Lessons from India in organizational innovation: A tale of two heart hospitals

Health Affairs

Volumn 27, Issue 5, 2008, Pages 1260-1270

  Richman, Barak D ^a   Udayakumar, Krishna ^b   Mitchell, Will ^c   Schulman, Kevin A ^c,d  

^a DUKE UNIVERSITY   (United States)

^b DUKE UNIVERSITY MEDICAL CENTER   (United States)

^c DUKE UNIVERSITY   (United States)

^d DUKE UNIVERSITY SCHOOL OF MEDICINE   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

COST BENEFIT ANALYSIS; HEALTH CARE COST; HEALTH CARE DELIVERY; HEALTH CARE ORGANIZATION; HEALTH CARE PERSONNEL; HEALTH CARE POLICY; HEALTH CARE QUALITY; HEALTH CENTER; HEALTH INSURANCE; HEALTH SERVICE; INDIA; MALPRACTICE; MEDICAL EDUCATION; MEDICAL SPECIALIST; OPEN HEART SURGERY; OUTCOME ASSESSMENT; REVIEW;

CARDIAC CARE FACILITIES; GENERAL SURGERY; HEALTH CARE COSTS; HEALTH CARE REFORM; HOSPITAL ADMINISTRATION; HUMANS; INDIA; MEDICAL TOURISM; ORGANIZATIONAL INNOVATION; QUALITY OF HEALTH CARE; UNITED STATES;

EID: 54549107937     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.27.5.1260     Document Type: Review

References (33)

