Robin Hood hospitals
Published by quizman January 27th, 2005 in Economics, HealthThe Harvard Business School newsletter Working Knowledge has an article on Dr. Devi Shetty’s Narayana Hrudalaya.
It’s kind of a Robin Hood hospital. When you walk in with a heart ailment, if you can pay, you pay; if you can’t pay, you get treated for free. It doesn’t matter what your heart ailment is. Its operating metrics are better than all the heart hospitals in the U.S.
Debate: Is their strategy sustainable?
Aravind Eye Care is also mentioned by Profs during business school case discussions (at least in U. C. Berkeley).
An interview with Dr. Shetty in the New Scientist is a must read.
This must all get very expensive. After all, the hospital at Bangalore will equip CCUs with instruments and train personnel while the NGOs will only bear local administration expenses . . .
In my 12 years of running the hospital in India I’ve seen that people are increasingly becoming more giving. The opening up of the global economy has created a lot of wealth among middle-class people. It used to be that wealth was accumulated over long periods, often by not-so-legitimate means. But now the people who have become rich do not have to read newspapers to understand poverty. And when good people become wealthy, money gets spent on better causes.
Ck, are you reading this? :-)
21 Responses to “Robin Hood hospitals”
- 1 Trackback on Jan 29th, 2005 at 7:09 pm
- 2 Trackback on Feb 19th, 2005 at 5:24 pm
Interesting to know that Dr. Shetty can practice that way :)
This place also adopts the same concept for something that is needed everyday, food. Yes, you heard right free food :)
Nice to read this early in the morning, good does prevail SOMEWHERE after all :-))
Hi Whirlwings,
You can read more good news at http://www.goodnewsindia.com/homepage.php
It feels great to read about these ’socially responsible’ businessmen and individuals. More so, when they don’t get branded as socialists by ideology-philes. Let the idea pervade and prevail. :)
The HBS article has this interesting snippet:
So I would like to repeat my question: Is this strategy sustainable?
50% of what they would earn in the west.
In India.
Why wouldn’t it be sustainable on that count?
Ravikiran,
I don’t know the answer. I am merely asking the question.
Firstly, the article talks about, “Yet it is solvent, and its founder would like to roll out a similar model beyond India—maybe even into Europe and the U.S” So the strategy is not limited to Indian doctors. So the strategy of doctors taking a pay cut may or may not work. [But then you have Medecins sans frontieres’ as a counter]
Secondly, the cost of medical equipment and medicine, especially patent protected ones are quite high. This is true even for developing countries in the post-WTO world.
Thirdly, malpractice insurance rates are very high in some countries.
Fourth, developing countries have rural poor who need access to healthcare. Can they (and their immediate family) afford to stay in the city/town while their health care needs are taken care of?
Fifth, insurance companies that pay the cost of health care in developed countries may not like the idea of their money being used to subsidise uninsured and poorly insured patients.
I’m trying to determine if all of the above are barriers for scalability and sustainability.
When I read the article I was struck by how much like health insurance it was.
So what he’s saying is that for $30/month he would like to provide healthcare. Thats $30/year - which is very low by western standards but is still more than Rs. 15,000/year for an Indian which is actually not that low.
When you are in an insurance scheme, you often end up paying for other people (involuantarily). I pay (or rather my company pays for me about $2000/year) for insurance. Being relatively healthy I perhaps have to visit the doctor twice a year and definitely do not take $2000 worth of healthcare. The unused insurance is then used to pay for other people’s more serious treatments and to return a profit to the insurance company.
Right now Dr. Shetty might have a unique model based on compassion but if I understand his long-term plans he wants to provide healthcare for $1/day. He can afford to keep it that cheap because his doctors are willing to accept less pay, his overheads in the developing world are low and he is not trying to return a profit.
I applaud his efforts but see no major difference between this and health insurance.
I meant $360/year
CK,
Everyone could potentially benefit from paying insurance premiums. In the case of the N. H hospital, some patients pay. The bills of others are paid through donations. There are many examples of this. The Lucille Packard Hospital(yes the wife of the P in HP) at Stanford is one.
Here is an Economist article on how the money you doled out for Win XP is being used for Global Healthcare, via Gates Foundation.
You nuts. I was pointing out that he was not paying his doctors low salaries. He was in fact paying them very very high salaries by Indian standards. Do I have to spell out every single point for you people? I am losing faith in the youth of today.
CK,
In insurance:
Everyone pays
Only the sick are treated.
In NH model
The sick are treated
Among those sick, those who wish to pay pay.(that would typically be the richer among them)
See the difference?
As I said, I am despairing of the reading and comprehension skills of today’s youth. In my time…
The survival and sustainability of charitable ventures is almost entirely dependent on the willingness of the donors to continue funding it.
Since, as ravikiran pointed out, the salaries paid to the doctors are relatively high by indian standards, they cannot in a strict sense, be called as donors (as opposed to the case of Aravind eye hospital or Medicine Sans frontiers). So, the only donors are the financial contributors. these people depend on a thriving market economy to continue thriving, and they need an ssurance that NH is using their money well. As long as these two factors continue, i don’t see a problem with sustainability.
First of all, I’m not a young man. :-) But I agree with you about “reading and comprehension skills”.I asked a question whether the model is sutainable across the countries which Dr. Shetty mentioned. You limited your reply to India. So I said, that you ought to look at the market that he is targeting and not India alone.
Capice, paisan?
Ravikiran,
What exactly is the dollar vs Rs rate in terms PPP?
Quizman, then the model we are talking of a model where
1) Doctors are paid very highly
2) Patients pay what they can - i.e. effectively the rich pay and the poor don’t.
Of course it is sustainable. That’s because of the cost structure in the health industry involves high sunk costs and low marginal costs. If you build enough capacity, the incremental cost of treating patients is very low. So you can recover your costs from the rich and treat the poor at very little additional cost.
As to whether the rich will pay, yes they will. Health is not something the rich cut costs on, and price discrimination in such an industry is much easier than elsewhere.
Nilu, it does not matter. No hospital in India will have to pay the PPP equivalent of US dollars to hire the best of doctors who stay in India and persuade a few who’ve gone abroad to return.
The incremental cost of treating patients is not low (lower than FC for sure, but still very high). The model is sustainable in as much as there are substantial donors who offset medical costs of those who cannot afford it.
Nilu, the crunch will come when the west reeingineer their medicare systems to make the barriers of entry low enough to attract migration (similar to engineering skill). See this article in The Guardian.
India’s problem is not the health of the urban poor. It may be bad but it still exists. The rural poor have it really bad and we’ve talked about this in another post.
Dear sir.
I am from bangladesh. My mom is a heart dieases peation. so i wanna take a apionment with Dr. Shetty . Please let me know very immergency.
mahfuz