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Innovative Hospital Cares for Nation’s Poorest – and Turns a Profit!

That was the headline of a newspaper article in The Toronto Star on April 2nd, 2011 that caught my attention.

Dr. Devi Shetty has built a thriving, profitable hospital business in India and they have achieved success not by charging more money, but by developing innovative ways to run a hospital.

How does this apply to your business? It is a great example of Value Innovation in action.

What are the issues? In the United States a heart bypass operation starts at about $15,000, and in Canada, while the cost is mostly covered the procedure would take months to be scheduled.

In both countries the cost of running a hospital and providing services and surgeries seem to be escalating without constraint. Canada spends more than 10% of its GDP on healthcare.

In India, about 2.5 million heart surgeries are needed annually with just 90,000 of them taking place. Dr. Shetty wanted to help with that.

Shetty, 58, established a public profile when he was appointed as Mother Teresa’s private physician and has since proved that charity and profit can coexist.

His cardiac hospital, Carayana Hrudayalaya Cardiac Hospital, last year reported an after tax profit of 8%, with 42 surgeons performing 6,272 surgeries (three times the number at Toronto General’s cardiac unit).

The difference is 60% of those surgeries were performed on patients who couldn’t afford the full cost of proper treatment and medicines.

“India will be the world’s first country to disassociate health care from affluence”

Shetty offers several reasons for his success.

One is that they rarely pay full list price for medical supplies because of sharing purchasing with the group of hospitals (Cancer, Eye, Multi-Specialty and a string of new hospitals in other cities), enabling them to buy in bulk.

Surgeons are also more efficient because they specialize in a way doctors in the West don’t. There are at least 25 types of heart surgeries and his surgeons typically specialize in only a few. “If you’re only doing the same routine so often, you can come close to perfection”

It’s also about increasing productivity by using the facilities to the maximum. Most western hospitals’ operating rooms are used for six or seven hours a day.
And to support the surgeons’ productivity and work environment the operating rooms all have natural lighting.

“Surgeons are creative people. It’s ridiculous to think they can perform well all day under fluorescents. Try it. Do something creative in a room with only artificial lights and see how you do after two hours.”

And finally Dr. Shetty has identified the Key Performance Indicators to track and he reviews it daily along with his executive team.

Indicators such as number of cardiac surgeries performed that day and the month to date, number of angiograms and outpatients for the day and month and the hospital’s profits.

“If our daily earnings slip below 12%, we tell people scheduled for free surgeries to come back in a few days and we move in more paid customers.”

He is revolutionizing how medicine is practiced and who it is available to.

How does this apply to you? Other than a good case study of creating an out of the box shift in his industry, Dr. Shetty may end up changing how we access medical services.

His hospital last month spent $500,000 to win accreditation from the Joint Commission, the same organization that accredits American hospitals.

Within 18 months Shetty’s company plans on opening the doors at a new 2,000 bed hospital in the Cayman Islands that will cater to both US customers frustrated with the high price of surgeries and Canadian patients dispirited over the long wait time for procedures.

Do you think he will have a market? Currently at his Indian Cardiac Hospital he charges about $3,200 for a heart bypass with seven nights in a private suite.

Applying Value Innovation Thinking to Your Business:

The very things that frustrate you or appear to be limiting factors in your business are probably the seeds to creating a Value Innovation for your business.

What are the things that your customers complain about?

What are the challenges you deal with in your business?

Capture them and allow time to think about them, Ask questions such as “Knowing what I know now, how could we do this?”

Or use The Profit Accelerator Formula™ from Module Six of The Profit Generator Program – plug in the challenge or complaint and let the Formula guide you’re thinking to start identifying your own out of the box solutions with your business.

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