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Innovations in Indian Healthcare Sector

Rohini Pimple, Roli Srivastava, Tulika Verma

Participants, PGPX, Indian Institute of Management, Ahmedabad, India.


India’s performance on health care is poor, the major problems being inadequacy and inaccessibility of medical facilities, and unaffordability of treatment. This article discusses four examples in which the above problems have been dealt with innovatively. These examples are: 1. The Kerala Model for palliative care, 2. Arvind eyecare system, 3. Narayana health, and 4. e-Mamta programme.


Text Box: Important health sector statistics of India
Population: 1.34 billion
Expenditure on health: 4.7% of GDP
Infant mortality rate: 38 per 1000 births
Maternal mortality rate: 174 per 1 lakh births
No. of medical colleges: 412
No. of registered doctors: 1 million
No. of government hospitals: 20,000.

In spite of achieving a significant improvement in the average life expectancy in the last few decades, India’s performance on many other dimensions of its citizens health has been quite poor. Infant mortality rate in India is 38 per 1000 live births, and maternal mortality rate is 174 per 1 lakh births, whereas in China the corresponding figures are 11 and 27 respectively.  According to Bill and Melinda Gates foundation (Mor, 2016), every seven

 Important health sector statistics of India

 Population: 1.34 billion

 Expenditure on health: 4.7% of GDP

 Infant mortality rate: 38 per 1000 births

 Maternal mortality rate: 174 per 1 lakh births

 No. of medical colleges: 412

 No. of registered doctors: 1 million

 No. of government hospitals: 20,000.

minutes an Indian woman dies because of pregnancy or child birth problems. The fate of the babies is no better: every two minutes, a new born Indian baby, less than one day old, dies. India has the largest number of tuberculosis patients in the world. Over two lakh young children die of infectious diarrhoea, which is attributable to untreated human waste. Even the number of deaths due to non-communicable diseases is on the rise. The medical infrastructure is woefully inadequate, and further, unevenly distributed between rural and urban areas. There are only 0.6 doctors and 0.8 hospital beds per 1000 people (Deloitte Report, 2010). A large percentage -- more than 70 per cent --of the Indian population, lives in rural areas, whereas 80 per cent of doctors, 75 per cent of dispensaries, and 60 per cent of hospitals are located in urban areas.  The urban areas are not within the reach of the rural masses. Most of the health care providers are in the private sector, and the cost of their treatment is unaffordable for a majority of the population.


Thus, the major problems facing the health sector are inadequacy and inaccessibility of the health facilities and unaffordability of the treatment.

Obviously, there is no single approach to improve the health of the staggering masses of India; improvements can only be achieved by a multi-pronged attack. Some possible approaches to mitigate the above problems are:

1. Given that India has only a small number of doctors, to maximize their productivity by design of efficient systems for medical task execution and hospital management;

2. To make health care affordable, using frugal approaches in the management of health care programs and exploiting economies of scale; 

3. To improve the accessibility of medical experts to far flung rural population, by using information and communication technology, and, finally,  

4. To cater to the large target population of public health programs, by encouraging and facilitating the involvement of local communities.

The above approaches are already attempted with success, both by government programs and private hospitals. We discuss below four examples, each of which has used one or more of the above approaches.

Kerala Model for Palliative Care.

Kerala, a tiny state of southern India, is far ahead of every other state, in many human development indicators, particularly in literacy, gender balance, and health, even though its per-capita income is not particularly high. The reasons are that its literate population is very much aware of their rights, the local governments are very active in providing good governance, and there is a lot of participation in developmental activities by volunteers and charitable organizations.

In many of the health performance indicators, Kerala is comparable to developed countries, and in some Kerala may even fare better than the developed world.

Particularly well known is Kerala’s palliative care system. Palliative care is the care provided to people suffering from incurable diseases like cancer and AIDS, and from old age problems. Government of Kerala has recognized officially that providing palliative care is a major responsibility of the government, and has introduced an official policy for such care. It is the first state government to do so. In framing this policy, the government has expanded the definition of palliative care to include patients chronically ill, and patients who are mentally incapacitated. Further, the government was bold to relax the narcotic usage restrictions, in the case of palliative care. It has also facilitated the establishment of several palliative care units, now 329 in number, throughout the state. The pain and palliative care society (PPCS) founded as early as 1993 the Institute for Palliative Medicine, now located in Calicut.

Palliative care requires not only physical treatment of the patient like in any other diseases, but also providing social, psychological and spiritual support to the patients. At times, even the family members of the patient need to be counselled. Kerala therefore has realized that the care should be patient focussed, and not merely disease focussed. The conventional medical system is not equipped to provide such holistic care. This gap has been filled in 1999 by the pain and palliative care society by facilitating the creation of community based self-help volunteer groups called neighbourhood network in palliative care (NNPC), which provide primarily home based support to patients and  their families by regular visits.

NNPCs do not replace but supplement the work of the existing doctors and nurses.  An aspiring volunteer should be willing to spare at least two hours a week visiting patients at their home. Such people are given training, which consists of 16 in-class hours, and four days of clinical training under supervision. At the end of the above period there would be a formal evaluation of the trainees. All the volunteers, on successful completion of the above training, are organized into groups of ten to fifteen. It is the responsibility of each group to identify the patients in their area, their requirements, and provide social, psychological, and spiritual support. They also perform other non-medical tasks such as organizing for financial support to the patients and their families, acting as an interface between the patient and the palliative care facilities and health providers in the neighbourhood, and organizing health awareness programs. The NNPC program initially began in Northern Kerala in 

2001. In the seven districts of Kerala, there were 64 palliative care units, 4000 volunteers, serving at any time 7000 patients. The NNPCs are well supported by doctors and nurses, and the government provides finances.

The above Kerala model, which is a combination of civic involvement and government support, has received worldwide acclaim. Other countries like Bangladesh, Seychelles, Ethiopia, and even Switzerland are trying to replicate it (Economist Intelligence Unit, 2010).

Arvind Eye Care System.

Text Box: At Arvind Eyecare System

Eye surgeries per year: 0.4 million
Cost of a cataract surgery: US $30
Time spent by a sugeon on a surgery: 10 minutes
Cost of an intraocular lens: $5
2/3 of the patients are treated free
Arvind Eye Care System is reputed to be the largest and the most productive eye care facility in the world. It is a network of eleven eye hospitals, and 40 vision centres in the state of Tamilnadu, dedicated to “eliminate needless blindness”. The first hospital was founded in 1976 by Dr. G. Venkataswamy under the Govel trust, another organization established by him. According to their latest reports, in the year ending March 31, 2016, Arvind Eye Care System has treated 4.7 million out patients, and performed 4,08,220 eye surgeries.   A  distinguishing feature of the system  is that about two thirds of all of its patients are treated free. Yet, the system is financially self-sufficient and funds all its expansion by its own internal  resources( Arvind Eye Care Systems Activity Report, 2015-16).

A lot of blindness in India is due to untreated cataracts, and can be eliminated by reaching out to the patients and by providing them affordable treatment.  Arvind  Eye Care System  accomplishes the above task by screening the rural population through its numerous eye camps, during which thousands of patients are checked and those needing surgery are identified, and referred to their hospitals for the surgery. Additionally, they have set up 40 vision centres in various locations to which patients can go on any day  for eye examination. The vision centres, equipped with the normal eye examination apparatus, a computer, a digital camera, and internet connectivity,  are manned by technicians who interact with experts in the eye care hospitals,  through telemedicine technology .  The patients requiring surgery or further treatment at the hospitals are identified through the above process also.

The rural patients referred to the eye hospitals by the eye camps and vision centres are transported to the hospitals, treated, and operated, if necessary, and dropped back at their villages. For those who cannot pay, the transport, lodging and boarding, and all medical services are provided free of charge.

Economies of scale definitely play a significant role in Arvind System’s  self-sustenance.  A key reason for their financial self-sufficiency  is their emphasis on efficiency,  and resource optimization—the two concepts they have borrowed from the field of mass production. An eye surgeon at Arvind for example performs on average 2000 operations in an year, whereas in US the corresponding figure is only 125 to 200.

 At Arvind Eyecare System


 Eye surgeries per year: 0.4 million

 Cost of a cataract surgery: US $30

 Time spent by a sugeon on a surgery: 10 minutes

 Cost of an intraocular lens: $5

 2/3 of the patients are treated free

 At Arvind, the cost of a cataract surgery is estimated to be $30, whereas in the US it is $3500. The low cost of operation at Arvind, surprisingly, is accompanied by high quality outcome.  According to some of the research studies, the number of complications developed post-surgery at Arvind is half of those in the British health care system.  On an average, a surgeon at Arvind Eye Care spends about 10 minutes per operation, whereas in other hospitals the time spent per operation is 30 minutes.  Such high productivity is achieved by various means:

 1. A doctor spends time only on the core part of the operation, whereas other tasks requiring lower skills are performed by nurses and paramedical staff. Generally, a doctor is assisted by four nurses during an operation,

2. A doctor attends on two patients present in the operation theatre at the same time,

3. The lay out of the operation theatre and the arrangement of the equipment are done to facilitate the doctor to switch between the two patients efficiently ( Govindarajan and Manikutty, 2010, Givindarajan and Ramamurti, 2013, and Innovation Portal article on Arvind).

Arvind Eye Care, in its initial days,  had to use imported intraocular lenses in their eye surgeries. As the number of surgeries at Arvind was quite high, their requirement of the intraocular lenses was also high.  To reduce the cost of the lenses,  Arvind Eye Care  set up , later, their own facility called Aurolab, to manufacture intraocular lenses, at a cost which was a fraction of the cost of imported lenses. The intraocular lens manufactured in Aurolab costs $5 whereas the average cost of the lens in other countries is $80. The scale of manufacture at Aurolabs is so high that they are not only able to meet their own requirements but are also able to export their product to other countries. Aurolabs also produces suture needles, cataract kits and a few other instruments.

In addition to running the eye hospitals, vision centres, and the above manufacturing facility, Arvind Eye care owns a research centre and a training facility. About 20to 25% of the eye specialists in India are supposed to have undergone some training or other at Arvind Eye Care training facility.

Narayana Health

Text Box: At Narana Health
No. of cardiac surgeries/year: 14,036
No. of cardiac procedures/year: 51,456
No. of surgeries by a surgeon per week: 24
Average cost of a surgery: US $1500
3.3% of patients treated free
10% receive substantial financial support

Begun in the year 2000 by the cardiologist Dr. Devi Prasad Shetty in Bangalore, Narayana Hrudayalaya, now called Narayana Health (NH),  has the mission of high quality and affordable health care services to everybody by leveraging economies of scale, skilled doctors, and an efficient business model.

Nowadays Narayana Health has diversified into multi-speciality hospital services, having originally specialized and made a name in the domain of cardiac care. It is well known as a pioneer in the use of telemedicine on a large scale and is said to have the largest experience in tele- cardiology.

It operates a chain of 23 hospitals, 8 heart centres, and 24 primary care facilities spread over 31 cities, towns and villages. Its hospitals contain 5442 operational beds. According to the Red Herring Prospectus issued by them in December 2015, the number of cardiac surgeries performed per year by them was 14,036,

 At Narana Health

 No. of cardiac surgeries/year: 14,036

 No. of cardiac procedures/year: 51,456

 No. of surgeries by a surgeon per week: 24

 Average cost of a surgery: US $1500

 3.3% of patients treated free

 10% receive substantial financial support

number of cardiac procedures 14,036, dialysis procedures 1,84,443, and kidney transplants 829 ( Narayana Hrudayalaya Limited, 2015).

Average cost of a heart surgery at NH is $1500, whereas in US it is $1,44,000.In spite of the low cost of their service, their quality is quite high. The mortality rate at NH is 1.27%, and infection rate 1% for coronary graft procedures, a performance which compares quite favourably with that of US cardiac hospitals.

As in Arvind, the productivity of a specialist is maximized at NH by providing to him a team of assistants, trainees, and nurses during each operation. In a bypass surgery which takes about five hours from beginning to end, the specialist is busy for only one hour performing the core part of the operation, namely the grafting. Other activities need less experience and skill. For example harvesting of veins and arteries, opening  and closing of chest, and suturing are done by junior doctors. Nurses prepare the patient for the operation. As a result of such division of labour, a surgeon at NH is able to perform 24 surgeries per a six day week; this productivity is higher than the global average.

NH also experimented with various alternatives to cut down its cost in setting up its hospitals, in owning and operating its equipment, and in its administration.

Not all of the hospital premises in which NH operates are owned by NH. Some are taken on lease, whereas some others by sharing a certain percentage of their revenues with the owners of the premises. In treating some categories of patients, NH uses  low utilization third party hospitals.

In the case of very expensive equipment, they have tried,  in some of their hospitals, a pay per use model rather than purchasing the equipment outright. Similarly to improve administrative efficiency and to achieve integration of various functions, they have deployed an enterprise resource planning (ERP) system, but instead of using an on- premise  application, they have chosen a cloud based ERP, thereby  converting  some fixed costs related to ERP into variable costs.

When NH was started,  it was estimated that the number of cardiac surgeries needed per year in India was two million whereas the actual  number of such surgeries performed was only 1,20,000 per year. This gap was largely due to unavailability of diagnostic facilities, doctors, and surgical facilities in rural areas. To close this gap, NH established three computer and communication networks, for transmission of data, image, voice, and video. The first network connected coronary care units, which were equipped with diagnostic equipment and staffed by NH; the second between remote government hospitals in district headquarter towns with NH, to perform basic screening and tele-consultation; and the third connected several family physicians with NH hospitals, for transmitting ECGs and getting their analysis from NH. The above  facilities could also be used  to conduct academic teaching or training sessions.


