ABSTRACT

This report delves into the realm of

commercial cardiac hospitals and aims to
identify and examine the world's cheapest
commercial cardiac hospital.
MAAZINA KHAN
A.D STRUCTURE, SBCA.

BUSINESSS MODEL FOR THE

CHEAPEST COMMERCIAL
HOSPITAL IN THE WORLD.
 BUSINESSS MODEL FOR THE CHEAPEST
COMMERCIAL
HOSPITAL IN THE WORLD.

INTRODUCTION:
The focus of this assignment is to shed light on business model of a healthcare
institution that provides affordable cardiac healthcare services without
compromising on quality patient care. With heart diseases being a significant
global health concern, it is crucial to explore healthcare providers that
prioritize accessibility, affordability, and excellence in cardiac treatments. This
report explores the strategies and factors that contribute to the cost-
effectiveness of the identified hospital, providing valuable insights into making
cardiac healthcare more accessible to a larger population while maintaining
high standards of medical care.

FIG NO.1: NH (NARAYANA HRUDAYALAYA) HOSPITAL IN BANGALORE, INDIA.

NH HOSPITAL:
NH (Narayana Hrudayalaya) Hospital is known for providing affordable
healthcare services in India. Dr. Devi Prasad Shetty, one of the world's most
prolific heart surgeons, is the founder of a for-profit medical chain in India that
offers top-notch surgery at very low prices. It serves wealthy patients and

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some medical tourists, but their goal is to bring the latest advances to the
poor.
DR. DEVI PRASAD SHETTY:
Charity is not scalable. It
doesn't matter who you are.
You may be the richest
person living on this planet,
but if you want to offer free
surgery, free treatment to
everyone, you will go broke
within a month. But good
business principles, standard
business policies are scalable.

FIG NO.2 DR DEVI PRASAD SHETTY

FOUNDER OF THE NH HOSPITAL.

A general overview of NH Hospital's approach to cost-effective healthcare:

Affordable Pricing: NH Hospital is recognized for its commitment to providing
healthcare services at affordable rates. The organization aims to make quality
medical treatment accessible to a larger population, including those with
limited financial resources.
Cost Optimization: NH Hospital employs various strategies to optimize costs
without compromising patient care. These may include efficient resource
allocation, streamlined processes, and leveraging economies of scale.
Technology and Innovation: NH Hospital focuses on utilizing advanced medical
technology and innovative approaches to deliver cost-effective healthcare. By
adopting the latest technologies and practices, they aim to enhance efficiency
and reduce overall treatment costs.
Cross-subsidization Model: NH Hospital operates on a cross-subsidization
model, where revenue from higher-paying patients helps subsidize treatments
for economically disadvantaged individuals. This approach allows NH Hospital
to offer affordable services to a broader patient base.

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Insurance Tie-ups and Partnerships: NH Hospital may have collaborations with
insurance providers and government healthcare schemes to facilitate
affordable treatment options for patients. These partnerships help reduce out-
of-pocket expenses for patients.
Emphasis on Preventive Care: NH Hospital places significant importance on
preventive care and early detection of diseases. By promoting wellness
programs and regular health check-ups, NH Hospital aims to minimize the need
for costly treatments.

The mechanism behind the cheapest surgeries

1. Creating a supply-driven model
In traditional hospitals, whenever the ‘demand’ or ‘need’ for heart surgeries is
raised, a free-lance surgeon is appointed to perform that surgery on a
commission basis. This way, the cost of every surgery is increased and
transferred to the patients. This was done to ensure the demand-driven model
is asset-light; these hospitals were smart and saved a lot for themselves.

On the Contrary, Narayana Health keeps the doctors & surgeons in-house on a
fixed salary basis instead of appointing a free-lance surgeon whenever the
need arises. This way, they don’t have to pay commission to freelance doctors,
and incremental cost is saved, reducing the total expenses of surgeries.

