It's going to take some major changes for hospitals in the U.S. to compete with coral-sand beaches and high-quality healthcare offered at a low price.
What if you could experience beautiful weather, relaxing beaches, fine dining and the amenities of a five-star resort at your hospital? If you think that is impossible, look less than 500 miles south of Florida to the Cayman Islands. That is where India's most renowned heart surgeon Devi Shetty, MBBS, MS, took a model of healthcare that he has already had significant success with in India and transferred it to Health City Cayman Islands, a facility some see as the future of healthcare. By providing quality healthcare for a fraction of the U.S. price, Health City may be where your patients schedule their next medical visit.
As Mother Teresa's cardiac surgeon, Dr. Shetty entered the limelight in the early 1990s. His name is now associated with revolutionizing the way healthcare is offered, which has gotten the attention of many healthcare providers in the U.S.
Dr. Shetty is chairman of Narayana Health, a system of 26 cardiac-care hospitals across 16 cities in India. Narayana Hrudayalaya Heart Hospital in Bangalore, India has been described by Fast Company magazine as "Wal-Mart meets Mother Theresa," and was the subject of a widely cited Harvard Business School case study. The hospital offers complex surgeries, such as open-heart surgery, for about $2,000 — substantially less than other hospitals in India and a fraction of the $20,000 to $100,000 the procedures would cost in the U.S.
This year, Narayana Health in partnership with nonprofit health system Ascension, a faith-based healthcare organization headquartered in St. Louis, opened Health City Cayman Islands. Currently, Health City focuses on cardiac and total joint surgery, and the hospital charges less than half the U.S. price for surgical procedures. In addition, Health City features some of the best technology available and is connected via a foot bridge to a five-star hotel. According to Chandy Abraham, MD, CEO of Health City, the hospital's next center of excellence will provide services in oncology and neurology.
To charge such low prices for surgical procedures, some might think quality of care is sacrificed, but that is not the case. Narayana Health hospitals have had outstanding results, and the same concept is behind Health City, with many of the same people providing care there.
Stemming from Dr. Shetty's vision that no one's socioeconomic status should determine their access to healthcare, Health City's primary focus is making healthcare accessible and affordable to the masses.
Quality care for one-tenth (or more) less
How does Dr. Shetty do it? This question can be answered with one word: volume. By driving huge volumes, Narayana Health has been able to drive down the cost of healthcare in India, and that is the same concept Dr. Shetty is using at Health City.
Although increasing volume to lower prices seems like a basic business principle, it is impractical for many hospitals in the U.S. For example, between San Jose, Calif., and San Francisco, there are 12 hospitals that perform heart surgery, and some do less than one surgery per day. Robert Pearl, MD, CEO of Permanente Medical Group, says "with so many hospitals providing the same services, it is hard to apply the principles Dr. Shetty has used or to put into place a well-structured program."
Kaiser Permanente has centers for excellence to ensure they have enough volume and teams for performing more advanced procedures, which has led to price reductions for some procedures. However, Dr. Shetty has been able to drive volumes that allow him to significantly lower prices, and has achieved cost savings even Kaiser Permanente has not been able to obtain.
In addition to using volume to lower prices, Dr. Shetty has used other methods to help his organizations achieve success. Delays in treatment often lead to prolonged hospital stays, and Dr. Shetty has been able to reduce those stays and the costs associated with them through the use of technology at Health City. Nurses and physicians at Health City respond to patients who need immediate care, such as those with abnormal lab tests, much quicker than hospitals in the U.S. do, with Health City's average hospital-wide response time being seven seconds.
Health City also uses iKare, an algorithm technology that is also used in the Narayana Health facilities in India. The system uses algorithm-based smart technology that assesses and recommends clinical protocols via assessment of real-time clinical data points to assist physicians and nurses in their treatment plans, in diagnosing patients and in defining patients' symptoms and test results. "The more information iKare receives, the smarter it becomes," says Dr. Abraham.
