CASE ANALYSIS OF HEALTH CITY CAYMAN ISLANDS This case talks about the construction of Health City Cayman Islands which was an extension of Narayana Health (NH), a very successful successful hospital based in Bangalore providing 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- speciality 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.
CAYMAN ISLANDS 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 lar ge scale medical school to train nurses & doctors.
Permitting HCCI to build a large-assisted living community.
COMPARISON OF U.S HOSPITAL WITH HEALTH CITY To offer quality 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 t o happen until we move from fee-for-service to pay-for-performance. Until that transition is made, the U.S. healthcare system is going to struggle because it is easier to increase volume than to increase efficiencies. Some hospitals in the U.S. have the same volume of patients as Dr. Shetty's facilities, but fee-forservice has kept many of them from achieving the same kind of success Dr. Shetty has. Under the feefor-service model, the hospitals in the U.S. that perform a high volume of surgeries compensate surgeons based on the number of procedures they perform. However, in Narayana Health hospitals, 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 interested in becoming more like Health City. While the healthcare industry has long been concerned about shifting away from fee-for-service, it appears more hospitals and health systems are embracing managed care models that utilize value-based payment models.
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 treatment
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.
CHALLENGES Although Health City has many desirable features, Dr. Shetty is going to face some challenges in the near future. A lot of people are travelling from the U.S. to other countries for cosmetic surgery because they are required to pay out-of-pocket for those procedures. However, many people with health insurance do not believe they need to go elsewhere for care. In the early years, Dr. Shetty is going to be challenged to get patients to want to go to Health City, especially those who have insurance. He will have to overcome U.S. patient’s perception that the quality of healthcare isn't as good as soon as you leave your shores.
COMPETITION Unless the healthcare system in the U.S. undergoes drastic change, it is possible Health City will have a negative effect on hospitals and surgical centres in America, and specifically in Florida — since it is just a short flight away from the Cayman Islands. It is clear Health City is meant to extend care beyond the Cayman Islands. Health City will feature 1 bed per 25 Grand Cayman residents once the facility's expansion plans are completed, compared to the 1 bed per 333 people in the U.S. It is likely patients in the U.S. are going to begin travelling to Health City for care and that businesses, such as insurance companies, are going to come up with incentives for people to get care there due to the cost savings they will achieve. Employers may also begin signing contracts with Health City for the hospital to provide its employees with care, as these types of agreements are gaining popularity. Health City aims to be a Joint Commission international accredited facility within the next six to nine months, and Dr. Abraham says he expects a more steady flow of U.S. patients to Health City at that point. Accreditation combined with high quality care, low prices and a vacation-like experience should leave U.S hospitals with all eyes on the Cayman Islands, as healthcare of the future can already be found at Health City.
