Narayana Hrudayalya

Hospitals
Presentation By:

Pankaj Tahilyani (13DM125)
Prakhar Jain (13DM130)
Prashant Aggarwal (13DM133)
Raushan Singh (13DM147)
Romil Dalal (13DM154)
Satyendra Kumar (13DM163)


The Presentation
August 2014
Introduction
SUPPLY CHAIN PRESENTATION I AUGUST 2014
Healthcare Industry
The healthcare sector in India is expected to grow at a CAGR of 15 per cent to touch US$ 158.2 billion in 2017 from US$
78.6 billion in 2012, according to a report by Equentis Capital.
In India, the diagnostics sector has been witnessing immense progress in innovative competencies and credibility.
SUPPLY CHAIN PRESENTATION I AUGUST 2014
Narayana Hrudayalaya Heart Hospital
The hospital has 6200 beds spread across 23 hospitals in
14 cities (as of December 2013). It has plans to expand to
30,000 beds in the coming seven to ten years.
It is known as a low cost and high quality Indian
healthcare service provider.
It has been bestowed with this title for its ability to
reconcile quality, affordability and scale
USP of NH
SUPPLY CHAIN PRESENTATION I AUGUST 2014
Cost Minimization
Dual Principle: Highest quality at the lowest Cost
Wal-martization of healthcare: Volume of procedures completed
allows the unit cost of surgery to be significantly decreased
Dont sign long-term suppliers. Negotiate every purchase because
price in India are very flexible
Instead of buying expensive machines, monthly rent is paid to
suppliers. Demand of reagents is high enough to make up profits for
suppliers
Calcutta hospital and NH made up approximately 10% of the cardiac
market in India. Through bulk orders hospitals enjoys 30% - 35%
discounts on medical supplies, the largest cost component
Comprehensive hospital management software for its operations,
helps maintain minimum inventory
Generic medicines reduced the cost by approximately 8% - 10%
Fixed staff salary reduced the revenue spending on salaries to 22% as
compared to industry standard of 60%

SUPPLY CHAIN PRESENTATION I AUGUST 2014
The Insurance Scheme - Yeshasvini
Dr. Shettys dream to cure the worlds poor for less than a dollar a day
Yeshaswini health insurance programme provides coverage to two million
farmers
Initially, when the scheme was launched, all a farmer had to do was to
contribute a premium of Rs5 per month with Rs2.50 subsidy from the
Government of Karnataka in the first year
From the second year, the premium was increased to Rs10 per month
To avail this scheme, the farmer had to be part of a co-operative society
for at least six months
Around 16 lakh farmers enrolled in the first year and 3,500 members
availed free consultation in the first year
9,039 cashless surgeries were done in the first year, of this 657 were
cardiac
In the second year, 21 lakh farmers enrolled, 32,174 availed free OPD
facility
In the third year, 14.73 lakh members enrolled, 36,077 members availed
free OPD facility and 11,154 surgeries were done amounting to Rs 16.93
crore

