Narayana Hrudayalaya

Heart Hospital:
Cardiac Care for the Poor (A)

Presented By : VIVEK KUMAR (M1617)

PRAJIT GOSWAMI (M1610)

Service Operation Management (SOM)

 The Indian Health Lanscape

2003:

Indian Government spent approx 1% of its GDP on public health care.

Overall expenditure on health 5% of GDP (Asian average : 6.3%).
85% of the Indian population and 47% of children under 3yrs didn`t receive
enough nourishment National Nutrition Monitoring Bureau.
15,000 hospitals and 6,00,000 physician well equipped health care system.
No. of physician per 1,000 population : 0.5 (US 2.7)
70% of doctors only in urban areas.
Government hospitals were underequipped and understaffed.

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 Less than 14% of the population having health
insurance.
Medical Tourism : 1,50,000 foreign patients.
OHS would cost only $3,000 - $ 10,000 at the best
Indian hospital as compared to 1,50,000 in the US and
70,000 in UK.
2.4 million people needed heart surgery every
year.
Only 60,000 surgeries were performed each year.
Approx 25% of heart attack occurred among the
under 40 population.
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Operation Strategy at NH

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Operation Strategy at NH..

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Operation Strategy at NH..

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Telemedicine

It gives ordinary doctor the opportunity to

accomplish extraordinary things.
Between 2001 to Jul. 2004, NH facility
performed 9,591 teleconsultation.
The state government planned to sponsor
29 more Coronary Care Units.
Telemedicine project utilized government
infrastructure (i.e., the support by ISRO and
state government.

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Company Growth

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Heart Disease
Occur when supply of blood to the heart stops.
Happens when coronary arteries get dogged due
to fat & cholesterol.

Angioplasty A balloon catheter is CABG

inserted in/near the Creates a bypass
blockage and along the blocked
inflated, thus part of the coronary
opening the blocked artery
vessel

Finally, arteries open

up and adequate Recommended over
blood flows to the Angioplasty
heart.

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Mobile cardiac diagnostic lab
Weekend buses sent to rural areas 800 km away
from hospitals
Buses staffed with 3 doctors including cardiologist.
Buses equipped with echocardiography equipment,
and necessary equipment along with a generator

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Training the next generation
19 postgraduate programs for doctors including
diplomas
Indias first diploma in cardiology in collaboration
IGNOU
Training of nurses

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The Insurance scheme-Yeshasvini
Health insurance scheme for 1.7 million farmers and
their families in Karnataka.
Farmers who had been members of a cooperative
for at least a year were eligible to participate
For Rs 5 a month, cardholders had access to free
treatment at 150 hospitals in 29districts of the
state.
Insurance scheme to organize self help group in
states.
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Health City
Non Cardiac units started with 35 acres of the
campus
Neurosurgery units, orthopaedic trauma hospital
Emami National Institute for Bone Marrow
Reduction of bone marrow cost from Rs 1.2 million to
400000
Reduction in the cost of Brain and spine surgery by half

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Would you describe this heart hospital as
successful? Explain why.
Considering that NH has started operating in the early 2000s, based on
the data in the case for 2004, the hospital is successful
The goal of Dr. Shetty in starting the hospital was to create a health city,
aiming to provide treatment for the poor at the lowest cost
Furthermore, exhibit 11 indicates the income statement for the heart
hospital, identifying that it generated a profit of $787,000 in 2004
Even in terms of cost, NH only requires Rs. 1,10,000 for OHS in comparison
to the average Indian private hospital cost of Rs. 250,000
If successful, what were the elements that made it successful? If
not yet successful, what else should NH be doing?

Cost leadership strategy

Due to the large volume of procedures performed by
the hospital, NH is able to have higher buying power
over suppliers, negotiating deals.
The hospital also controls other supply costs through
concentrated buying power.
The hospital also had an excellent monitoring of all
cost related activities through its finance
department.
Is the insurance scheme successful? Explain why. What
are the challenges going forward?

The insurance scheme was successful for helping out

the poor but not for actually generating a profit
The program required Rs. 5 a month from
cardholders, and insured for treatments up to Rs.
100,000
The premium was very low making it affordable,
but the potential profit is also very low
How would you advise Dr. Shetty regarding the three lines of
business - the heart hospital, the Health City, and the insurance
scheme for the poor?

Dr. Shetty should put most of his focus on the heart

hospital as it exemplifies most of the qualities of a
business that is capable of sustainable competitive
advantage through cost leadership
NH should also consider moving out of the insurance
scheme if focusing more on profit as the scheme is
unprofitable with a low premium, barely covering
the cost with funds collected
Some Cost Effective approaches that hospitals
practice: Beckers Hospital review

Cut food waste in half by weighing it

Consider Financial benefits of smoke free
workplace.
Out sourcing IT, Paper management
Reward and Recognize employee ideas for reviews

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