What U.S. Hospitals Can Still Learn from India’s Private Heart Hospitals

In 2008, we explored the emergence of private heart hospitals in India whose outcomes rivaled those of top U.S. hospitals (low infection and readmission rates for coronary artery bypass grafting [CABG], angioplasties, and other cutting-edge procedures) at between 1/10 and 1/20 of the cost. We described how Indian hospital leaders exhibited a near-obsessive drive to offer the highest quality services at the lowest possible price. We concluded that even though India is far from a model of social justice in health care, American hospitals could learn a great deal from the organizational focus and structure of their Indian counterparts. We additionally wanted to challenge the preconceived notion in policy discussions that high health care costs were a consequence of high quality and that patients and providers could not economize without diminishing the clinical quality of care.

Nearly a decade later, we see few changes in the strategic operations or organizational strategy of U.S. hospitals. Meanwhile, Indian hospitals are expanding throughout the world, including on the U.S. doorstep, in the Cayman Islands. Why have hospital markets in India and the United States continued to diverge? Our lessons from India still resonate. Given ongoing cost struggles in the United States, it is more important than ever to understand why U.S. hospitals have failed to provide high quality care at affordable prices. We highlight three key differences that signal changes that U.S. business and policymakers must address to match the benefits achieved abroad.

1. Business Strategy: In India, the majority of people pay for private health care entirely out of pocket with very limited budgets. In this competitive environment, Indian heart hospitals must compete vigorously for scarce consumer dollars, driving leaders to scrutinize each element of their operations for opportunities to conserve costs. The competition for consumers is evidenced in the Indian hospitals’ focus on brand differentiation: their two leading heart hospitals, Fortis and Apollo, compete with each other the way Ford and Toyota compete for U.S. auto consumers. These hospitals also offer optional comforts in an effort to price discriminate (as Ford and Toyota charge more for cars with leather seats), with fewer ancillary amenities available for those with fewer resources...