The ‘Walmart model’ Narayana Health (NH) hospital chain is entering into the health insurance segment, calling it another way to offer affordable treatment options to patients.
Popular cardiologist Devi Shetty’s Narayana Hrudayalaya — which was renamed Narayana Healthcare in 2012 — is known for applying mass production techniques to healthcare, exploiting economies of scale.
However, with the increasing cost of infrastructure and services, the possibility of going cheaper has become limited.
“Our model remains the same but we have done as much as we can in lowering the price of healthcare through process optimisation, ensuring efficiencies in medicine and making doctors work more smartly,” Viren Shetty, executive vice-chairman at Narayana Health and son of the company’s chairman, Devi Shetty, told News18 in an exclusive interaction.
“But then how much more can we make our doctors and nurses work or bring in efficiencies?” Shetty, a Stanford business graduate, asked while sharing the growing cost pressures. “The infrastructure cost has gone up by 50 per cent since the pandemic. Since the time we started in 2000, it has gone up more than 10 times.”
Shetty, 39, added: “If you start lowering the price of medicine anymore, you will start killing patients because the quality starts to go down…we cannot compromise on patient care.”
Why health insurance segment?
At present, health insurance penetration in India remains considerably inadequate. However, in the last two years, the sector has witnessed a substantial transformation due to a notable shift in customer attitudes post the Covid-19 outbreak.
“There is a lot of scope to grow,” said Shetty, who officially became a part of the organisation in 2007 and, with his engineering background, assumed responsibility for overseeing the construction surge of NH.
“Health insurance is something that will be the most significant determinant of how people will pay for healthcare in the future.”
According to Shetty, no matter how much effort the hospital chain makes to reduce the cost of healthcare, “there’s nothing more expensive than an expense you have not planned for”.
“People are able to buy very expensive houses, very expensive cars, motorbikes, even widescreen televisions because they know when they are going to buy it… they are able to get it on EMI, and it’s all planned.”
However, healthcare events are emergencies.
“No one just wakes up and decides that today’s the day I’m going to get a heart attack. You plan for this expense only if you invest in insurance, where you pay a small amount every month.”
The organisation has applied for a licence from the statutory body, the Insurance Regulatory and Development Authority of India (IRDAI).
“The insurance business will be under Narayana Health Insurance Company, whenever we get the license.”
Headquartered in Bengaluru, Narayana Health Group claims to be the second-largest healthcare provider in the country in terms of operational bed count.
In the year 2000, NH began as a 225-bed heart hospital. The group has since expanded to 21 hospitals, four heart centres, 18 primary care facilities across India and an international hospital in the Cayman Islands — a total of over 6,800 operational beds.
How Does Company Plan to Roll Out Clinics & Pharmacies?
Shetty believes that via health insurance, the company will be able to operate in a very integrated fashion, where everything — clinics, pharmacies, online care and the hospital chain — will work in a concerted manner to provide a full-service experience.
Currently, the company does not plan to launch a standalone pharmacy model. “These are pharmacies within the clinics that we run, but essentially to take care of the medical needs of our customers who are coming to our hospitals.”
NH wants to build infrastructure closer to where its patients are. “Right now, we will roll out the pilot programme only in Bengaluru. In the coming months, we will look at only the constituencies that we serve.”
With the company’s entry into the health insurance sector and investment into building clinics and pharmacies, NH has also revamped its branding strategy and corporate logo.
Invest in Prevention Rather Than Blaming Pvt Hospitals
When asked why private hospitals are frequently accused of rendering prohibitively expensive healthcare, Shetty said people need to invest more in preventive care to escape the bigger cost burden instead of blaming private hospitals.
“If a heart surgery costs Rs 2 lakh here (in India), it costs Rs 20 lakh in Singapore, Rs 2 crore in US. India does surgery at the lowest cost in the world, but if this is overcharging compared to ‘I don’t want to pay Rs 2 lakh for heart surgery’, then it’s fine.”
Shetty believes that “Indians must get serious about their health and start taking the concept of prevention seriously”.
“I’m shocked every time people get surprised when some famous person or some very young person gets a heart attack and dies. God did not programme us to live very long. We have very poor arteries. We live in a very poor environment and a lot of environmental factors, diet and sedentary lifestyle cause us to have cardiac blockages. So knowing all the risk factors, people just have to recognise that if you want to live a long life, you have to get on a diet plan, do at least 5,000 steps or do anything so that you don’t end up in a situation in the future.”