The Wall Street Journal had an interesting article today about Dr. Devi Shetty and the hospital he runs in India. They specializes in heart surgeries (The Henry Ford of Heart Surgery, Nov 21). This accompanying video gives the idea:
The article has the following facts:
At his flagship, 1,000-bed Narayana Hrudayalaya Hospital, surgeons operate at a capacity virtually unheard of in the U.S., where the average hospital has 160 beds, according to the American Hospital Association.
Narayana’s 42 cardiac surgeons performed 3,174 cardiac bypass surgeries in 2008, more than double the 1,367 the Cleveland Clinic, a U.S. leader, did in the same year. His surgeons operated on 2,777 pediatric patients, more than double the 1,026 surgeries performed at Children’s Hospital Boston.
So they work at a much higher volume than a typical US heart surgeon. That pays off in a number of ways.
Cardiac surgeons at Dr. Shetty’s hospitals are paid the going rate in India, between $110,000 and $240,000 annually, depending on experience, says Viren Shetty, a director of the hospital group and one of Dr. Shetty’s sons. Dr. Shetty was paid almost $500,000 last year, according to the group’s audited financial statements.
Here, too, Dr. Shetty finds additional savings on the per-patient cost. His surgeons perform two or three procedures a day, six days a week. They typically work 60 to 70 hours a week, they say. Residents work the same number of hours. In comparison, surgeons in the U.S. typically perform one or two surgeries a day, five days a week, operating fewer than 60 hours.
On top of that, they are paying less for sutures directly from an Indian firm as opposed to buying from Johnson & Johnson or distributor. They buy name brand equipment (e.g., GE) because cheaper competitors does not have the field service to guarantee the up time they need.
So volume matters. By tuning everything to optimize heart surgeries, they offer high quality care at much lower cost. That insight follow from the most intriguing quote of the article:
Japanese companies reinvented the process of making cars. That’s what we’re doing in health care,” Dr. Shetty says. “What health care needs is process innovation, not product innovation.”
And that ties to US health care reform. At some level, health care reform supposedly aims at expanding insurance coverage and reducing cost. It is relatively easy to do the former; you can simply legislate that everyone has to have insurance and subsidize the cost. Whether that is affordable over the long haul, of course, depends on how successful cost containment is. But much of the action has been aimed at expanding coverage. The following is from a story on APM’s Marketplace (Health reform not focusing on waste, Oct 26):
A Thomson Reuters report out today says the U.S. health-care system wastes about $700 billion every year. The report says unnecessary care accounts for more than a third of excess costs. Congress touches on that. But the focus of the overhaul is insurance.
EWE REINHARDT: This is really an insurance extension bill.
Ewe Reinhardt is an economist at Princeton. He says it’s easier for Congress to focus on the uninsured. The problem with eliminating health-care waste is one person’s waste is another’s income.
REINHARDT: The Hill is full of people with money bags handing out money to prevent cost containment, because they read that as income containment.
The trouble is that you cannot easily legislate process innovation and I think that may be particularly hard when you need scale to make a real difference. I doubt, for example, that the people of Cook County would accept having just, say, two hospitals doing open heart surgeries even if that guaranteed the scale to drive down cost. Too many people (both doctors and patients) may be vested in having local care for such high scale hospitals to succeed.