by Katherine Restrepo
Director of Health Care Policy, John Locke Foundation
When assessing India’s health care landscape, one could argue that it’s ripe with competition. It hosts the fourth-largest number of physicians in the world accompanied by the second-highest number of hospitals at 15,000 and counting. But even with that supply of available health care resources and a booming economy since the 1990s, there are critical environmental factors that still make it difficult for the majority of the Indian population to access health care needs. Over half of the population lives in rural areas that lack adequate health care infrastructure. There are high levels of impoverishment. And demand for care outweighs available supply, given that the physician to patient ratio is 1:2,000.
It’s amazing what a freer market and little bit of price transparency can do to help mitigate these factors, however. Price transparency is still a foreign concept in America’s mainstream health care landscape. But for nations like India, price transparency is mainstream, and it is the driving force behind Dr. Devi Shetty’s relentless passion to provide the highest quality cardiac care to the masses at the lowest possible cost.
A “maniac on a mission,” Dr. Shetty is a world-renowned surgeon, having performed over 60,000 cardiac surgeries in the span of his career. His privately funded flagship hospital that was established in 2001, Narayana Hrudayalaya (NH) – which translates to “God’s compassionate home” – is a well-oiled machine that specializes in cardiac care, with 40% of its cases in pediatric heart surgery. It is what Harvard Business School Professor Regina Herzlinger would call a true focused factory, given that case volume is on average two times higher than U.S. competitors – a positive correlation to quality care.
So how exactly does price transparency help?
In India, there isn’t much of a choice but to be price transparent. Less than 14 percent of the population has private insurance, and just one percent of the nation’s GDP is spent on public health expenditures. So Dr. Shetty and his team leverage price transparency to their advantage to be able to perform open-heart surgeries at an average price of $2,000. Compare that to a minimum of $20,000 and as much as upward of $100,000 in the U.S. Here’s how: