Health City Cayman Islands, a new, high-tech hospital in the Caribbean, is increasingly seen as a model for US health systems struggling to remain profitable in the face of razor-thin margins and declining reimbursement. Less than two hours by air from Miami, the planned 2,000-bed facility expects to attract American patients with high-deductible health plans seeking less expensive high-quality care.
As featured in a new documentary film, “From the Heart: Healthcare Transformation from India to the Cayman Islands,” Health City is the first development outside of India by Narayana Health, internationally regarded as one of the world’s lowest-cost, highest-quality healthcare providers.
The brainchild of famed heart surgeon Dr. Devi Prasad Shetty, who was Mother Teresa’s personal physician, Health City replicates the model that enables Narayana’s average cardiac hospital to perform thousands of heart surgeries per year for less than USD $1,400 per case – about 2 percent of the average cost for heart surgery in the US.
“Henry Ford proved that the commoditization of a product makes it cheaper, makes it better and makes it more efficient,” said Dr. Shetty. “I strongly believe that we have to commoditize the delivery of healthcare, and that is the model that Health City represents for the world.”
Narayana’s secret is a laser-sharp focus on efficiency, enabling some of the highest patient volumes in the world. Surgeons at Narayana Health City in Bangalore, India perform roughly 30 cardiac surgeries each day. That compares to 12 cardiac surgeries per day at Cleveland Clinic, which says it performs 20 times more cardiac surgeries per year than any other US hospital. Many of Heath City’s medical professionals have already performed thousands of surgeries in their respective careers, with outcomes that rival the best American facilities.
All Narayana providers are employees and they are invested in increasing productivity, streamlining processes, and improving patient care. High volume drives cost savings, and Narayana has taken an aggressive approach to every component in the supply chain, which enables it to provide basic heart surgery for a fraction of the cost in the United States.
US Healthcare Providers Watching Carefully
Health City is a joint venture between Narayana Health and Ascension Health, one of the largest US healthcare providers, which has said it is interested in learning from the Narayana model. But Ascension is not the only US health system interested in what’s happening in the Cayman Islands.
Robert Pearl, MD, CEO of the (Kaiser) Permanente Medical Group, the largest US medical group, wrote recently in Forbes that Health City “has American health care providers watching closely, and anxiously.” Dr. Pearl concluded that “the operational approaches in Dr. Shetty’s hospital are about 10 years ahead of those used in the typical US hospital.”
“Innovators like Toyota and Amazon consistently disrupt the leading organizations in their markets,” said Dale Sanders, former chief information officer of the National Health System of the Cayman Islands, now a senior executive of Health Catalyst, a Salt Lake City-based healthcare IT company. “Anyone that doesn’t believe that healthcare is being disrupted outside the boundaries of the US is not watching what’s happening in the Cayman Islands, and they’re not watching what’s happening in India. If you don’t believe that’s happening, you’re going to miss out on the opportunity to participate in this next wave and you may become disrupted yourself.”
Clear Pricing + Data + Process
Health City’s innovations begin at the ground level. Construction of the current 108-bed facility took less than 12 months and cost USD $420,000 per bed, about one-third the US average of $1.5 to $2 million, despite the relatively high cost of real estate in the Cayman Islands.
Real-time performance metrics are constantly available for administrators across the medical center. Analytics technology called iKare monitors lab results and clinical findings to predict potentially significant medical problems. Clinical teams are timed on their speed of response, with a particular focus on eliminating delays in treatment. Narayana Hospitals’ average time to an appropriate response is just seven minutes, significantly less than the average US hospital.
Eschewing the profit-center approach of US hospitals, in which key departments such as the operating room bill patients separately, Health City has only one profit center – the hospital. That arrangement aligns incentives to cut cost from every process. And to further simplify costs, the medical center provides an all-inclusive flat rate for every procedure covering every service.
“We’re one of the few hospitals in the world to publish our prices as a bundled flat rate,” said Chandy Abraham, MD, Health City’s Facility and Medical Director. “And that’s what you’ll pay, nothing more. You get one bill and you’ll never get another bill. It’s a model that gets a lot of attention when we talk with other healthcare providers.”
A large provider of charitable care, Narayana Health gives its executives a daily profit/loss statement so they can see exactly how much care they can give away to patients.
“We’re never going to match India and their costs,” said Health City Director Gene Thompson, referring to Narayana Health. “But we feel we can show that in a high-cost destination we can provide high-quality low-cost healthcare if we think outside of the box. It’s about saving lives and providing the highest quality healthcare to the most people at an affordable price, because humanity deserves it.”
Dr. Shetty added, “We’re all living in a global village. Healthcare has to be available to everyone on this planet, with dignity. We know it can be solved and I’m convinced it’s going to happen in our own lifetimes.”