1. A photo is available online at http://content.healthaffairs.org/cgi/ content/full/27/5/1260/DC1.
2. T. Khanna, V.K. Rangan, and M. Manocaran, "Narayana Hrudayalaya Heart Hospital: Cardiac Care for the Poor," Harvard Business School Case Study no. 9-505-078 (Boston: HBS, April 2006);
3. and World Bank, "Health Expenditures, Services, and Use," in World Development Indicators (Washington: World Bank, 2008), Table 2.15 (2005 data).
4. C.M. Christensen, The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail (Cambridge, Mass.: Harvard Business School Press, 1997);
5. and C.M. Christensen, R. Bohmer, and J. Kenagy, "Will Disruptive Innovations Cure Health Care?" Harvard Business Review 78, no. 5 (2000): 102-117.
6. R. Henderson and K.B. Clark, "Architectural Innovation: The Reconfiguration of Existing Product Technologies and Failures of Established Firms," Administrative Science Quarterly 35, no. 1 (1990): 9-30;
7. and C.M. Christensen and R. Rosenbloom, "Explaining the Attacker's Advantage: Technological Paradigms, Organisational Dynamics, and the Value Network," Research Policy 24, no. 2 (1995): 233-257.
8. M.L. Tushman and C.A. O'Reilly, "Ambidextrous Organizations: Managing Evolutionary and Revolutionary Change," California Management Review 38, no. 4 (1996): 8-30.
9. World Health Organization, "Core Health Indicators," http://www.who.int/whosis/database/core/core_select_process.cfm (accessed 5 June 2008).
10. S. Sengupta, "Royal Care for Some of India's Patients, Neglect for Others," New York Times, 1 June 2008;
11. and A. De Costa and V. Diwan, " 'Where Is the Public Health Sector?' Public and Private Sector Healthcare Provision inMadhya Pradesh, India," Health Policy 84, no. 2-3 (2007): 269-276.
12. The high quality at Indian surgical hospitals has already been favorably compared to that in U.S. hospitals. A. Milstein and M. Smith, "Will the Surgical World Become Flat?" Health Affairs 26, no. 1 (2007): 137-141.
13. Fortis and Care hospitals have earned similar recognition. Escorts Heart Institute has a self-reported success rate of cardiac procedures of 99.6 percent and an infection rate of less than 0.3 percent. See "Medical Highlights" on the Escorts home page, http://www.ehirc.com/ international_patients/ index.asp.
14. Fortis hospitals have also received Joint Commission International accreditation. See "Fortis Hospital Mohali Gets JCI Accreditation," Press Release, 27 August 2007, http://www.fortishealthcare.com/about_fortis/ news_events/fortis_hospital_mohali_js.html (accessed 23 June 2008).
15. Similarly, Care has facilities that are ISO 9001:2000 certified. See "Care Hospital Nagpur Bags ISO 9001:2000 Certification," http://www.carehospitals.com/nagpur/nagpur_iso%209001_2000%20certification.htm (accessed 23 June 2008).
16. Also see A. Comarow, "Under the Knife in Bangalore," U.S. News and World Report, 12 May 2008;
17. and Sengupta, "Royal Care."
18. Khanna et al., "Narayana Hrudayalaya Heart Hospital."
19. As evidence of the potential for cost reductions secondary to self-manufacturing capabilities, leaders of the Care Group described a drastic reduction in coil stent pricing upon introduction of their Kamal-Raju coil stent, India's first indigenous coronary stent. Krishna Reddy, chairman of Relisys, estimates that Relisys can reduce the cost of both stents and catheters by 40-70 percent.
20. The lackof an engineering focus in U.S. hospitals has been lamented by experts and is only recently receiving scholarly attention. See "Engineering a Learning Healthcare System: A Look at the Future" (A Learning Healthcare System Workshop, IOM Roundtable on Evidence-Based Medicine, 29-30 April 2008, Washington, D.C.), http://www.iom.edu/cms/28312/rt-ebm/52747. aspx (accessed 5 June 2008).
21. J.K. Iglehart, "The Emergence of Physician-Owned Specialty Hospitals," New England Journal of Medicine 352, no. 1 (2005): 78-84, reports that the number of specialty hospitals grew 20.3 percent annually from 1997 through 2003.
22. Ibid. This idea of specialization as a source of efficiency has been touted as part of a larger U.S. consumer-driven health care movement that aims for wholesale reform. See R.E. Herzlinger, Consumer-Driven Health Care: Implications for Providers, Payers, and Policymakers (San Francisco: Jossey-Bass, 2004).
23. Medicare Payment Advisory Commission, Report to the Congress: Physician-Owned Specialty Hospitals (Washington: MedPAC, 2005), 1-94. Note, however, that developing meaningful measures of quality under these circumstances is difficult. Many of these hospitals served small numbers of patients where measuring outcomes is challenging.
24. See S.M. O'Brien et al., "Exploring the Behavior of Hospital Composite Performance Measures: An Example from Coronary Artery Bypass Surgery," Circulation 116, no. 25 (2007): 2969-2975. Given the difficulty that the federal government had in documenting these outcomes, it is clear that patients would have had a difficult time determining whether these providers were offering superior care.
25. MedPAC, Physician-Owned Specialty Hospitals, 11, 32-35.
26. Ibid.; and Centers for Medicare and Medicaid Services, Final Report to the Congress and Strategic and Implementing Plan Required under Section 5006 of the Deficit Reduction Act of 2005 (Baltimore: CMS, 2006), 63-66.
27. See CMS, Final Report. The report exhaustively documents the regulatory review and oversight of modest changes inproposed structure of the delivery system. HHS has proposed a broad revision of the DRG system to reduce the overpayment for profitable conditions and to propose moving to a standardized or hospital-specific reimbursement system, neither of which would provide for easy entry of new business models into the market.
28. For the persistence of hospitals negotiating a single price formula for a cluster of services, see C.P. Tompkins, S.H. Altman, and E. Eilat, "The Precarious Pricing System for Hospital Services," Health Affairs 25, no. 1 (2006): 45-56.
29. For an elaboration of the troubling allocative and distributive consequences when provider market power is combined with U.S.-style health insurance, see C.C. Havighurst and B.D. Richman, "Distributive Injustice(s) in American Health Care," Law and Contemporary Problems 69, no. 4 (2006): 14-20.
30. The moratorium was included as part of MMA (PL 108-173, 117 Stat. 2066), which was extended under the Deficit Reduction Act of 2005 (PL 109-171, 120 Stat. 4). See also Iglehart, "Emergence of Physician-Owned Specialty Hospitals."
31. Another regulatory device that enables incumbent hospitals to block potential competitors is certificate-of-need (CON) regulations, which still operate in approximately half of the states. For a current and typical CON dispute between competing entrenched interests, see R. Craver, "Mediation Will Start on New Hospital Plans,"Winston-Salem Journal, 25 March 2008.
32. C.C. Havighurst, J.F. Blumstein, and T.A. Brennan, Health Care Law and Policy, 2d ed. (New York: Foundation Press, 1998), 992-1087.
33. For example, see Helling v. Carey, 83 Wash.2d 514 (1974), holding that the reasonable-prudence standard may require a standard of care higher than that exercised by the relevant professional group; and Shilkret v. Annapolis Emergency Hospital Association, 276 Md. 187 (1975), discarding locality rules that permit local deviation from general standards, instead instituting national professional standards for health care providers.