Dr. Shetty's vision is easier to realize in the Cayman Islands and in India than it would be in the U.S., with staff wages being one of the contributors to Dr. Shetty's success. Wages in the Cayman Islands are not as low as they are in India, but the wages in the U.S. are higher than many other places in the world.
Construction costs are also much lower in the Cayman Islands than in the U.S. Health City was built for approximately one-third the cost of building a U.S. hospital, with each hospital bed in the U.S. equating to $3 million in costs.
Although the concept behind Health City might seem complicated, Dr. Abraham says that is not the case. "The model is quite simple — provide the best care at the most affordable price," he says. "From the executive team to the medical staff and employees on all levels, the patient's needs are at the core of everything we do."
Can U.S. hospitals be more like Health City?
The answer is no, unless there are major changes to the healthcare system in the U.S. To offer quality care at a low cost, like Dr. Shetty has done, it requires using technology and providing services that match the demand that is there, and "none of that is going to happen until we move from fee-for-service to pay-for-performance," says Dr. Pearl. Until that transition is made, the U.S. healthcare system is going to struggle because it is easier to increase volume than to increase efficiencies.
Some hospitals in the U.S. have the same volume of patients as Dr. Shetty's facilities, but fee-for-service has kept many of them from achieving the same kind of success Dr. Shetty has. Under the fee-for-service model, the hospitals in the U.S. that perform a high volume of surgeries compensate surgeons based on the number of procedures they perform. However, in Narayana Health hospitals, surgeons are paid a fixed salary, rather than being paid on a per procedure basis. In addition, the surgeons at Dr. Shetty's facilities perform more procedures than surgeons in the U.S. do, which has led Dr. Shetty to be called the "Henry Ford of Heart Surgery."
The current trend in the national healthcare economy indicates hospitals in the U.S. are interested in becoming more like Health City. While the healthcare industry has long been concerned about shifting away from fee-for-service, it appears more hospitals and health systems are embracing managed care models that utilize value-based payment models. In June, a study commissioned by McKesson found 90 percent of payers and 81 percent of hospitals currently offer or have signed onto a mix of fee-for-service and other value-based reimbursement models. The study also found payers and hospitals anticipate two-thirds of payments will be based on complex reimbursement models with value measures by 2020.
There are still some challenges in paradise
Although Health City has many desirable features, Dr. Shetty is going to face some challenges in the near future. A lot of people are traveling from the U.S. to other countries for cosmetic surgery because they are required to pay out-of-pocket for those procedures. However, many people with health insurance do not believe they need to go elsewhere for care.
"In the early years, Dr. Shetty is going to be challenged to get patients to want to go to Health City, especially those who have insurance," says Dr. Pearl. "He will have to overcome U.S. patients' perception that the quality of healthcare isn't as good as soon as you leave your shores."
Should U.S. hospitals view Health City as competition?
Unless the healthcare system in the U.S. undergoes drastic change, it is possible Health City will have a negative effect on hospitals and surgical centers in America, and specifically in Florida — since it is just a short flight away from the Cayman Islands. "It is clear Health City is meant to extend care beyond the Cayman Islands," says Dr. Pearl. Health City will feature 1 bed per 25 Grand Cayman residents once the facility's expansion plans are completed, compared to the 1 bed per 333 people in the U.S.
It is likely patients in the U.S. are going to begin traveling to Health City for care and that businesses, such as insurance companies, are going to come up with incentives for people to get care there due to the cost savings they will achieve.
Employers may also begin signing contracts with Health City for the hospital to provide its employees with care, as these types of agreements are gaining popularity. For instance, Cleveland Clinic has entered into a number of direct contracting agreements with employers through its Program for Advanced Medical Care.
Health City aims to be a Joint Commission international accredited facility within the next six to nine months, and Dr. Abraham says he expects a more steady flow of U.S. patients to Health City at that point. Accreditation combined with high quality care, low prices and a vacation-like experience should leave U.S hospitals with all eyes on the Cayman Islands, as healthcare of the future can already be found at Health City.
