The U.S. must learn more about value-based healthcare from global emerging markets and employ frugal innovation if the country and the industry wants to reduce the gross domestic product on healthcare and prevent it from rising 25 percent over the next few years, Forbes contributor Reenita Das wrote in a recent opinion piece.
General Electric introduced the idea of frugal innovation more than a decade ago with its electrocardiography machine when it focused on creating products based on needs, and rethinking the business and production processes to reduce costs while creating financial gains, Das wrote.
Hospitals and healthcare systems can replicate that business model. As an example, Das pointed to Narayana Health (NH), an Indian-based multi-specialty hospital chain, that opened in 2001 with 300 beds. It now operates 23 hospitals with more than 6, 200 beds in two other countries and 14 cities. NH provides high-quality care at low costs and practices frugal innovation by using IT infrastructure, advanced lean manufacturing principles and process control within environmentally friendly buildings to reduce costs.
"The concept NH has brought to fruition will emerge as a global industry model for its ability to reconcile quality, affordability, scale, transparency, credibility and sustainable profitability in emerging countries," Das wrote, noting the organization hoped to expand to 30,000 beds within the next five years.
The hospital group recently began a project in the Cayman Islands at Health City Cayman Islands, a 104-bed multi-specialty facility, according to Das. The system plans to invest $2 billion over the next 10 years to expand to 2,000 beds, build a medical school and an assisted living center to offer healthcare services discounted at about 30 percent of U.S. rates, staffing the hospitals with Indian doctors, nurses and staff.
U.S. healthcare systems must embrace this frugal innovation concept if they want to survive and deliver value-based care in financially trying times, she said. "The past is built on affluent hospital models; the time has come to rethink, especially in light of the realities U.S. healthcare faces today," Das wrote.
Importing new knowledge is key to implement innovations that will benefit both organizations and patients, FierceHealthcare previously reported. For example, Memorial Hospital in South Bend, Ind., sends staff members to visit businesses in other industries to pull the best and most innovative ideas to recreate at the hospital.
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