Govindarajan & Ramamurti, Reverse Innovation in Health Care

I got an advance reader’s copy of Reverse Innovation in Health Care: How to Make Value-Based Delivery Work (Harvard Business Review Press, 2018) by Vijay Govindarajan and Ravi Ramamurti. I put it aside, thinking that it was not within the scope of this blog. But then came the tornadoes that struck Connecticut, one of which touched down far too close for comfort, on May 15. My property (fortunately not the house) was devastated, with large uprooted trees all around the house and the edges of the property and the top of one mighty oak pinning, and miraculously only denting, the car sitting in the driveway. Naturally, I had no power for days, and no Internet access for days more. And so, with my usual routine upended as well, I turned to this book.

The book’s premise is that U.S. healthcare providers can learn from models that have been successful in India. The authors are not, of course, touting Indian healthcare as a whole, which is sorely wanting. But one hospital system in particular, Narayana Health, could serve as an exemplar.

Founded by Dr. Devi Shetty in 2001 with a vision to treat all patients regardless of their ability to pay, Narayana Health is now a profitable company that offers, most notably, open-heart surgery (which would normally cost between $100,000 and $150,000 in the U.S.) to paying patients for $2,100 and to subsidized patients for $1,307. The hospital’s cost for each surgery is $1,100 to $1,200. Narayana is now doing about 14,700 cardiac surgeries a year. On average, in 2016-17 Narayana’s cardiac surgeons performed two to three times as many open-heart surgeries as their U.S. counterparts. And their outcome metrics rival those of the best hospitals in the world.

Shetty is a ruthless cost-cutter, as long as cutting costs doesn’t negatively impact quality of care. To construct Narayana’s no-frills hospitals, for example, costs about half that of its competitors. And when Shetty wanted to buy disposable surgery gowns and drapes from multinational suppliers who refused to budge on price, he had them stitched locally. Within four years, this firm became the largest manufacturer of disposable surgical gowns in India. The multinationals, unable to compete on price, left the market.

Narayana has innovated through task-shifting, allowing surgeons to do three operations in the time it takes other hospitals to do one. “[E]very motion in the operating cycle is choreographed to reduce turnaround time and optimize pay grades.” Senior surgeons do little or nothing that can be done by lower-paid, less-skilled staff.

In perhaps the most striking instance of task-shifting, in Narayana’s multispecialty hospital in Mysore, family members provide much of the post-ICU care. Since, in India, the entire family comes to the hospital with the patient and typically spends three days there, Narayana upgraded them from “underfoot” to caregivers. They get instruction from a four-hour video curriculum. “The practice of training families for in-hospital postoperative care not only frees up the nursing staff for other work but also eases the transition to reliable, high-quality home care, reducing readmissions by 30 percent.”

Narayana uses a hub-and-spoke model and, through farming cooperatives in Shetty’s home state, instituted an insurance plan to reach out to underserved villages. By 2017 the insurer had four million members who, for 22 cents a month, could get free treatment at 800 network hospitals across the state for any procedure whose cost did not exceed $2,200.

Shetty is also starting to pursue opportunities in telemedicine.

The authors highlight four new models in or near the United States that use some of the Indian tactics: Health City Cayman Islands (founded by Narayana Health), University of Mississippi Medical Center, Ascension, and Iora Health. All of these are making strides in trying to change the American healthcare system from the bottom up.

Reverse Innovation in Health Care offers ways for U.S. healthcare to save billions without compromising (indeed, perhaps with improving) quality. And it’s not simply on the back of low wages. The authors address a series of questions that skeptics raise to show that aspects of the model would be viable in the United States. As such, it’s an essential read for anyone who is prepared to tackle the change-resistant healthcare establishment.