Frugal Innovation and Far Away Heart Surgeries

by jtaylor on April 21, 2010 / CC

Devi Shetty has been called the Henry Ford of Heart Surgery. Through mass production and specialization, his hospital, Narayana Hrudayalaya in Bangalore, has doubled the throughput of heart surgeries per surgeon while drastically reducing the per procedure costs.  According to a recent Economist special report on innovation in emerging markets, his 40 surgeons perform about 600 operations a week and charge only ~$2000 per open heart surgery (costs in America range $20,000 – $100,000).  Pretty remarkable considering this is done without reducing the success of outcomes.

Developed nations could learn a lot from emerging economies – the past decade has seen incredible innovation coming from those using less.  Obvious examples include the pervasive use of cell phones in Africa and the invention of microfinance.  In these examples, the emerging nations had the unique advantage that they did not have to compete with incumbant infrastructure that stifles the entrepreneurial spirit.  Lee Hood, the founder and president of the Institute for Systems Biology (where I did my Ph.D.), always emphasized that new ideas require new organizations.  In the case of these emerging market innovations, it appears that these new ideas are building entire new industries from the ground up.

It may take some time before North American hospitals seriously consider adopting practices like those of Devi Shetty.  Fortunately, our public may be more adept to change.  In a recent Deloitte Report on Medical Tourism, 750,000 Americans traveled abroad for medical care in 2007, with projections of 1.6 million in 2012 (35% annual growth rate following the recession).  This is very interesting, as I would have naively assumed that most North Americans would be hesitant to fly to Thailand or India (or elsewhere) for that crucial surgery.  However, surgery abroad can be significantly cheaper (savings of 70% after travel) and of the same quality. Hopefully globalization will provide one downward pressure on healthcare costs, just as it accomplished in manufacturing and services like software development and advanced engineering.

  • Katrina Couture

    This is brilliant.

  • Euan Ramsay

    Check out the above HBR blog that provides yet another example for your argument: India’s Aravind Eye Care System. This article contents that the success of this operation, which conducted nearly 300,000 cataract surgeries in 2008-09 as well as 2.46 million outpatient visits (where 50% of patients were treated for free and the others charged at or below markets rates) is:
    1. extraordinary productivity
    2. exploiting economies of scale
    3. borrowing best practices from other sectors
    4. investing in critical activities but saving of frills
    5. Aravind’s ideological foundations.

    Good post. Look forward to the next one.

  • jtaylor

    Wow, that’s another incredible example. It’s refreshing that these examples are being highlighted and North Americans are recognizing that Health Care innovation is occurring globally.

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