangalore, patients have access to
cardiac care, neurosurgery, pediatric surgery, hematology, transplant
services and nephrology. A state-of-the-art trauma hospital Sparsh and an
ophthalmology hospital Narayana Nethralaya are also a part of the complex
expected to house a children's hospital and a cancer research
center.
Born in the
erstwhile South Canara district of Karnataka, Shetty graduated in general
surgery from the Kasturba Medical College, Mangalore. He trained in cardiac
surgery at Guys Hospital in the United Kingdom. After returning to India in
1989, he worked at the BM Birla Hospital in Kolkata and was Mother Teresa's physician during the
last five years of her life. He then moved to Bangalore and started the Manipal
Heart Foundation at the Manipal Hospital, Bangalore. "Entrepreneurship
happened by chance as I did not find an employer who understood me," says
Shetty, who believes a certain degree of eccentricity is what drives him.
"Doctors at the
pinnacle of their careers work 16-18 hours a day at our hospital. I can manage
such eccentric people as I count myself as one amongst them. I understand
them," observes Shetty, who has performed over 15,000 heart surgeries.
In
Karnataka, Shetty has also crafted a unique, low-cost insurance program, Yeshasvini, estimated to be the world's cheapest
comprehensive health insurance scheme. Launched in tandem with the state
government, it covers 4 million people who pay a premium of Rs 10 per month.
"There is no point in an innovation or a magic pill that is not
affordable," says Shetty, who is melding the charitable ideals of his role
models Mother
Teresaand Mahatma
Gandhi with
hard-headed business sense.
The Henry Ford of Heart Surgery
In
India, a Factory Model for Hospitals Is Cutting Costs and Yielding Profits
Dr.
Shetty, who entered the limelight in the early 1990s as Mother Teresa's cardiac
surgeon, offers cutting-edge medical care in India at a fraction of what it
costs elsewhere in the world. His flagship heart hospital charges $2,000, on
average, for open-heart surgery, compared with hospitals in the U.S. that are
paid between $20,000 and $100,000, depending on the complexity of the surgery.
The
approach has transformed health care in India through a simple premise that
works in other industries: economies of scale. By driving huge volumes, even of
procedures as sophisticated, delicate and dangerous as heart surgery, Dr.
Shetty has managed to drive down the cost of health care in his nation of one
billion.
His model
offers insights for countries worldwide that are struggling with soaring
medical costs, including the U.S. as it debates major health-care overhaul.
"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."
At his
flagship, 1,000-bed Narayana Hrudayalaya Hospital, surgeons operate at a
capacity virtually unheard of in the U.S., where the average hospital has 160
beds, according to the American Hospital Association.
Narayana's
42 cardiac surgeons performed 3,174 cardiac bypass surgeries in 2008, more than
double the 1,367 the Cleveland Clinic, a U.S. leader, did in the same year. His
surgeons operated on 2,777 pediatric patients, more than double the 1,026
surgeries performed at Children's Hospital Boston.
Next door
to Narayana, Dr. Shetty built a 1,400-bed cancer hospital and a 300-bed eye
hospital, which share the same laboratories and blood bank as the heart
institute. His family-owned business group, Narayana Hrudayalaya Private Ltd.,
reports a 7.7% profit after taxes, or slightly above the 6.9% average for a
U.S. hospital, according to American Hospital Association data.
But Jack
Lewin, chief executive of the American College of Cardiology, who visited Dr.
Shetty's hospital earlier this year as a guest lecturer, says Dr. Shetty has
done just the opposite -- used high volumes to improve quality. For one thing,
some studies show quality rises at hospitals that perform more surgeries for
the simple reason that doctors are getting more experience. And at Narayana,
says Dr. Lewin, the large number of patients allows individual doctors to focus
on one or two specific types of cardiac surgeries.
In
smaller U.S. and Indian hospitals, he says, there aren't enough patients for
one surgeon to focus exclusively on one type of heart procedure.
Narayana
surgeon Colin John, for example, 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.
Dr.
Shetty's success rates appear to be as good as those of many hospitals abroad.
Narayana Hrudayalaya 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.
It isn't
possible truly to compare the mortality rates, says Dr. Shetty, because he
doesn't adjust his 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.
Dr.
Shetty, 54 years old, is a lanky and chatty man. He grew up in Mangalore,
another south Indian city, the eighth of nine children. Doctors were gods in
the Shetty household, swooping in to save his restaurateur father who suffered
from chronic diabetes and fell into diabetic comas several times in the young
boy's life.
He had
already resolved to be a doctor when his fifth-grade teacher told the class
that a South African surgeon had just performed the world's first heart
transplant. In that moment, Dr. Shetty says he decided to become a heart
surgeon.
After
graduating from medical college in India, Dr. Shetty trained in cardiac surgery
at Guy's Hospital in London, one of Europe's top medical facilities. He had
been operating there for six years when the Birla family, leading
industrialists in India, decided to start a heart hospital in Calcutta. Dr.
Shetty was brought in as the first director.
On
returning to India in 1989, Dr. Shetty 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.
"When
I told patients the cost, they would disappear. They literally didn't even ask
about lowering the price," he says.
During
that time, Mother Teresa had a heart attack, and Dr. Shetty was called to
operate on her. From then on, he served as her personal physician. Two pictures
of Mother Teresa still adorn the white walls of Dr. Shetty's office, one with
white type saying, "Hands that serve are more sacred than lips that
pray."
Dr.
Shetty set about pursuing a heart hospital big enough to make a difference in a
country where most of the people needing heart surgery can't afford it. His
father-in-law, the owner of a large construction company, agreed to build and
finance a heart hospital in his wife's hometown of Bangalore.
In 2001,
the white-washed, red-roofed Narayana Hrudayalaya Hospital opened on 25 acres
that had been a marshland around a cement factory.
No comments:
Post a Comment