We should understand this more clearly; let’s imagine the commission of a

freelance surgeon is Rs. 5,00,000, and he performs 2 heart surgeries; this way,
the cost per heart surgery becomes Rs. 2,50,000, and this cost is transferred to
the patients.
On the other hand, an in-house doctor has a fixed salary of Rs. 6,00,000 per
month, and he performs 15 surgeries in a month. Thus, the per surgery cost is
only around Rs. 40,000. Huge difference!
Thus, instead of bringing doctors on demand, they keep a steady supply of
patients for the in-house doctors.
This way, they changed the demand-driven model to a supply-driven model.

2. Economies of scale

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On average, Narayana Hrudayalaya performs 150 major surgeries per day. This
gives them the advantage of Economies of Scale, where the cost per surgery is
reduced by increasing the number of surgeries performed per day.
They built the surgery process like a production line to perform operations
quickly and effectively. With the help of task-shifting, every surgeon takes up
only the task they are qualified to do. This way, many surgeries are performed
in a row driving the cost down without compromising the quality. Each surgeon
performs 400 to 600 procedures annually.
They also reduce costs when it comes to buying equipment or medicines. Due
to the power of scaling, negotiations for these things become easy in
centralized purchases.
They use a pay-per-use model for some diagnostic equipment to minimize
capital costs. Also, reuse some devices after the strict sterilization process.

3. Tier 2-3 cities are the target

Narayana Health has continuously tried to expand its presence in all tier 2-3
cities where they partner with the existing hospitals to provide them with
equipment, technology & managerial expertise.
In small cities, the existing hospitals are run by a group of doctors who lack
administration expertise. Also, they don’t get the advantage of scaling. thus,
these hospitals are expensive, transferring the cost to patients. Narayana
targets such hospitals and tie-up with them. And naturally, people prefer to be
treated in hospitals with the ‘Narayana’ brand.
4. Choosing the right infrastructure
The cost to build a fully functional infrastructure of hospitals can be crores; on
the other hand, it takes at least 4 years to build one. Narayana Hrudayalaya
saves this excess spending as mostly they do not build their own infrastructure
but lease one. Mostly in Tier 2 & 3 cities, they get into a contract with a local
hospital and rent it. 
Narayana Healthcare also has telemedicine networks (exchange of information
from one location to another electronically to treat patients in different
locations) connecting more than 800 centers globally; this increases
Narayana’s reach with no investment in physical infrastructure.

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5. Operationally smart
Typical heart surgery is completed in one day, but the number of days a
patient spends in a hospital is more, and this staying cost is huge. Narayana
doesn’t keep a patient in the hospital for many days; rather, they increase the
occupancy in operation theatres, decreasing the unnecessary cost spent on
rooms, Wards & ICU.
This practice reduces the expenses of total treatment. Thus, because
Narayana’s operation theatre is always full, a 100-bed hospital in Narayana
earns as much as a 200-bed hospital anywhere else.

6. Major focus on surgeries

The major focus of Narayana Hrudayalaya is the treatment that involves
surgeries rather than focusing on communicable diseases. Even though an
emergency ward is always present, they voluntarily seek only to treat major
diseases requiring surgeries.
CONCLUSION:
Narayana Health’s operations in India are profitable. Eighty percent of its total
revenue is generated from inpatient visits, 10 percent from outpatient visits, and
10 percent from remote consultations and diagnoses. To identify cost drivers and
support efforts to further increase efficiency, the system is working with Stanford
University researchers to develop a model to measure the time and cost of each
part of the patient encounter, from walking in the door through follow-up

CITATIONS:
1. https://www.pbs.org/newshour/show/india-surgery

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2. https://insider.finology.in/entrepreneurship/narayana-health
3. https://knowledge.wharton.upenn.edu/article/narayana-hrudayalaya-a-
model- for-accessible-affordable-health-care/
4. https://www.commonwealthfund.org/publications/case-study/2017/nov/
expanding-access-low-cost-high-quality-tertiary-care
5.
https://www.powershow.com/view0/74f9f3-YjdkZ/Best_Heart_Surgeon_India
_Assures_You_of_a_Healthy_Heart_powerpoint_ppt_presentation