Learn from Indian Hospitals the Best Ones Provide First-Rate Medical Care at Cut-Rate Prices

By Vijay Govindarajan; Ravi Ramamurti | Pittsburgh Post-Gazette (Pittsburgh, PA), November 6, 2013 | Go to article overview

Learn from Indian Hospitals the Best Ones Provide First-Rate Medical Care at Cut-Rate Prices


Vijay Govindarajan; Ravi Ramamurti, Pittsburgh Post-Gazette (Pittsburgh, PA)


No matter how the fight over Obamacare shakes out, the biggest challenge facing U.S. health care will remain reducing costs while improving quality of care and access for patients. The experience of a few innovative Indian hospitals may point the way forward.

India's health care system as a whole has many problems, but our research has uncovered nine private hospitals that provide quality care at a fraction of U.S. prices. Most are accredited by the U.S. Joint Commission International or its Indian equivalent.

At these hospitals, a patient would pay $120 for cataract surgery, $250 for a caesarean-section delivery, $2,000 for a knee or hip replacement, $2,000 for an angioplasty, $2,900 for cancer radiation treatment and $3,200 for open-heart surgery -- 5 percent to 10 percent of U.S. prices. These private hospitals deliver medical outcomes comparable to that of good U.S. hospitals, as measured by medical complication rates or post-treatment survival rates. Furthermore, they're profitable.

Even if Indian hospitals paid U.S.-level salaries for all health- care staff, which are as much as 20 times higher, their prices would be one-fifth of U.S. levels. That is because these nine hospitals are super-efficient at using resources -- doctors, equipment and facilities -- and because they work incessantly to improve every process. Their services have to be affordable because their patients are poor and typically pay 60 percent of medical costs out of pocket.

How do the Indian hospitals do it? They have innovated in three areas, and U.S. hospitals would do well to follow their example.

The first innovation is using a hub-and-spoke design, with hub hospitals located in major cities and spoke hospitals in rural areas. This concentrates the best equipment and expertise within the hub, with telecommunication links that allow hub specialists to serve spoke patients remotely. Since these specialists perform a high number of specific procedures, they quickly develop skills that improve quality. By contrast, hospitals in the United States are uncoordinated, duplicating specialized care without enough volume in most of them to make procedures affordable. Even when hospitals consolidate, the motive is often to gain pricing power over insurance companies rather than to lower costs. …

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