The break-even cost of an open heart surgery at Narayana Health is Rs 90,000.
How does it cut costs?
Build large facilities
The multi-specialty hospital chain in India builds large facilities and leverages economies of scale.
All consumables are standardised and centrally purchased. This cuts costs by 15 to 40 per cent while maintaing quality.
Hierarchy of medical talent
A working model ensures that a specialist does only the critical part of the surgery, which is grafting the by-pass.
Narayana Health does not buy all the equipments. Some it leases and pays on per-use basis
Extend machines' life
The multi-specialty hospital chain also strives to extend the life of the machines used in its hospitals.
Offer more to specialist doctors
As other aspects of the surgery - such as suturing, harvesting of arteries/veins, opening and closing the chest - is done by junior doctors, the specialist doctor gets to do more surgeries per day. This brings down the cost per surgery
The hospital chain innovates constantly and this helps to lower costs. A good example is use of cold sea water (instead of a refrigeration process) to provide air-conditioning.
Optimise use of technology
Narayana Health tries to adopt technology to smoothen information flow and hence decision-making.
Work on buildings' design
The hospital buildings are designed to keep costs low. Cost of Narayana Health's Mysore hospital was Rs 18 lakh per bed against the thumb rule cost of Rs 50 lakh a bed.
Adopt 'asset light' growth model
The model helps keep capital costs low by sharing of assets, instead of purchasing them.