Experience and Economy of Scale Decrease Cost and Increase Quality of Medical Care in India

This article deals with a new model for hospitals which was developed in India where citizens faced high health care costs, especially for heart surgeries.

Indeed, patients in India had to pay $ 2 400 in order to have an open-heart surgery.
Nonetheless, only a few people can afford this kind of treatment. As a result, if they do not save enough money they die.

Let’s now focus on a model developed by an Indian surgeon, who build the Narayana Hudayalaya Hospital in Bangalore and helped reducing the costs of treatments. This surgeon built the Narayana Hudayalaya Hospital in Bangalore. This one was build in order to collapse costs. Firstly, this hospital has 1 000 beds whereas US hospitals have on average 160 beds. This practice permit to the hospital to amortize running costs by more people.
Moreover, given that it hosts a high volume of patients, it offers to surgeons more patients. Hence, they improved their knowledge and are more efficient.
Secondly, the management observes that it is 50% cheaper to use sutures from a local company instead of using those of well-known “Johnson & Johnson Company”.
Thirdly, surgeries costs are lower thanks to farmer’s insurance.
All those practices decreased the profit of the hospital. After all, hospital has only 7.7% of profits after tax. By the way, this profit rate is higher than those of US hospitals.

Let’s turn to the fact that it is often thought that, according to Amit Varma – who is a member of a competitor – high volume of patient’s leads to a decrease of quality. By the way the mortality rate of patient within 30 days after a surgery amounts to 1.4 %
However, in fact, it’s not the case.
First of all, every surgeon has the opportunity to cope with one or two types of cardiac surgery while at smaller US and Indian hospitals surgeons have only one case to focus on.
Secondly, the Narayana Hudayalaya hospital has 2-3 surgery a day and is open 6 days a week whereas American hospitals have 1-2 surgery a day and work 5 days a week. Thus, surgeons at Narayana Hudayalaya hospital have more opportunity to learn and improve the quality of their interventions.
Considering the mortality rate in India, it isn’t risk adjusted. However, given that Indians wait a long time before a surgery, the interventions are more risky. Hence, we can see that a good quality level and a high volume of patient can be achieved together.

Let’s now consider the future perspectives of this model.
Firstly, it will be used in other medical fields notably for the cancer, eye diseases…etc
Secondly, it will perhaps be implemented on Cayman Islands which are at one plane hour from Miami.

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