Posted by: Tony Carson | 24 November, 2009

Mass-producing bi-passes

What would happen if some guy opened up a hospital that did nothing but heart operations, dozens of times a day?

Meet Dr. Devi Shetty. His 1,000-bed Narayana Hrudayalaya Hospital in Bangalore, India did 3,174 cardiac bi-pass surgeries in 2008. No big deal? His operations cost around $2,000 compared to the same operations in the US which can go for anywhere from $20,000 to $100,000.

“What health care needs is process innovation, not product innovation.” His innovation is to become The Henry Ford of Heart Surgery.

He plans to establish a hospital in the Caymen Islands that would primarily serve Americans in search of lower-cost medical care.

The group is fueling its expansion plans through private equity, having raised $90 million last year. The money is funding four more “health cities” under construction around India. Over the next five years, Dr. Shetty’s company plans to take the number of total hospital beds to 30,000 from about 3,000, which would make it by far the largest private-hospital group in India.

At that volume, he says, he would be able to cut costs significantly more by bypassing medical equipment sellers and buying directly from suppliers.

Then there are the Cayman Islands, where he plans to build and run a 2,000-bed general hospital an hour’s plane ride from Miami. Procedures, both elective and necessary, will be priced at least 50% lower than what they cost in the U.S., says Dr. Shetty, who hopes to draw Americans who are uninsured or need surgery their plans don’t cover.

By next year, six million Americans are expected to travel to other countries in search of affordable medical care, up from the 750,000 who did so in 2007, according to a report by Deloitte LLP. A handful of U.S. insurance plans now give people the choice to be treated in other countries.


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