Fluent Essays

DA 2: Review the following news item to motivate your discussion.News Item: The Henry Ford of Heart SurgeryFor our discussion, I am including below links to two articles. The first one is an article in Wall Street Journal titled The Henry Ford of Heart Surgery and the second is an editorial related to it. These offer insights on how an doctor in India is sustainably performing state-of-the-art open heart surgeries, a complex procedure, at high volume assembly line mode but with low costs, something considered hard to accomplish in the product-process matrix framework. Provide your opinion on what you learned from it in context of implications for operations management in healthcare industry.The Henry Ford of Heart Surgery (clicking this link will download the article as a PDF file)Editorial High Volume Efficient (clicking this link will download the article as a PDF file)In addition to contributing to discussion, you are expected to reply to at least one of your classmates. Note that you must post your discussion blog before you will be able to see other students replies.This question have to submit 350+worlds, and reply one of the student(150+worlds). Total 500+worlds.CTA 2: Hotel Monaco Chicago - Value Creation.A link to a short video about Hotel Monaco Chicago is included herewith. This hotel provides a unique set of services to meet its target market. Located in downtown Chicago, Hotel Monaco is recognized as a boutique hotel. It provides a unique atmosphere and a unique set of services.Play media comment.Video: Hotel MonacoWrite well-thought out answers to the questions below:Describe the characteristics of Hotel Monaco. What is its target market? How does Hotel Monaco Chicago differentiate itself in that market?How does Hotel Monaco’s small size support its strategy? Could a larger hotel do the same thing?What has Hotel Monaco Chicago done to meet business travelers’ needs? How does Hotel Monaco differentiate its treatment of weekend travelers from its treatment of business travelers?Given any business’s desire to minimize non-value-adding activities, which of the activities of Hotel Monaco would you evaluate for possibly not adding value?***This is question have to submit 650+worlds. the_henryford_surgeryv7.pdf editorial_high_volume_efficient.pdf Unformatted Attachment Preview Dow Jones Reprints: This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit www.djreprints.com See a sample reprint in PDF format. HEALTH INDUSTRY Order a reprint of this article now November 25, 2009 The Henry Ford of Heart Surgery In India, a Factory Model for Hospitals Is Cutting Costs and Yielding Profits By G EET A ANAND BANGALORE -- Hair tucked into a surgical cap, eyes hidden behind thick-framed magnifying glasses, Devi Shetty leans over the sawed open chest of an 11-year-old boy, using bright blue thread to sew an artificial aorta onto his stopped heart. As Dr. Shetty pulls the thread tight with scissors, an assistant reads aloud a proposed agreement for him to build a new hospital in the Cayman Islands that would primarily serve Americans in search of lower-cost medical care. The agreement is inked a few days later, pending approval of the Cayman parliament. Tending to Indias Health-Care System Ryan Lobo for The Wall Street Journal Dr. Shetty prepares for surgery. More photos and interactive graphics Dr. Shetty, who entered the limelight in the early 1990s as Mother Teresas cardiac surgeon, offers cutting-edge medical care in India at a fraction of what it costs elsewhere in the world. His flagship heart hospital charges $2,000, on average, for open-heart surgery, compared with hospitals in the U.S. that are paid between $20,000 and $100,000, depending on the complexity of the surgery. The approach has transformed health care in India through a simple premise that works in other industries: economies of scale. By driving huge volumes, even of procedures as sophisticated, delicate and dangerous as heart surgery, Dr. Shetty has managed to drive down the cost of health care in his nation of one billion. His model offers insights for countries worldwide that are struggling with soaring medical costs, including the U.S. as it debates major health-care overhaul. Japanese companies reinvented the process of making cars. Thats what were doing in health care, Dr. Shetty says. What health care needs is process innovation, not product innovation. At his flagship, 1,000-bed Narayana Hrudayalaya Hospital, surgeons operate at a capacity virtually unheard of in the U.S., where the average hospital has 160 beds, according to the American Hospital Association. Narayanas 42 cardiac surgeons performed 3,174 cardiac bypass surgeries in 2008, more than double the 1,367 the Cleveland Clinic, a U.S. leader, did in the same year. His surgeons operated on 2,777 pediatric patients, more than double the 1,026 surgeries performed at Childrens Hospital Boston. Next door to Narayana, Dr. Shetty built a 1,400-bed cancer hospital and a 300-bed eye hospital, which share the same laboratories and blood bank as the heart institute. His family-owned business group, Narayana Hrudayalaya Private Ltd., reports a 7.7\% profit after taxes, or slightly above the 6.9\% average for a U.S. hospital, according to American Hospital Association data. At the Narayana Hrudayalaya Hospital in Bangalore, Dr. Devi Shetty and his fellow cardiologists perform about 600 operations a week. Theyre making heart