3 Ways Indian Hospitals Have Reduced Costs

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IND-thumb1In our conversations with health-care executives around the country, a refrain common across-the-board is their desire to cut costs while maintaining quality.

As with most aspects of health care today, this is more succinctly said than done. However, an opinion piece in The Washington Post by researchers Vijay Govindarajan and Ravi Ramamurti examines ways in which nine private accredited hospitals in India are delivering quality care at reduced costs, often for 5 to 10 percent of U.S. costs, all while matching the outcomes demanded of U.S. hospitals.

Check out these figures: at these hospitals, the authors report, “a patient would pay $120 for cataract surgery, $250 for a caesarean-section delivery, $2,000 for a knee or hip replacement, $2,000 for an angioplasty, $2,900 for cancer radiation treatment, and $3,200 for open-heart surgery.”

Furthermore, the authors contend, “Even if Indian hospitals paid U.S.-level salaries for all health-care staff, which are as much as 20 times higher, their prices would be one-fifth of U.S. levels. That is because these nine hospitals are super-efficient at using resources — doctors, equipment and facilities — and because they work incessantly to improve every process. Their services have to be affordable because their patients are poor and typically pay 60 percent of their medical costs out of pocket.”

With the economic situation in the United States rapidly becoming one in which the middle class is diminished and the gap between rich and poor only continues to widen, there is wisdom in what India is doing that can be applied to our country.

So, here are three areas in which these hospitals have innovated for the sake of reducing costs:

1.) Implementing a hub-and-spoke design, “with hub hospitals located in major cities and spoke hospitals in rural areas. This strategy concentrates the best equipment and expertise within the hub, with telecommunication links that allow hub specialists to serve spoke patients remotely.”

This level of coordination is simply not present in U.S. hospitals and most are registering volume levels that don’t justify “duplicating specialized care,” the authors assert.

2.) Utilizing task shifting, “or the transfer of responsibility for routine tasks to lower-skilled workers.” This approach “leaves doctors free to focus on complicated medical procedures. Several hospitals have created a tier of paramedic workers with two years of training after high school to perform routine medical jobs. As a result, surgeons, for example, are able to perform two to three times as many surgeries as their U.S. counterparts.”

In the U.S., the authors point out, we’re in the midst of doing the opposite: laying off lower-skilled workers and adding routine tasks to a doctor’s responsibilities.

3.) Applying old-fashioned frugality: “They shepherd resources by building hospitals at a fraction of the cost spent in the United States, replacing imported devices with local equivalents costing a fraction of the price or, for example, sterilizing and reusing clamps for open-heart surgery that are routinely discarded after one use in the United States.”

Physicians also receive a fixed salary, meaning there is no fee-for-service program. Furthermore, each hospital keeps its medical professionals informed of financial matters. Once again, all of this is in direct contrast to the U.S. model.

The authors doubt that the United States will embrace the Indian model wholesale, especially given the regulations present in our country that aren’t present in India, but they urge all American health-care professionals to realize: “It is time to move beyond the myth that U.S. health care is costly because it is of exceptional quality. Better outcomes at lower costs have been established in many other countries.”

As health-care executives, are there practices of other countries that you believe we would be advised to adopt in this country? What are the best ways you’ve found to reduce costs at your organization?

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