Healthcare

GLOBAL INVESTOR 2.12 — 31
A patient recovers after surgery at one of Dr. Shetty’s hospitals. Despite handling 37 operations a day,
the NH franchise is still far from meeting demand. The group will expand to 14 hospitals by next year.
a business community that understands both the power of money as
a force for doing good and the reality of the bottom line. “Charity is
not scalable,” Dr. Shetty told the Indian daily “Economic Times” after
it recently voted him Entrepreneur of the Year.
Asked what that means, Dr. Shetty replies, “How much money can
you throw at the immensity of our social problems? It will run out very
soon.” Consequently, over time Dr. Shetty has recalibrated his business
model. Now, his is tightly focused on scaling up. “2.5 million Indians
need a heart operation,” he says. “Even with 37 operations a day, we
merely scratch the surface of the problem. We need to expand.” A year
from now, there will be 14 hospitals, all committed to the same goals.
They will replicate the model of Health City, a complex that has sprung
up just behind the original NH in Bangalore, offering a variety of medical
specialties to the poor at low cost through economies of scale.
“We perform 10% of all the heart operations in India,” says Viren
Shetty, Dr. Shetty’s eldest son and an administrator for NH. “Thus,
we can pool resources like blood banks and lab testing. It also gives
us bargaining power. We can buy consumables like sutures as well
as expensive MRI (magnetic resonance imaging) machines at very
competitive rates.”
Another of Dr. Shetty’s healthcare innovations is social: his hospital
in Mysore provides facilities for family members to stay with
patients and support the skeleton staff in delivering post-operative
nursing care. They are given a short nursing course. Even patients
get involved so they can become their own nurse once they are home
again. “We hope to make this a model for India,” says Dr. Shetty, “and
elsewhere as well.” Indeed, his high-quality, low-cost model has attracted
interest far beyond his homeland.
Viren Shetty pulls out his iPhone and points to a text message that
has just come in. It shows the previous day’s income and expenditure
for one of the NH hospitals, as well as the operating cash flow figures
derived from it. Each of the NH hospitals is treated as a profit center
and must generate an outline balance sheet – every day. Dr. Shetty
explains: “A balance sheet every month is like a postmortem report.
But a daily summary is a diagnosis. It helps us to get healthy hospital