surgery affordable to some of the poorest people in India. WSJs Geeta Anand reports. The group is fueling its expansion plans through private equity, having raised $90 million last year. The money is funding four more health cities under construction around India. Over the next five years, Dr. Shettys company plans to take the number of total hospital beds to 30,000 from about 3,000, which would make it by far the largest private-hospital group in India. At that volume, he says, he would be able to cut costs significantly more by bypassing medical equipment sellers and buying directly from suppliers. Then there are the Cayman Islands, where he plans to build and run a 2,000-bed general hospital an hours plane ride from Miami. Procedures, both elective and necessary, will be priced at least 50\% lower than what they cost in the U.S., says Dr. Shetty, who hopes to draw Americans who are uninsured or need surgery their plans dont cover. By next year, six million Americans are expected to travel to other countries in search of affordable medical care, up from the 750,000 who did so in 2007, according to a report by Deloitte LLP. A handful of U.S. insurance plans now give people the choice to be treated in other countries. Some in India question whether Dr. Shetty is taking his high volume model too far, risking quality. On one level, its a damn good idea. My only issue with it comes from the fact that if you pursue wholesale volumes, you may give up something -- which is usually quality, says Amit Varma, a physician who serves as president of health-care initiatives for Religare Enterprises Ltd., a publicly listed financial services group in Delhi. Religare is part of a conglomerate that also owns Fortis Healthcare Ltd., a rival hospital chain. I think he has reached the point where if you increase volume any more, you could compromise patient care unless backed up by very robust standard operating procedures and processes, Dr. Varma says. But Jack Lewin, chief executive of the American College of Cardiology, who visited Dr. Shettys hospital earlier this year as a guest lecturer, says Dr. Shetty has done just the opposite -- used high volumes to improve quality. For one thing, some studies show quality rises at hospitals that perform more surgeries for the simple reason that doctors are getting more experience. And at Narayana, says Dr. Lewin, the large number of patients allows individual doctors to focus on one or two specific types of cardiac surgeries. In smaller U.S. and Indian hospitals, he says, there arent enough patients for one surgeon to focus exclusively on one type of heart procedure. Narayana surgeon Colin John, for example, has performed nearly 4,000 complex pediatric procedures known as Tetralogy of Fallot in his 30-year career. The procedure repairs four different heart abnormalities at once. Many surgeons in other countries would never reach that number of any type of cardiac surgery in their lifetimes. Dr. Shettys success rates appear to be as good as those of many hospitals abroad. Narayana Hrudayalaya reports a 1.4\% mortality rate within 30 days of coronary artery bypass graft surgery, one of the most common procedures, compared with an average of 1.9\% in the U.S. in 2008, according to data gathered by the Chicago-based Society of Thoracic Surgeons. It isnt possible truly to compare the mortality rates, says Dr. Shetty, because he doesnt adjust his mortality rate to reflect patients ages and other illnesses, in what is known as a riskadjusted mortality rate. Indias National Accreditation Board for Hospitals & Healthcare Providers asks hospitals to provide their mortality rates for surgery, without risk adjustment. Dr. Lewin believes Dr. Shettys success rates would look even better if he adjusted for risk, because his patients often lack access to even basic health care and suffer from more advanced cardiac disease when they finally come in for surgery. Dr. Shetty, 54 years old, is a lanky and chatty man. He grew up in Mangalore, another south Indian city, the eighth of nine children. Doctors were gods in the Shetty household, swooping in to save his restaurateur father who suffered from chronic diabetes and fell into diabetic comas several times in the young boys life. He had already resolved to be a doctor when his fifth-grade teacher told the class that a South African surgeon had just performed the worlds first heart transplant. In that moment, Dr. Shetty says he decided to become a heart surgeon. After graduating from medical college in India, Dr. Shetty trained in cardiac surgery at Guys Hospital in London, one of Europes top medical facilities. He had been operating there for six years when the Birla family, leading industrialists in India, decided to start a heart hospital in Calcutta. Dr. Shetty was brought in as the first director. On returning to India in 1989, Dr. Shetty performed the first neonatal heart surgery in the country on a 9-day-old baby. He also confronted the reality that almost none of the patients who came to him could pay the $2,400 cost of open-heart surgery. When I told patients the cost, they would disappear. They literally didnt even ask about lowering the price, he says. During that time, Mother Teresa had a heart attack, and Dr. Shetty was called to operate on her. From then on, he served as her personal physician. Two pictures of Mother Teresa still adorn the white walls of Dr. Shettys office, one with white type