ANALYSIS OF HEALTH CITY CAYMAN ISLANDS

ANALYSIS OF HEALTH CITY CAYMAN ISLANDS(HCCI) CASE
BY
GROUP 7

BRIEF DESCRIPTION OF THE CASE
This case talks about the the construction of Health City Cayman Islands which was an extension of Narayana Health(NH),a very successful hospital based in Bangalore providing affordable health-care services to the large low-income population in India.After its huge success in India where it eventually went on to build a multi-specaility Health-City,it now wants to replicate this model in the Western World as well.And for this purpose it has chosen Cayman Islands to build its first Health City on Foreign Soil.

WHY CAYMAN ISLANDS?
Some of the reasons why NH chose Cayman Islands are-:
Close proximity to the Americas & the Carribean Islands provided access to a large market of around 950 milllion people
After being badly hit during the Great Recession of 2007-08,CAYMAN ISLANDS(CI) urgently needed to diversify its economy which was mostly dependent on the tourism & finace industry.
Medical Tourism was already a booming industry with 100,000-150,000 American tourists travelling to far-off countries like India,Thailand etc while Indians in need of high-quality medical treatment travelled to developed countries like US.The strategically favourable location of CI would provide a better alternative to both sets of medical tourists.
It would provide low-cost alternatives to the exorbitantly priced health-care services in USA.
Limited tertiary health care facilities in CI meant most of the Caymanians in need of quality healthcare had to fly to Florida after a long & tiring VISA process
Various tax concession/exemption laws in CI would be extremely helpful in sustaining this low-cost health-care model.

COST-CUTTING MEASURES ADOPTED
In order to make this low-cost,high quality dream a reality,HCCI adopted several innovative measures to cut costs-:
Use of Open-bay 17 bed ICUs instead of Individual Private ICU rooms to make observation easy by fewer nurses.
Use of large windows to cut down on lighting & ventilation costs.
Using local labour & material procured from local businesses instead of importing them from outside saved significant costs.
Use of Sea Water Air Conditioning(SWAC) to reduce Air-Conditioning costs by 75%.
Getting Oxygen for clinical purposes from Dedicated Oxygen Generation Plants instead of procuring themfrom outside at exorbitant prices.
Medical Equipment Procurement from India instead of from the U.S.A resulting in significant cost savings
Innovative construction techniques such as wall insulated concrete forms to reduce electricity bills,modular pre-fabricated bathrooms to save plumbing work & time & construction of two floors to comply with safety regulations & to minimize costs.

SUPPORT FROM CAYMAN GOVERNMENT
To make this project a success,The Cayman Government took several steps to support HCCI.
Exemption of HCCI from all tax liability for a period of 25 years irrespective of any changes to tax laws
Exemption of HCCI from Custom Duty for the first $800 Million of medical equipment & medical supplies brought to Cayman
Capping of non-economic damages awarded in medical malpractice cases to USD 620,000
Making VISA available to patients within 48-72 hours of their being approved by HCCI hospital for a visit.
Recognizing medical qualifications from India & approving Indian doctors & nurses to practice in the Cayman.
Allowing HCCI to set up a large scale medical school to train nurses & doctors.
Permitting HCCI to build a large-assisted living community.

COST COMPARISONS
As a comparison of the healthcare prices of HCCI with equivalent facilities in the U.S.A,following observations are noted-:
Total cost of CABG for a Caymanian at a Miami Hospital is $102,000 while that in NH BANGALORE is $8,000.
Cost per bed in HCCI came to US$400,000 while it was US$1-2 million in the U.S.A.
Members of the 'Yeshaswini' Insurance Program got access to more than 1600 tratment modalities by paying a premium of just 11 cents a month!!
Average cost of Heart Surgery in NH was about 2% of the same in comparable medical facilities in the U.S.A.



PARTNERSHIP WITH ASCENSION
Ascension Health,a subsidiary of Ascension Group,was a provider of health-care services in the US.It was assisted by other subsidiaries in the group in the form of services like medical equipment management,treasury management etc.Sensing the lack of innovation in the US Healthcare market,Ascension Health was eager to partner on the HCCI project.Also Dr.Shetty wanted to partner with a US Healthcare organization willing to co-invest in the HCCI project.So,in April 2012,they announced a JV to develop the first phase of HCCI

POTENTIAL ISSUES IN THE FUTURE
Some issues which may trouble HCCI in the future are-:
HCCI may not have the same reception among US & Carribean patients
Uncertainity in setting HCCI rates given low flexibility in increasing prices post the initial agreement with insurance companies.
Replication of this model in the US healthcare systems if it proves to be successful thus diverting patients away from HCCI.
Costs estimated for different medical operations may deviate to a large extent from actual costs or they may rise significantly in later years.
In case local healthcare agencies for whatever reason are unable to collaborate with HCCI in the event of it becoming a success in the future,they may provide stiff opposition to its operations