ANALYSIS OF HEALTH CITY CAYMAN ISLANDS(HCCI) CASE

BY
GROUP 7

BRIEF DESCRIPTION OF THE CASE

This case talks about the the construction of Health City Cayman Islands which
was an extension of Narayana Health(NH),a very successful hospital based in
Bangalore providing affordable health-care services to the large low-income
population in India.After its huge success in India where it eventually went on to
build a multi-specaility Health-City,it now wants to replicate this model in the
Western World as well.And for this purpose it has chosen Cayman Islands to build
its first Health City on Foreign Soil.

WHY CAYMAN ISLANDS?

Some of the reasons why NH chose Cayman Islands are-:
1. Close proximity to the Americas & the Carribean Islands provided access to
a large market of around 950 milllion people
2. After being badly hit during the Great Recession of 2007-08,CAYMAN
ISLANDS(CI) urgently needed to diversify its economy which was mostly
dependent on the tourism & finace industry.
3. Medical Tourism was already a booming industry with 100,000-150,000
American tourists travelling to far-off countries like India,Thailand etc while
Indians in need of high-quality medical treatment travelled to developed
countries like US.The strategically favourable location of CI would provide a
better alternative to both sets of medical tourists.
4. It would provide low-cost alternatives to the exorbitantly priced health-care
services in USA.
5. Limited tertiary health care facilities in CI meant most of the Caymanians in
need of quality healthcare had to fly to Florida after a long & tiring VISA
process
 6. Various tax concession/exemption laws in CI would be extremely helpful in
sustaining this low-cost health-care model.

COST-CUTTING MEASURES ADOPTED

In order to make this low-cost,high quality dream a reality,HCCI adopted several
innovative measures to cut costs-:
1. Use of Open-bay 17 bed ICUs instead of Individual Private ICU rooms
to make observation easy by fewer nurses.
2. Use of large windows to cut down on lighting & ventilation costs.
3. Using local labour & material procured from local businesses instead
of importing them from outside saved significant costs.
4. Use of Sea Water Air Conditioning(SWAC) to reduce Air-Conditioning
costs by 75%.
5. Getting Oxygen for clinical purposes from Dedicated Oxygen
Generation Plants instead of procuring themfrom outside at
exorbitant prices.
6. Medical Equipment Procurement from India instead of from the
U.S.A resulting in significant cost savings
7. Innovative construction techniques such as wall insulated concrete
forms to reduce electricity bills,modular pre-fabricated bathrooms to
save plumbing work & time & construction of two floors to comply
with safety regulations & to minimize costs.

SUPPORT FROM CAYMAN GOVERNMENT

To make this project a success,The Cayman Government took several steps
to support HCCI.
1. Exemption of HCCI from all tax liability for a period of 25 years
irrespective of any changes to tax laws
2. Exemption of HCCI from Custom Duty for the first $800 Million
of medical equipment & medical supplies brought to Cayman
3. Capping of non-economic damages awarded in medical
malpractice cases to USD 620,000
4. Making VISA available to patients within 48-72 hours of their
being approved by HCCI hospital for a visit.
5. Recognizing medical qualifications from India & approving
Indian doctors & nurses to practice in the Cayman.
6. Allowing HCCI to set up a large scale medical school to train
nurses & doctors.
7. Permitting HCCI to build a large-assisted living community.

COST COMPARISONS
As a comparison of the healthcare prices of HCCI with equivalent
facilities in the U.S.A,following observations are noted-:
 Total cost of CABG for a Caymanian at a Miami Hospital
is $102,000 while that in NH BANGALORE is $8,000.
 Cost per bed in HCCI came to US$400,000 while it was
US$1-2 million in the U.S.A.
 Members of the ‘Yeshaswini’ Insurance Program got
access to more than 1600 tratment modalities by paying
a premium of just 11 cents a month!!
 Average cost of Heart Surgery in NH was about 2% of the
same in comparable medical facilities in the U.S.A.

PARTNERSHIP WITH ASCENSION

Ascension Health,a subsidiary of Ascension Group,was a
provider of health-care services in the US.It was assisted by
other subsidiaries in the group in the form of services like
medical equipment management,treasury management
etc.Sensing the lack of innovation in the US Healthcare
market,Ascension Health was eager to partner on the HCCI
project.Also Dr.Shetty wanted to partner with a US Healthcare
organization willing to co-invest in the HCCI project.So,in April
2012,they announced a JV to develop the first phase of HCCI

POTENTIAL ISSUES IN THE FUTURE

Some issues which may trouble HCCI in the future are-:
 HCCI may not have the same reception among US
& Carribean patients
 Uncertainity in setting HCCI rates given low
flexibility in increasing prices post the initial
agreement with insurance companies.
 Replication of this model in the US healthcare
systems if it proves to be successful thus diverting
patients away from HCCI.
 Costs estimated for different medical operations
may deviate to a large extent from actual costs or
they may rise significantly in later years.
 In case local healthcare agencies for whatever
reason are unable to collaborate with HCCI in the
event of it becoming a success in the future,they
may provide stiff opposition to its operations