saying, Hands that serve are more sacred than lips that pray. Dr. Shetty set about pursuing a heart hospital big enough to make a difference in a country where most of the people needing heart surgery cant afford it. His father-in-law, the owner of a large construction company, agreed to build and finance a heart hospital in his wifes hometown of Bangalore. In 2001, the white-washed, red-roofed Narayana Hrudayalaya Hospital opened on 25 acres that had been a marshland around a cement factory. A lobby with seating for hundreds is encircled by dozens of offices for surgeons to consult with patients. A giant statue of a many-headed deity -representing gods in the Hindu pantheon -- stands in the center of the lobby. In a second-floor operating room one October morning, Dr. Shetty finished sewing a new aorta onto the heart of his 11-year-old patient. The process provided an example of how he slashes costs. Four years ago, the sutures would have been bought from a Johnson & Johnson subsidiary. Today they are made by a Mumbai company, Centennial Surgical Suture Ltd. Four years ago, Dr. Shetty scrutinized his annual bill for sutures -- then $100,000 and rising by about 5\% each year. He made the switch to cheaper sutures by Centennial, cutting his expenditures in half to $50,000. In health care you cant do one big thing and reduce the price, Dr. Shetty says. We have to do 1,000 small things. He says he would also like to find lower-cost versions of his priciest medical equipment. But the Chinese makers that have brought good quality, cheaper machines to market dont yet have enough local service centers to ensure regular maintenance. So he is still buying equipment from General Electric Co. He pays $60,000 for echocardiography machines, which use sound waves to create a moving image of the heart, and $750,000 for cardiac catheterization labs, which produce images of blood flow in the arteries and allow surgeons to clear some blockages using stents and other devices. V. Raja, head of GEs health-care business in India, declined to comment on specific pricing, but says Dr. Shetty drives a hard bargain and wrestles some savings because he is such a big customer. Between Narayana Hrudayalaya and another hospital he runs in Calcutta, Dr. Shettys group performs 12\% of Indias cardiac surgeries, Mr. Raja says. Dr. Shetty also gets more use out of each machine by using some of them 15 to 20 times a day, at least five times more than the typical U.S. hospital. Cardiac surgeons at Dr. Shettys hospitals are paid the going rate in India, between $110,000 and $240,000 annually, depending on experience, says Viren Shetty, a director of the hospital group and one of Dr. Shettys sons. Dr. Shetty was paid almost $500,000 last year, according to the groups audited financial statements. Here, too, Dr. Shetty finds additional savings on the per-patient cost. His surgeons perform two or three procedures a day, six days a week. They typically work 60 to 70 hours a week, they say. Residents work the same number of hours. In comparison, surgeons in the U.S. typically perform one or two surgeries a day, five days a week, operating fewer than 60 hours. Dr. Shetty says doctor fatigue isnt an issue at his hospital, and in general, his surgeons take breaks after three or four hours in surgery. The morning after Dr. Shetty operated on 11-yearold Mahesh Parashivappa, the boy sat in bed in the pediatric intensive care unit, a white bandage on his bare chest. Virtually all of the 80 beds in the unit were full. K. Parashivappa, the boys father, a sugarcane worker from a village eight hours away, held a cup of water to his sons lips. He says hes known his son needed surgery since he was born with a congenital heart defect. The boy has never been able to run and play cricket like other children, hobbled by chronic shortness of breath and weakness. Mr. Parashivappa says he cant himself pay for the surgery, but it is covered by a farmers insurance plan that Dr. Shetty began several years ago in partnership with the state of Karnataka, which includes Bangalore. Nearly one third of the hospitals patients are enrolled in this insurance plan, which costs $3 a year per person and reimburses the hospital $1,200 for each cardiac surgery. That is about $300 below the hospitals break-even cost of $1,500 per surgery. The hospital makes up the difference by charging $2,400 to the 40\% of its patients in the general ward who arent enrolled in the plan. An additional 30\% who opt for private or semi-private rooms pay as much as $5,000. The father, in an untucked brown shirt, raised both hands to offer the traditional Indian greeting, Namaste, to Dr. Shetty as the hospital head stopped by his sons bed. Thank you for giving my son his life back. Write to Geeta Anand at geeta.anand@wsj.com Copyright 2012 Dow Jones & Company, Inc. All Rights Reserved This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com This article appeared in a journal published by Elsevier. The attached copy is furnished to the author for internal non-commercial research and education use, including for instruction at the authors institution and sharing with colleagues. Other uses, including reproduction and distribution, or selling or licensing copies, or posting to personal, institutional or third party websites are prohibited. In most cases authors are permitted to post their version of the article (e.g. in Word or Tex form) to their personal website