Whatever model is chosen, however, there is more to low-cost provision than merely keeping input costs as low as possible – it is much more about how resources are used.
We looked at the strategy in a number of providers and found the following common features:
“Providers in India must now become more consumer-focused, more commercial and better able to develop models that respond to different levels of willingness to pay among the populations they serve.”
Amit Mookim, Partner, KPMG in India
In a number of cases there is a mix of provision for the poor and the better off. This allows high volumes that create efficiency. The case of Narayana Heart Hospital clearly stands out in this regard, where heart surgeries are offered to the population below the poverty line at a price that is subsidized by medical tourists and the better off, who pay above cost.
There is often deliberate cross-subsidization, careful targeting of the market and a focus on underserved populations. These strategies are very similar to those described by Clayton Christensen in other industries that have found their business models challenged and disrupted.
Many models are looking for lower costs per transaction, future strategies will be focused on improving value along the continuum of care.
Focus is a helpful strategy in managing the complexity of healthcare process design. Where this is not possible, protect programs by separating them.
Redesign work and develop new roles, Promote team work, Remove clinician administration, Performance feedback, Training, Recruitment
Keeping the costs of supplies under control is important in delivering low-cost care including pharmaceuticals and outsourcing
Healthcare buildings are over-specified and expensive to operate. Hospitals need to change and adapt to different functions and services.
Changing the interaction helps patients, virtual, future models, financing, leasing, automating routines, miniaturization and portability.
Excellent management is key to low-cost delivery, while front-line managers need autonomy to make decisions supporting value for money.