Dr. Devi Shetty: Higher Quality Heart Surgery, Low Prices, and Making a Profit

I was thrilled to see this article showing for only $800 you could get heart surgery in India. However, the article is a little misleading since the average price people pay is $2,000. The average cost for doing a heart bypass operation varies around the world. In the United States the cost is $144,000, while in Mexico the cost is $27,000, and just $14,000 for the same procedure in Colombia.  You might be surprised to know that an actual individual entrepreneur doctor is able to do this. His name is Dr. Devi Shetty. Dr. Shetty runs a hospital named Narayana Hrudayalaya in India. The hospital has 5,000 beds and Shetty wants to expand this to 30,000 beds.  What is interesting is that the hospital performs more surgeries than first rate hospitals in the United States and still maintains high quality. For instance Narayana performs twice as many surgeries as the Cleveland Clinic. The mortality rate is very low at 1.4% which is less than the United States rate of 1.9% (and even less since the hospital doesn’t adjust for risk factors like the United States does). The heart facility in Bangalore does 30 cardiac surgeries a day (more than any place else). The same place also handles 1,000 walk in patient per day.

What is really interesting is that the hospital is for profit. The company has a profit margin of 7.7% profit after tax which is higher than the average profit margin in the United States of 6.6%. It always amazes me that people claim hospitals are greedy. If hospitals are so greedy why are they only making profit on less than 7 cents out of every $1? Dr. Shetty finds ways of reducing his costs like using cheaper sutures which saved him $50,000. He points out that you have to find many different things to cut.  He pays nurses to watch over patients in 8 hour shifts but doesn’t allow them to sit down. He claims that nursing efficiency decreases 30% if a nurse is provided a chair. He even hires people with a college degree to read radiology charts. What is fascinating is that Shetty has real time performance measures. Every day doctors can see the profit and loss statement from the prior day which would be unheard of in an American hospital. Not only can Shetty see the profit and loss statement he can also see how many surgeries were done the prior day in addition to how many surgeries were done for the month. If earnings fall below a certain amount they tell the people with free surgeries to come back until they get more paying customers.

It is too bad that Dr. Shetty couldn’t set up shop in the United States. For one his hospitals don’t have air conditioning in most parts of the hospital which would not even be allowed in the United States. Shetty plans on building a hospital in the Cayman Islands.  The United States would greatly benefit from hundreds of hospitals like the one Dr. Shetty has created. The cost of heart bypass in the Cayman Islands will only be $10,000 in the Cayman Islands.

The United States should recruit Dr. Shetty on how to reduce healthcare costs. I actually think many people would be open to business model of charging people with money for surgery and using that money to provide for those that can’t don’t have the means to pay for surgery. While at the same time on the whole the hospital would be making money which would allow them to grow and provide care to even more people in the future. I have feeling some people would still object to this.