or institutional repository. Authors requiring further information regarding Elsevier’s archiving and manuscript policies are encouraged to visit: http://www.elsevier.com/copyright Authors personal copy Editorial Lower Price High Volume Better Outcome Maximum Efficiency Minimally Invasive: A Developing Model for Health Care Delivery M inimally invasive arthroscopy is ideally suited to efficient health care delivery. With highly trained teams, it is possible to perform a high volume of surgery while raising the quality of the work. Henry Ford, the Detroit automobile magnate and founder of the Ford Motor Company, is credited with inventing the assembly line. In addition to efficient production, Ford minimized errors by maximizing uniformity (i.e., any color “as long as it was black”), and mass-produced the reliable (i.e., good outcome) and famous Model T Ford. We all know that every patient is different, but we also know there are many similarities in patients as well. Caregivers who see high volumes should, theoretically, be better able to distinguish the shades of grey. Surgeons may heed these lessons. We read in the Wall Street Journal in November 20091 about an Indian cardiothoracic surgeon named Devi Shetty from Bangalore. He first became known as Mother Teresa’s cardiac surgeon. He offers cuttingedge surgery at a fraction of what it costs elsewhere in the world. His average open-heart surgery costs $2,000 where most everywhere else the charge is $20,000 for the same work. His simple premise is economies of scale. He states that “in health care you can’t do one big thing and reduce the price. We have to do 1,000 little things.” Dr. Shetty’s team of “42 cardiac surgeons performed 3,174 cardiac bypass surgeries in 2008, more than double the 1,367 the Cleveland Clinic, a US leader, did the same year.” “Some in India question whether Dr. Shetty is taking his high-volume model too far, risking quality.” Jack Lewin, chief executive of the American College of Cardiology, who visited Dr. Shetty’s hospital says © 2011 by the Arthroscopy Association of North America. All rights reserved. 0749-8063/1187/$36.00 doi:10.1016/j.arthro.2011.02.005 “Dr. Shetty has done just the opposite— used high volumes to improve quality. For one thing, some studies show quality rises at hospitals that perform more surgeries for the simple reason that doctors are getting more experience . . . the large number of patients allows individual doctors to focus on one or two specific types of cardiac surgeries.” Worldwide, it seems that the cost of health care is difficult for many to manage, similar to India. The cost of health care has risen to a point where patients without insurance cannot afford elective surgery and can be financially ruined by emergency surgery. To address this, the new law requiring all United States citizens to have health insurance is projected to increase health care costs due to a probable increase in volume of utilization. Someone has to pay for this increase in costs, and things will inevitably change. What we have seen in other nations with universal health care requirements for all citizens, whether socialized or private, is that health care delivery in most of the nations of the world evolves in a direction of the advent of two parallel systems: public and private.2 Private health care is generally expensive and, from a business standpoint, the model is the luxury service industry (imagine a very expensive restaurant or hotel) where service (for a price) is uncrowded, unhurried, and available with a short waiting period. Obviously, due to cost, again like expensive restaurants or hotels, access is only for those who can afford it and choose to seek this luxury. While this concierge model is present in the United States to some extent today, it is very rare. It is most common among primary care physicians and cashonly cosmetic plastic surgeons. For an American orthopaedic surgeon to achieve success using a cashonly model today, three variables must be addressed. The surgeon must be very famous, must live in an affluent area or specialize in affluent patients who are willing to travel (e.g., professional athletes), and the Arthroscopy: The Journal of Arthroscopic and Related Surgery, Vol 27, No 5 (May), 2011: pp 599-600 599 Authors personal copy 600 EDITORIAL number of potential patients must be reasonably large because even affluent patients may choose not to pay cash when less expensive, acceptable quality care is available under universal health care (albeit less luxurious than that described above). Most predict that when universal health care becomes mandatory in the United States, reimbursement may decrease, surgeon desire for improved reimbursement will increase, service will go into backlog because of increased use (i.e., waiting lists), demand for concierge care will increase, and two-tiered systems of public and private sectors will develop. But let’s not forget the third possibility. This is not common around the world, but it is working for Dr. Shetty in India, and has been the American way since the time of Henry Ford. We think it is perfectly suited to arthroscopic surgeons. Arthroscopic surgeons specialize in performing efficient surgery and efficient rehabilitation, and achieving superb outcomes through standardization. This allows high volume. We think that this could be the secret to success for many surgeon ... Purchase answer to see full attachment