Mass Production Heart Surgery
| Mon Nov. 23, 2009 9:40 AM PST
Over the weekend, the Wall Street Journal had an interesting piece about Devi Shetty, an Indian heart surgeon who is revolutionizing the practice of heart surgery:
Dr. Shetty, who entered the limelight in the early 1990s as Mother Teresa's 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.
....Then there are the Cayman Islands, where he plans to build and run a 2,000-bed general hospital an hour's 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 don't cover.
A few notes: Shetty runs a for-profit business, not a charity. He makes money at these prices. And although a big part of his lower prices has to do with the generally low cost of living in India, his mass-production techniques have reduced prices more than 50% even compared to other Indian hospitals.
But although this may be cheap medicine, there's nothing cheap about his results: outcomes at his hospitals are at least as good as they are at the best American clinics, and probably even better. It's the kind of thing someone ought to be trying here. The whole story is worth a read.
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Comments
Does not compute
Submitted by J.W. Hamner (not verified) on Mon Nov. 23, 2009 10:38 AM PST.
It looks like our cardiac surgeons make more than twice as much as they do in India... but that doesn't seem to be enough to explain an order in magnitude difference in surgery cost (and a bigger profit margin). Is the rest really just volume and "economies of scale"? Wow.
I'm a US citizen of Indian
Submitted by Anonymous (not verified) on Mon Nov. 23, 2009 2:47 PM PST.
I'm a US citizen of Indian background. A relative of mine had an open heart surgery recently -- around 4-5000 $ depending on exchange rate, for one of India's best heart surgeons, 6 days in a private room more like a very good hotel and excellent care.
US cardiac surgeons probably make more like 5-10 times as much. In the case of more junior surgeons or support staff, the differentials may be even higher.
Equipment costs are also lower in India. Land prices are comparable to major American metros (sometimes even higher).
You can bet
Submitted by Omega centauri (not verified) on Mon Nov. 23, 2009 12:21 PM PST.
You can bet that the AMA will go on the warpath to stop this. A model that dramatically cuts costs, means the medical industry (and especially the profits of it) will shrink. Gotta kill off any potential threats.
I'll bet the AMA is
Submitted by B on Mon Nov. 23, 2009 12:46 PM PST.
I'll bet the AMA is considering lobbying for duty charges on newly installed heart valves. Maybe an import quota.
This might be the only way we get cost control. Outside competition.
So what are the main obstacles to mega-surgery complexes in the US?
Kevin, the government
Submitted by Another Brad (not verified) on Mon Nov. 23, 2009 12:46 PM PST.
Kevin, the government bureaucrats that you love so much will regulate this guy right out of town.
How and why? The AMA, sure,
Submitted by dob (not verified) on Mon Nov. 23, 2009 12:57 PM PST.
How and why?
The AMA, sure, they'll fight tooth and nail to protect their guild, but government bureaucrats? I don't see it.
Who do you thinks write the
Submitted by Brad Warbiany (not verified) on Mon Nov. 23, 2009 2:27 PM PST.
Who do you thinks write the checks to the Congressman who write the regulations that the bureaucrats enforce? DING DING DING, the AMA!
It's called regulatory capture. Look into it.
This is really nothing
Submitted by Luther on Mon Nov. 23, 2009 1:15 PM PST.
This is really nothing new...just another example of US jobs and wages going away due to globalization. Now its the turn of heart surgeons. X-ray analysis has been outsourced to Indian radiologists for quite a while. Some legal work is making inroads in being outsourced to India.
http://www.texasheart.org/AboutUs/History/cooley.cfm
Cooley and his associates have performed more than 100,000 open heart operations--more than any other group in the world.
Dr. DeBakey operated on more than 50,000 patients,
Insurance companies are
Submitted by Th (not verified) on Mon Nov. 23, 2009 1:27 PM PST.
Insurance companies are already looking at sending patients off-shore for treatment. Self-insured large companies are also. A week on the beach and a new knee, what's not to like?
Yes, nothing new.
Submitted by Omega Centauri (not verified) on Mon Nov. 23, 2009 1:40 PM PST.
Outsourcing of mega-surgeries has strangely been called "medical tourism". Somehow getting major surgery just doesn't strike me as a vacation. But it is growing precisely because the cost differences are so huge. He's just trying to cut the transportation costs by locating close by.
The average annual household
Submitted by Anonymous (not verified) on Mon Nov. 23, 2009 5:27 PM PST.
The average annual household income in the U.S. is $55000. The average annual household income in India is $550. A U.S. cardiothoracic surgeon making $500,000 per year is making almost 10 times the average annual household income. An Indian cardiothoracic surgeon making $100,000 per year is making almost 200 times the average annual household income. ALL of the rest of the personnel in that Indian hospital are also being paid on an Indian wage scale. Surgery and hospital care are nothing if not labor intensive. Even if we paid U.S. physicians on an Indian pay scale, unless we paid THE REST of the people working in the U.S. hospital at an Indian wage (which would be well below the U.S. poverty level), it's unlikely that we would be able to sell surgeries at the Indian price. Indian docs live a princely lifestyle ... in India.
Not just salaries
Submitted by Robert Merkel (not verified) on Mon Nov. 23, 2009 8:56 PM PST.
Reread Kevin's comment:
A few notes: Shetty runs a for-profit business, not a charity. He makes money at these prices. And although a big part of his lower prices has to do with the generally low cost of living in India, his mass-production techniques have reduced prices more than 50% even compared to other Indian hospitals.
So, no, American hospitals might not be able to do surgeries for $2,000. But they should be able to cut their costs significantly with economies of scale, and produce better outcomes as the surgical teams devote themselves to knowing how to do one type of surgery exceedingly well, rather than several different types moderately well.
What a surprise, market
Submitted by John Hansen (not verified) on Mon Nov. 23, 2009 9:07 PM PST.
What a surprise, market forces allow direct payment to a doctor who innovates to make up the discount by volume. This leads to cheaper prices and satisfactory outcomes. There definitely needs to be more regulation on this guy! Otherwise people might discover that we really don't need those fantastic Democratic party experts to save health care.
Except, "market forces"
Submitted by tanstaafl on Tue Nov. 24, 2009 1:46 AM PST.
Except, "market forces" have failed to produce such innovations here in the U.S. Nothing this doctor is doing in India is unique. I remember articles more than 20 years ago describing how the best outcomes for brain surgery came from Chinese hospitals where surgical teams performed 2-3 procedures a day, compared to 2-3 a week here in the U.S.
Yet, somehow the U.S. "free market" system continues to operate in the same inneficient and increasingly expensive manner as before.
Oh and another thing, I did
Submitted by John Hansen (not verified) on Mon Nov. 23, 2009 9:08 PM PST.
Oh and another thing, I did not see a listing of how much Dr. Shetty pays for malpractice insurance.
And what relevance do you
Submitted by tanstaafl on Tue Nov. 24, 2009 1:50 AM PST.
And what relevance do you think that could possibly have given that malpractice insurance runs no more than 1-2% of total health spending here in the U.S. and this guy is cutting prices by well over half even after you adjust for the differences in salaries and equipment prices?
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