SUPPLY CHAIN PRESENTATION I AUGUST 2014
Telemedicine

A specialist instruct another doctor who is
operating the patient in another city or region. it is
used when specialists is not able to reach and
operate the patient. telemedicine is useful in
emergencies and immediate treatment.
When a patient visited a CCU, the GP first took an
ECG which was transmitted to a specialist at NH
or RTI. the specialist then diagnosed the condition
and advised the GP on the appropriate treatment.
Dr. Shetty set up 9 coronary care units(CCUs)
across India, linked to NH or rt. each CCU was
equipped with beds, medication, computers, ECG
machines, video conferencing devices and
technical staff.
The project was supported by ISRO which adopted
telemedicine as a community project and provided
connectivity for the CCU free of charge. In
addition, Karnataka govt. planned to sponsor
further 29 CCUs.
54,000 patients have been
treated through this program and
more than 5 Lac ECGs seen till
date.
SUPPLY CHAIN PRESENTATION I AUGUST 2014
Mobile Cardiac Diagnostic Lab
Both NH and RTI also organized outreach camps for cardiac
diagnosis and care. Each weekend, two buses were sent out to
rural areas, up to 800 km away from the hospitals in Bangalore
and Kolkata.
The buses were outfitted with echocardiography equipment, a
treadmill, a defibrillator, ECG machines, equipment needed for
resuscitation in emergencies, and a generator to ensure the
machines could be used in rural areas with irregular power
supply.
On average, each camp screened 400 people a day, none of
whom were required to pay either the hospital or the organizers.
When a diagnosis indicated that the patient required medical
intervention, he was advised to visit NH or RTI, where the
procedure was performed at or below cost price with help from
the NH charitable trust.
SUPPLY CHAIN PRESENTATION I AUGUST 2014
Training the next generation
Dr. Shettys solution to bridging the gap between the 18,000 doctors graduating from Indias
medical schools each year and the 180 newly trained cardiologists and cardiac surgeons each
year.
NH ran 19 postgraduate programs for doctors and other medical staff, including diplomas
in Cardiac Thoracic Surgery, Cardiology and Medical Laboratory Technology.
The hospital also offered the countrys only formal training program for paediatric cardiac
surgery, reflecting the rich expertise of NHs doctors in paediatric care.
In 2005, NH was scheduled to offer Indias first Diploma in Cardiology, in collaboration
with the Indira Gandhi National Open University (IGNOU).
Beyond training doctors, a separate department at the hospital coordinated the training of
nurses. The 700 nurses at NH were required to complete a year of training which included
a minimum six month period in a critical care unit.
To encourage students from poor remote areas who would benefit most from these
educational opportunities, NH arranged to guarantee bank loans taken by the students to
cover fees and living expenses.
SUPPLY CHAIN PRESENTATION I AUGUST 2014
Treatment for all
Surplus gained from paying patients was used to subsidize procedures that were performed at or below,
cost for patients who could not afford operation fees.
In addition, the hospital offered a scheme called Karuna Hrudaya, which allowed financially constrained
patients to pay Rs. 65,000 (US$1,400) per OHS, with NH absorbing the remaining costs.
For patients who could not afford this package, the Narayana Hrudayalaya Trust, a charitable organization
with offices within the hospital, helped to arrange funds from a general corpus or by specifically seeking
donations from a list of individuals and organizations
Plan for Health City
SUPPLY CHAIN PRESENTATION I AUGUST 2014
Plan for Health City
Following the success of NH, Dr. Shetty was keen to extend the concept of affordable
healthcare to other specialties with NH serving as the backbone hospital.
He offered this rationale: We have reached a plateau in cost-reduction by increasing our
volume of surgeries . . the yearly increase in procedures is now small but our resources are
still underutilizedour machines, sterilization department, blood bank, etc. can be used by
other hospitals within health city and this will drive unit costs even lower.
The plan, according to him, was to build a total of 10 hospitals in a common area, with each
hospital housing one or two specialties.
The hospitals would be self-sufficient within each specialty (thus each building would have
its own OTs, intensive care units, etc.) but would draw on common facilities such as blood
banks and laboratories that were already established at NH.



SUPPLY CHAIN PRESENTATION I AUGUST 2014
Plan for Health City
Health City
Cardiac Units
Emami National Institute
for Bone Marrow
Transplant
Noncardiac Units
Neurosurgery unit
Plan for 10 more hospitals,
each housing 1 to 2
specialties.
Spine surgery units
Brain surgery Units
SWOT Analysis
SUPPLY CHAIN PRESENTATION I AUGUST 2014
SWOT


Strength
1. Supportive higher management
2. Relatively cheaper cost of operations
(operational excellence)
3. Trusted Brand name
4. New Technology with world class Doctors


Weakness
1. Karuna Hrudya Package
2. High staff turnover
3. Maintaining customer service considering
expansion plans



Opportunity
1. Fragmented market of health care
2. Health city expansion
3. Rural market using Yeshaswini scheme
4. Training GP to handle emergency and
nonintervention cardiology









Threat
1. Maintaining Karuna scheme in expansion
plans
2. Support of highly qualified doctors in
expansion plans
3. Changing State Government.
4. Imitating of their operational excellence
by competitors.










SWOT
Case Questions
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Driver of Success to Narayana Hrudayalaya
Value Creation
Network with Suppliers
Leveraging
Technology
Low Cost
High
Quality
Volume
Flexibility
Volume gives
Bargaining
Power
Full
Capacity
Utilization
Min
Inventory &
Quick
Processing
SUPPLY CHAIN PRESENTATION I AUGUST 2014
Narayana Hrudayalaya Success: How to Sustain it?
By expanding the
same concept to
other specialties
such as neurology,
oncology,
nephrology.
At present only 0.7
hospital bed per
1000 people is
available in India. So
there is a huge scope
for capital
expansion.
India spends only 5%
of GDP in healthcare
in comparison to
6.3% in Asia.
By leveraging the use
of evolving IT to
reduce per unit cost
which will further
reduce medical cost.
By integrating all
processes involved in
an operation to
make full capacity
utilization of all the
equipment.
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NH Success: Can it be Applied to other Developing Countries?
NH became successful because of:









So the developing countries with large population who cant afford expensive operation, NH model can be a
successful one.
Telemedicine is one process by which we can train General physician and also we can reach to far off places.
So developing countries with emerging technology can apply NH model in healthcare industry.

2.4 Million Surgery
required but only 60000
performed per year
Poverty made operation
unaffordable to people
SUPPLY CHAIN PRESENTATION I AUGUST 2014
One mans Vision vs Fundamental Change in Healthcare Industry?
The condition of Healthcare industry in India before NH started:





All the above factors along with increasing number of patients were the guiding force behind establishment of
NH.
Dr. Devi Shetty wanted to prove that with advancement in technology, cost per unit can be brought down even
in healthcare industry and this concept helped him to make surgeries affordable to common man.
Vision of one person can change the entire healthcare industry in the way it operates.
0.5 physician
per 1000
Corruption at
Government
Hospitals
Skewed access to
private healthcare
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