Hospital governance and financing has always been in my research interest. So I was happy to have the opportunity to visit one of the world’s most renowned hospitals, Narayana Hruyadayala, a cardiac centre located in the heart of Bangalore. This private cardiac centre is often put on a pedestal for its financially-sustainable business model that promotes equitable access to high level cardiac care. The hospital has also institutionalized an interesting tele-referral system that facilitates diagnosis in far-flung parts of India and even across Africa.
Discovering India’s melting pot of health market innovations
I was in Bangalore, India to attend the partners meeting of the Centre for Health Market Innovations Project, and part of our 3-day meeting was an excursion to this innovative hospital in Bangalore.
India is a melting pot of health market innovations. The country’s enormous pool of human resources, vibrant private sector and high consumer demand due to growing population are the major underpinning factors that fostered suitable environment for innovations.
Almost 3 out of 10 or 400 million Indians are poor. Despite this backdrop, the country has managed to develop products and schemes that are considered world-class. Interestingly, a lot of these innovations cater to the poorer and vulnerable segments of the population. The success story of India on innovation development is important, especially for policy-makers, advocates and investors working in low- and middle-income countries.
As a researcher from the Philippines, I find that the business practices of Narayana offer potential key solutions to emerging problems in many low- and middle-income countries—high impoverishment due to chronic care and difficulty referring between primary and tertiary care because of geographical barriers. (At right: My colleague Oscar Picazo, at right, with ACCESS Health International, India researcher Ikram Khan, discuss ways to translate effective healthcare models across borders).
Business for the poor is good business
When I first stepped into the lobby of the hospital, I was welcomed by a sign of Joint Commission International which ascertains the high quality of healthcare service that the hospital provides. The hospital houses modern cardiac care facilities manned by cardiologists trained from the best hospitals abroad.
The hospital was packed with people from all walks of life. This scenario is uncommon in most developing countries where the hospital market is highly segmented, and the poor cannot access institutions that provide high quality services. Narayana proves that business for the poor is good business.
The hospital utilizes cross-subsidization, a very rare business model adopted in private health facilities in developing world. Cross-subsidization is a socialized pricing practice where the richer patients support the cost incurred by poorer patients. Hence, poor patients do not incur any out-of-pocket expenditure, but they can still receive high quality inpatient care. Dr. Shetty, the man behind the success of Narayana, runs the hospitals with multiple business strategies to lower operating costs. This includes negotiated contracts with medical and pharmaceutical suppliers. It is no wonder that the costs of services and procedures, including open heart surgeries, at Narayana are much lower compared to other hospitals in India or any part of the world.
A tele-referral system that extends across Africa
The hospital also has a tele-referral system using videoconferencing. This allows remote health facilities outside Bangalore to seek advice from cardiologists at Narayana free of charge. Since the hospital is also part of the Pan-African consortium, cardiologists advise physicians from different countries. This approach has been lauded as one of the effective and efficient ways to facilitate correct diagnosis and decrease the direct and indirect cost of care. We have tele-referral innovations like Buddyworks[LINK] in the Philippines. Unfortunately, most of them are not successful due to lack of funding and incentives.
Could Narayana’s approach work in the Philippines?
Given the dominance of the private sector in the hospital market—almost two-thirds of hospitals in the Philippines are privately owned and about sixty percent of the population goes to these facilities for inpatient care—the Philippines can learn a lot from the business model of Narayana.
However, the role of government is critical: are there available government policy instruments in the country that incentivize private hospitals to adopt pro-poor business models?
In my opinion, policy instruments need to be developed to entice private hospitals to adopt pro-poor business models. I think the Philippine Health Insurance Corporation (PhilHealth) can be a good motivator. It can provide incentives for private hospitals by offering global budget schemes and other provider payment mechanisms. These schemes can empower poor patients to utilize private health facilities and hospitals. Hence, market segmentation will decrease, and over time we can achieve healthcare equity in the Philippines.
Valerie Ulep, Oscar Picazo, and colleagues represent CHMI in the Philippines at the Philippine Institute for Development Studies.