In a recent article in Bloomberg news, the dramatic cost-cutting approach of India’s Dr. Devi Shetty is featured in dramatic contrast to the high costs of heart surgery in London and the United States. Never overtly stated, the suggestion is that Dr. Shetty’s dramatic cost-cutting approaches could have similar effects in lowering prices for heart surgery elsewhere.
The extraordinary growth in healthcare prices in the UK, US and elsewhere is the result of many factors including complexity, profit and the rising cost of inputs – everything from labor to sterile water. The formula is simple; costlier inputs equals higher priced outputs.
In healthcare delivery, the key input to price isn’t the cost of scrubs or computer systems (referenced in the Bloomberg article), but labor. Labor inputs represent 65 to 70% of the cost output in hospital services.
Dr. Shetty and his groundbreaking team at Narayana are making complex cardiovascular services both available and affordable throughout India. It would be exciting and challenging to attempt to implement his groundbreaking methods in more established, more complex and costlier environments such as the NHS in the UK or in the US.