This case study analysis discusses the mission, vision, and strategy of a team of entrepreneurs. The team was led by a heart surgeon who was also a founder of a heart hospital in India - the Narayana Hrudayalaya Heart Hospital. The hospital provides health care services for the masses. It performs thousands of surgeries annually totaling more than what The Cleveland Clinic and the Mayo Clinic (ranked #1 and #2 in the United States) perform. It is capable of performing complex operations and surgeries such as bypass surgery or CABG for a lesser price than other hospitals in India offering the same services.
Tarun Khanna; V. Kasturi Rangan
Harvard Business Review (505078-PDF-ENG)
June 22, 2005
Case questions answered:
- What drove the success of Narayana Hrudayalaya Heart Hospital?
- To what extent was this success driving force of one man’s charisma vs. a fundamental change in the institutions underpinning Indian health care?
- Could this be adopted in other developing countries?
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Narayana Hrudayalaya Heart Hospital: Cardiac Care for the Poor (A) Case Answers
The Study of Narayana Hrudayalaya Heart Hospital
The author of the article has expressed pessimistic concern over Dr. Shetty’s plan for a healthy city, whereby the author states, “he now looked adolescent, almost a ten-year-old with a dream.” However, I believe the contrary. The main focus of Dr. Shetty’s initiative or his business process is an attempt to drive unit costs lower through a high level of capacity utilization and productivity, which is consistent with his vision. There are certain variables that are indispensable in the health industry, and the way Narayana Hrudayalaya Heart Hospital and Dr. Shetty’s team have effectively managed the procurement and operation cost is not reflective of specialization not just in cardiac care but overall business operations, which can be replicated and extended beyond his area of specialization into the health city.
NH’s success is rooted in its business operations and follows a distinctive approach to procuring different machines, which are an integral part of the health industry. It hires the machines where possible instead of the regular practice of purchasing the machines and also enters into a short-term contract so as to reap benefits from the volatile Indian landscape.
Secondly, they are able to exert bargaining power on the medical suppliers by projecting bulk demand for the medicines and, in return, enjoy a large range of discounts.
Thirdly, Narayana Hrudayalaya Heart Hospital has very succinctly used technological upgrades and resource management to avoid or save recurring costs. There are two examples of this: one, where they have replaced the recurring cost of X-ray plates with digital X-rays, and second, where they were to significantly reduce the cost of a bone-marrow transplant by utilizing the existing resources that would otherwise go futile (blood bank).
Fourthly, the hospital was also able to bring down the cost of staff salaries, whereby the doctor works for long hours and receives a fixed salary as opposed to the regular practice of getting a share for every surgery.
Fifthly, the heart hospital has solved the problem of manpower by opening up training centers for nurses and doctors.
Finally, Narayana Hrudayalaya Heart Hospital has recognized and worked towards building a legal void in both cardiac care and nephrology whereby they can bring down…
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