Strategic

Management Case
Submission

Narayana
Hrudalaya
Heart
Hospital
Cardiac Care for the
Poor (A)
SECTION D GROUP 7 Mrigaunk Pillai
Niraj Mohata
Pawan Kumar
Pranay Deepak Minj
Prateek Shamkuwar
Priyank Kumar
Rahul Jain

Enumerate the salient features of the Indian health landscape.

With about 85% of population under nourished, India is 2nd in number of hospitals with 15000
of them and 600000 physicians which seems a seems a huge number. However, the number of
physicians per 1000 person is 0.5 and the number of hospital beds per person is 0.9 which
actually is quite low well when compared with other countries like China and USA. Moreover,
25% of people who had heart attack were under 40 years old which is a reverse trend from
developed countries where people are over 65 years have heart attacks.
The average occupancy of hospitals in Karnataka is 35%, which doesnt depict lack of facilities
but underutilization due to high cost of healthcare services. Masses are deprived of top quality
tertiary care as only 14 % of population is covered by insurance and cost of tertiary care is very
high. For example, Heart disease is one of the most common illness in India with 2.4 million
people needing surgery for it every year, but due to lack of affordable treatment only 60000
surgeries are performed.
Indian private hospitals are becoming world class with improving quality and technology. Cost
at good private hospitals is still lower than the cost of similar services at developed nations.
This seems ironical as foreigners are coming to India for treatment while Indian themselves
lack basic facilities.
Public healthcare is mostly free in India but rampant corruption drives up the cost. Also, these
facilities lack in staff and good equipment necessary to run diagnostics and tests. Medical staff
available is also not properly trained. So, people prefer going to private hospitals to these public
healthcare units even if it requires selling their valuables or property.
Recommendations:
A higher supply of doctors is required to utilise economies of scale and bring down the cost
while maintain the quality which poor people can afford. This can be done by filling the gap
between general practitioners and trained specialists like cardio surgeons as general
practitioners available in remote areas are unable to prescribe correct medicine due to lack of
knowledge. With proper training these general practitioners can become that supply.

Identify the rationale that triggered the health insurance offering by Dr. Devi Shetty.

When Dr. Shetty treated Mother Theresa, he was able to experience first-hand her charitable
work and this set the direction for his ambitions in health care. He had a dream to cure the
worlds poor for less than a dollar a day and also to serve the masses; his health insurance
offering Yeshasvini was a major step towards reaching that goal.
He had compared healthcare with the IT industry was in constant search to solve the strange
paradox that in spite of major technological advancement in healthcare, the costs keep going
up all the time. He wanted to make sure that the masses are not deprived of top notch medical
care due to financial constraint.
The Indian government spent only 1% of its GDP on public health care which was one of the
lowest spent by any country and adding to it even when public health care was mostly free, the
high incidence of corruption lowered the cost differentiation between public and private health
care. This not only pushed the common man away from hospitals but also left the understaffed
and underequipped public hospitals underutilized. Also, given the fact that only less than 14%
of the population was supported by health Insurance, treatment was an option only for the wellfinanced population. This all was against what Dr. Shetty had stood for. He wanted to provide
the best treatment to the masses keeping aside their finances and also wanted to utilize the
governments underutilized facilities. This was the major concern that Yeshasvini finally dealt
with.
When approached by a milk cooperative for an endorsement of its product, he learned about
the membership of the cooperative and their demographic profile, and foresaw that this was
the opportunity through which he could access a clustered and organized group of middle to
low income people.
Prior to the scheme the state of Karnataka boasted 30 private medical colleges with each having
over 500 beds but the average occupancy was only 35%, which showcased lack of affordability
rather than lack of infrastructure. Dr. Shetty recognized this and set up insurance scheme for
over 1.7 million farmers who were part of some cooperative or other, for Rs.5 a month and
providing the cardholders access to free treatment in over 150 hospitals for any medical
procedure costing upto INR 100,000. He knew that the farmers were not willing to spend on
their healthcare but by giving them maximum access at a minimal cost would gradually change
their mentality. Also, the Narayana Hrudalaya (NH) team had estimated that out of the
policyholders only 8% would require medical procedures, so the total funds collected were
expected to cover the cost of treatment of those in need, which was the major aim of NH.
Since Yeshasvini was launched as a government project the government donated Rs.2.5 for
every Rs.5 donated by the farmers. The scheme also utilized the government infrastructure but
the planning and implementation was done by the NH team. The main rational behind this was
that people were still more willing to trust the government agencies and if the program was
started as a private organization, there were chances that people would show low interest. This
also increased the utilization of the hospitals with low turnouts and increased their patient flow
without additional costs.
The success of this scheme also laid stones for the insurance program for self-help groups in
state. Where they bought insurance and medicines in bulk, which was cheaper to the group, but
also helped them to attain healthcare facilities at minimal costs.

Certainly these were distinct appearing programs, but it was all a small step of Dr. Shettys
dream to cure the worlds poor for less than a dollar a day.