Health Care

India's Walmart of Heart Surgery Cuts the Cost by 98%


“The current price of everything that you see in health care is predominantly opportunistic pricing and the outcome of inefficiency.” —Dr. Devi Shetty

Photograph by Manjunath Kiran/AFP/Getty Images

“The current price of everything that you see in health care is predominantly opportunistic pricing and the outcome of inefficiency.” —Dr. Devi Shetty

Devi Shetty keeps photographs of Mother Teresa and Mahatma Gandhi on his desk, and he’s obsessed with making cardiac surgery affordable for millions of Indians. But these two facts are not connected. Shetty’s a heart surgeon-turned-businessman who founded a chain of 21 medical centers around India. Every bit the capitalist, he has trimmed costs by buying cheaper scrubs and spurning air-conditioning and other efficiencies. That’s helped cut the price of artery-clearing coronary bypass surgery to 95,000 rupees ($1,555)—half of what it was 20 years ago. He wants to get it down to $800 within a decade. The same procedure costs $106,385 at Ohio’s Cleveland Clinic, according to data from the Centers for Medicare & Medicaid Services.

“It shows that costs can be substantially contained,” says Srinath Reddy, president of the Geneva-based World Heart Federation. “It’s possible to deliver very high-quality cardiac care at a relatively low cost.”

Medical experts like Reddy are watching closely to see if Shetty’s severe cost-cutting can serve as a model for making life-saving heart operations more profitable and more accessible to patients in India and other emerging nations. “The current price of everything that you see in health care is predominantly opportunistic pricing and the outcome of inefficiency,” says Shetty, who opened his flagship hospital, Narayana Hrudayalaya Health City, in Bangalore in 2001.

Controlling costs is key in India, where more than two-thirds of the populace lives on less than $2 a day and 86 percent of health care is paid by individuals. Per capita health spending is less than $60 a year. A recent study by the Public Health Foundation of India and the London School of Hygiene & Tropical Medicine found that in India noncommunicable ailments such as heart disease are now more common among the poor than the rich. One in four people there die of a heart attack, yet the country performs only 100,000 to 120,000 heart surgeries a year, well short of the 2 million Shetty estimates are needed. “There has been fast urbanization in India that’s brought with it a change in dietary patterns and lifestyle,” says Usha Shrivastava, head of public health at the National Diabetes, Obesity, and Cholesterol Foundation. “It’s leading to this huge jump in cardiovascular disease.”

Shetty plans to add 30,000 beds over the next decade to the 6,000 his hospitals have now, and he has identified 100 towns with populations of 500,000 to 1 million that have no heart hospital.

All of that expansion is dependent on keeping costs low. A 300-bed, prefabricated, single-story hospital in the city of Mysore cost Shetty’s company $6 million and took just six months to build, he says. To reduce energy costs, only the hospital’s operating theaters and intensive-care units are air-conditioned. Shetty also saves by cutting out unnecessary pre-op testing. Urine samples that were once routine before surgery were eliminated when only a handful of cases tested positive for harmful bacteria. And the chain uses Web-based computer software to run logistics, rather than licensing or building expensive new systems for each hospital.

When Shetty couldn’t persuade a European manufacturer to lower the price of its disposable surgical gowns and drapes to an affordable level, he persuaded a group of entrepreneurs in Bangalore to make them—for 60 percent less.

The bottom line: In India, where per capita spending on health care is less than $60 a year, a chain is pioneering low-cost heart surgery.

Gokhale is a reporter for Bloomberg News.

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