MANAGEMENT HEALTHCARE
spend cash for treatments that they could get for less or for free at home?
THE pRE-CondiTion: QuALiTy Surgeries get real quality and cost improvements when a) a narrow range of disease-specific conditions combines with b) Empirical Medicine’s best practices in c) a hospital culture that encourages lean production for d) surgeries that can be regularized and standardized which are e) performed in a process-designed, custom-built hospital facility. Most hospitals aspire to this point, but no further. However, when f) at least twice the expected volume of patients are added - the astonishing value innovation can follow.
VoLumE is THE ALCHEmisT HVFM is powerful enough to establish a country, hub or firm as a health travel destination within three years. HVFHs present the single greatest healthcare delivery innovation in my lifetime. The model is especially suited to the needs of the Greater Middle East and regional hospitals will need to evaluate HVFM both opportunistically and defensively.
HEALTH TRAVEL As BuiLding BLoCk Countries, regions and hubs that want thriving health travel industries need to create expertise, attention, regard, revenue, services and a compelling, differentiated value equation. The very first step is to focus on developing one tent-pole offering that has delivers superior overall value and is strong enough to anchor a long-term strategy. HVFHs create touchstone offerings.
FLoATing LAyERs Physical, cultural, administrative, and economic distance are all layers related to health travel, which float over a search for medical treatment. These layers create a framework for mapping the additional effort required of medical travellers and the extra value health travellers can gain. The customer evaluation is: Health Travel Benefits must be ≥ (greater than or equal to) Price + Burden. HVFM makes value visible.
WHy noW? HVFHs are about to explode into the global conversation with 35,000 new beds in planning/commercialization stages. Five governments (The UK, Slovenia, India, Malaysia and Cayman Islands) are already creating strategy and policy around HVFM. HVFHs have been around for years. The drawback was always the risk that the value
innovation would be hard to reproduce in new environments. There was also the assumption that value creation was due, solely, to low-cost environments. Yet, my research on Coxa hospital in Finland, Aravind Eye Hospital in India and the two examples below shows that major and minor surgeries can be value- innovated and are agnostic to geography. The change is that very smart money
from J. P. Morgan and others is financing huge growth. To me, this says that HVFM is portable to other countries, surgeries and environments.
sHouLdiCE - THE pionEER High-volume, focus surgeries were pioneered by Dr. Edward Shouldice from Toronto, Canada who developed an innovative, in-demand hernia repair technique during World War II. He opened a hernia-repair-only hospital in 1945 and applied sophisticated effort, focus- of-practice, lean production steps and volume until, by happy accident, his surgeries tipped into a quantum change that delivered the value innovation we recognize today. Daryl Urquhart, Shouldice Hospital’s
director of business development, writes me: “We reduce the chance of recurrence of a hernia to less than 1% over the lifetime of a Shouldice patient. Compare that to a recurrence rate of 5-10% in the first two years, (and double that, 10 years post-op), for hernia patients in a general hospital facility. The average infection rate for general surgery hernia cases reaches as high as 9%, compared to only 0.5% at Shouldice Hospital”. Shouldice is Canada’s only private hospital and
it charges about half the prevailing rate for hernia surgeries available from other Ontario hospitals.
nARAyAnA HRudAyALAyA= HEALTHCARE FoR ALL At its headquarters in Bangalore, India, Narayana Hrudayalaya (NH) has a campus of single-disease, focus-hospitals where it performs about 12% of India’s heart surgeries. It is one of the world’s biggest hospitals and 20% of patients are international. The hospital is privately owned but
voluntarily has vast, social justice programming. Fully, 40% of NH’s surgeries are subsidized. Yet, Devi Shetty, MD, NH’s chairman, claims higher than average returns to investors. NH is the actor with scale that can move
anywhere on the Action Map (see figure 1) wherever it wants to go. The Blue Ocean Strategy research of professors W. Chan Kim and Renée Mauborgne, suggests that NH could be in the highest tier of profitability, if it
‘About 70% of the healthcare facilities in the region are government run and highly subsidized
IN SHORT
■ The benefits of High-Volume hospitals are plenty, including low cost, highly specialised doctors, high patient satisfaction and better productivity
■ With the UAE and GCC marketing themselves as hubs for medical tourisms, the possibility of HVFM’s should be evaluated both opportunistically and defensively
Hospital Build Issue 3 2011 33
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