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Narayana Health

Bringing low-cost, high-quality specialty care to the masses
Narayana Health is a multi-specialty hospital chain offering high quality affordable care. Over the last 13 years NH Health has grown to be a network of 32 hospitals with 6,500 beds across 20 cities employing over 15,000 people and 1,800 doctors. The network performs 150 major surgeries daily. Through various innovations, economies of scale and efficiency gains, NH is able to offer world-class quality care and attract high-income patients. This in turn allows NH to cover low income clients through cross subsidization. NH’s rural area focused tele-medicine service is delivered through telephone, internet and satellite. It further extends their reach to over 100 facilities in Asia and over 50 in Africa. The telemedecine service is mainly used for outreach and patient follow-up. Patients can connect with doctors through free services like Skype, Whatsapp or Facebook.
Narayana Health provides health care services at a volume that is incomparable to most other hospitals, without compromising quality. NH manages to achieve this by: (1) Investing in high-end technology and equipment. (2) Maximising the marginal return on investment through a high number of beds. While most hospitals have around 150 beds, NH has 800 beds. (3) Focusing hospitals on particular surgeries e.g. cardiac surgery, allows for hyper-specialization. Surgeons become highly skilled in procedures, this reduces errors, reduces readmissions, increases precision, and improves recovery time for patients. (4) Enabling cross-subsidization. About 40% of their patients are subsidized, which is compensated by the higher- income patients who pay full price for procedures and add-ons such as a private room. (5) Providing financial assistance and micro-insurance to low-income patients in partnership with the Indian government.
Location: Bengaluru, India
Sector: Health
Adopter profile: Hospitals, health care facilities, investors with an interest in the health sector
2001
Founded
> 15,000
Employees
169 million
Annual turnover (USD)
8%
Profit margin

How it works

The business model

Narayana Health relentlessly aims to cut costs through economies of scale, innovative supply chain strategies, cross-subsidization, and government-supported subsidies. Meanwhile, standardized protocols and specialization allows them to maintain a high standard of quality.

Key Partners, Activities and Resources

The hospital chain has 6498 beds spread across 32 hospitals in 20 locations. Each hospital has a specialty, such as cardiac care, cancer treatment, transplants, and other high-end work. Government partnerships were key to establishing the telemedecine and micro-insurance programmes.

Customer Relationships, Channels and Segments

40% of patients are from government reimbursement schemes or otherwise subsidized. Narayana is able to service them on marginal costing basis. 60% of patients pay upfront, and many are able to afford private or deluxe rooms.

Cost structure

Surgeons work on a fixed salary rather than per procedure, so hospitals can benefit from economies of scale. Surgeons perform an average of 12 surgeries per week. The major upfront costs are building hospitals and acquiring technology and material. The operating costs are relativity low; mainly salaries and electricity.

Additional revenue streams

The tertiary health care services that Narayana Health provides are the main revenue source. The company also has a chain of primary care clinics. In addition, they offer micro-insurance plans in partnership with government to low-income groups. Charitable donations account for approximately 5% of NH’s revenues.

Customer base

An average of 150 surgeries are performed every day and an average of around 80,000 outpatients are seen every month. The chain caters to the specialty tertiary care services of the Indian populace.

Other features

NH is actively involved in training and education. They run 56 post-graduate programmes for doctors and other medical staff. They also offer certified training programmes and training for nurses and para-medical staff.

Impact

More affordable healthcare

Naraya is able to offer procedures at about half of the cost that other private hospitals in India are able to offer. On average, 15% of the monthly revenues are given as discounts.

Impact

Increased health insurance coverage

Yeshaswini micro health insurance covers 30 million people. The premium is 18 Rupees per month (less than 0.30 USD).

Impact

High quality of care

Emphasis on standardized protocols and quality assurance allow NH to boast a mortality rate (1.3%) and infection rate (1%) on par with that of US hospitals.

Recreate this model in Latin America

Growth opportunity

Narayana Health once tried to expand to Mexico, but were unable to secure the necessary key partnerships. They have since opened an accredited hospital in the Cayman islands, with suitable partners, and the facility has been open for one year. In its first year the hospital has done about 100 procedures. It was able to perform three artificial heart transplant surgeries that usually cost 1 million USD for 400,000 USD each. Mexico or other Latin American countries are attractive partners because rather than relying solely on foreign patients, there is a potential customer base in the local population. There are already very good hospitals in Mexico, but hospitals in India operate differently in terms of specialty and volume and adopting these practices could bring significant benefits. For example, Narayana relies on extensive standardized protocols that help doctors to reduce mistakes and ensure quality of care. They are working to build ICT tools around these protocols, and would be interested in using such tools in Latin America. Narayana Health is interested in partnering with local hospitals or health care facilities that are open to adopting new practices to make their services more affordable. Mexico or other Latin American countries are attractive partners because rather than relying solely on foreign patients, there is a potential customer base in the local population. There are already very good hospitals in Mexico, but hospitals in India operate differently in terms of specialty and volume and adopting these practices could bring significant benefits. For example, Narayana relies on extensive standardized protocols that help doctors to reduce mistakes and ensure quality of care. They are working to build ICT tools around these protocols, and would be interested in using such tools in Latin America. Narayana Health is interested in partnering with local hospitals or health care facilities that are open to adopting new practices to make their services more affordable.

Do you match the Adopter profile?

What we are looking for in potential partners

Narayana Health is interested in meeting companies/individuals who are adventurous and want to disrupt the affordable healthcare sector in Latin America. Potential partners could be local hospitals or health centers who are open to adopting new practices or changing their approach, and have the capacity/resources to do so.
Individuals with a medical background or investors interested in the health sector are also potential partners. They are seeking dynamic and proactive partners that are able to move things and make their ideas happen.
From Narayana’s experience, finding the right partners is crucial and so for now they are simply looking to open a dialogue with interested companies or individuals who are keen on carrying on the conversation.

Further documentation

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