Becker's Hospital Review

Register Today! Becker's Hospital Review CIO and CEO Strategy Roundtables - Nov. 4 and 5, 2014 - Chicago 9 Although increasing volume to lower prices seems like a basic business principle, it is impractical for many hospitals in the U.S. For example, between San Jose, Calif., and San Francisco, there are 12 hospitals that perform heart surgery, and some do less than one surgery per day. Robert Pearl, MD, CEO of Permanente Medical Group, says, "With so many hospitals providing the same services, it is hard to apply the principles Dr. Shetty has used or to put into place a well-structured program." Kaiser Permanente has centers for excellence to ensure they have enough volume and teams for performing more advanced procedures, which has led to price reductions fro some procedures. However, Dr. Shetty has been able to drive vol- umes that allow him to significantly lower prices, and has achieved cost savings even Kaiser Perma- nente has not been able to obtain. In addition to using volume to lower prices, Dr. Shetty has used other methods to help his organi- zations achieve success. Delays in treatment often lead to prolonged hospital stays, and Dr. Shetty has been able to reduce those stays and the costs associated with them through the use of tech- nology at Health City. Nurses and physicians at Health City respond to patients who need imme- diate care, such as those with abnormal lab tests, much quicker than hospitals in the U.S. do, with Health City's average hospital-wide response time being seven seconds. Health City also uses iKare, an algorithm technol- ogy that is also used in the Narayana Health fa- cilities in India. The system uses algorithm-based smart technology that assesses and recommends clinical protocols via assessment of real-time clinical data points to assist physicians and nurses in their treatment plans, in diagnosing patients and in defining patients' symptoms and test re- sults. "The more information iKare receives, the smarter it becomes," says Dr. Abraham. Dr. Shetty's vision is easier to realize in the Cay- man Islands and in India than it would be in the U.S., with staff wages being one of the contribu- tors to Dr. Shetty's success. Wages in the Cayman Islands are not as low as they are in India, but the wages in the U.S. are higher than many other places in the world. Construction costs are also much lower in the Cayman Islands than in the U.S. Health City was built for approximately one-third the cost of building a U.S. hospital, with each hospital bed in the U.S. equating to $3 million in costs. Although the concept behind Health City might seem complicated, Dr. Abraham says that is not the case. "The model is quite simple — provide the best care at the most affordable price," he says. "From the executive team to the medical staff and employees on all levels, the patient's needs are at the core of everything we do." Can U.S. hospitals be more like Health City? The answer is no, unless there are major changes to the healthcare system in the U.S. To offer qual- ity care at a low cost, like Dr. Shetty has done, it requires using technology and providing services that match the demand that is there, and "none of that is going to happen until we move from fee-for-service to pay-for-performance," says Dr. Pearl. Until that transition is made, the U.S. healthcare system is going to struggle because it is easier to increase volume than to increase ef- ficiencies. Some hospitals in the U.S. have the same volume of patients as Dr. Shetty's facilities, but fee-for- service has kept many of them from achieving the same kind of success Dr. Shetty has. Under the fee-for-service model, the hospitals in the U.S. that perform a high volume of surgeries compen- sate surgeons based on the number of procedures they perform. However, in Narayana Health hos- pitals, surgeons are paid a fixed salary, rather than being paid on a per procedure basis. In addition, the surgeons at Dr. Shetty's facilities perform more procedures than surgeons in the U.S. do, which has led Dr. Shetty to be called the "Henry Ford of Heart Surgery." The current trend in the national healthcare economy indicates hospitals in the U.S. are inter- ested in becoming more like Health City. While CEAA CERTIFIED EQUIPMENT APPRAISAL ASSOCIATES, INC. Call us at (215) 260-2680 for a FREE consultation. For more information, visit us on the web at www.ceaahealthcare.com or email us at ceaahealthcare@aol.com CEAA CERTIFIED EQUIPMENT APPRAISAL ASSOCIATES, INC. Certifi ed Equipment Appraisal Associates, Inc. is a leading nationwide medical equipment appraisal fi rm offering comprehensive medical equipment appraisals for the healthcare industry. We have conducted over 2,000 Healthcare Equipment Appraisal Assignments in all 50 states. 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