Initially, for the above networking NH used the satellite network of Indian Space Organization, but later shifted to broad band Internet. It has also developed its own software to transmit ECGs with the help of trans telephonic ECG machines (TTECGs), and distributed it free of cost to family physicians in rural areas. Further the district head post offices , 25 in number, in the state of Karnataka were connected to NH. This facilitated the patients to access a nearby district head post office and hand in their ECGs and medical reports for uploading into NHs systems through internet. NH would review such reports and send back their recommendations within twenty four hours to the patients through the post offices (Booth, 2014 and UNDP Report, 2007).

NH is committed to providing health care to whoever approaches it  with a health problem, without turning any patient away. If a patient cannot pay, sources of funding are found by NH for the patients. 3.3% of the patients are treated free of cost, while 10%  of the patients receive substantial financial support.

NH also played a key role in formulating and implementing a micro health insurance scheme for farmers and peasants of Karnataka state, which covers, for the subscribers,S costs of several different kinds of surgeries including the heart surgeries that  NH is well known for. This scheme, called the Yesehaswani  Medical Insurance scheme,  is administered by the Karnataka Government through Cooperative Farmers Trust. The scheme was targeted at farmers and peasants registered in cooperative societies in Karnataka. The number of  registrants in the scheme  was initially 2.2 million. The enrolment fee was set at Rs 150, and annual premium at Rs 60. In 2013-14, the premium is Rs 210 per year. Primarily the scheme covers the cost of surgery, and outpatient consultation for all members. Cost of implants like stents, valves, pace makers involved in a surgery are not free, although the implants may be made available to the members at a discount by many hospitals. Even at a low premium,  the scheme is self-sustaining because the subscriber base is huge, and the probability of a subscriber needing a surgery  very low, less than 1 per cent . The scheme is so successful  that  some other states in India have already come forward to replicate it among their own farmers.

Mother and Child Care in Gujarat : e-Mamta

Two major health indicators of a community are infant mortality rate(IMR) and maternalmortality rate(MMR), in both of which India is lagging behind .

MMR is important because loss of a mother is a loss not only to her family, but to her community and nation. Most mothers do not have access to good nutrition and health care during pregnancy, child birth, and post-delivery. Further, most infants die during the very first year of their birth, because of mal nutrition, and improper attention to childhood inoculation.  Normally, parents are supposed to keep track of when the child is to be inoculated. Unfortunately, illiteracy and lack of awareness, among other things, cause  several parents to miss out on the inoculation programmes.

Gujarat  Government, with the help of National Rural Health Mission (NRHM), has launched the e-mamta program to help solve the above problems. This targets the pregnant women, and children below the age of 6 years. It attempts to reach out to all rural areas and urban slum dwellers. The objective is to provide antenatal, natal, and post natal care to mothers, and to provide immunization, nutrition, and adolescent services to children. National Informatics Centre is in charge of developing the database of the beneficiaries  and facilitating the reports and other communication through the website of the programme (Department of Health, Government of Gujarat, 2015)

Towards the above goal, the government involved its sub-centres and primary health care centres to perform the following tasks: to conduct family health survey; so far,  about 80% of the population of Gujarat has been covered as a part of this step, 2. To populate the database of pregnant women, and children, 3. To generate work plans for health workers, and to give communication to beneficiaries regarding a scheduled service, 4. To update the records with the actions taken, 5. To track the patients who were left out from a scheduled service, and  6. To aggregate the information related to various performance indicators and generate reports for higher authorities.

There are several potential benefits of the above program to the various stake holders:

1. The beneficiaries now know the kind of services that they are going to receive and the schedule of the services; even if a beneficiary has undergone a change of address because of migration, their status is still intact, because a beneficiary can be tracked by name and health ID, and not just by address

2. The service providers know the schedule of work, which beneficiary has to be given what kind of service; and which services have already been received by a beneficiary.

In case a mother or child is left out of a given service, such people can be easily tracked, and corrective actions taken.

3. Program managers are provided with a dashboard, which is frequently updated to provide them with a view of how the program is progressing.

The e-mamta model has been replicated by several other states of India.

Evaluations of the mother and child tracking programmes in other states have shown that the programme needs improvement in the following aspects (Nagarajan et al, 2016):

1. Right now, the data entry operators and auxiliary nurse and midwife are overloaded,

2. The training provided to various workers is not adequate,

3. Power supply to the computers is not steady,

4. Internet connectivity is poor, and

5. The SMSs could be sent to only a small fraction of the beneficiaries; and even among the recipients of the SMSs, only a small fraction was able to understand them.

In spite of the above gaps, e-Mamta programme should be recognized for the following major initiatives:

1. A mammoth effort at digitizing public health records over a whole state,

2. Generation of work schedules for health workers through computer,

3. Name based tracking of beneficiaries, particularly those who were left out in a scheduled service,

4. A model which is replicable in various other parts of the country

The four examples described above belong to different domains in health care: the Kerala Model is concerned with palliative care, e-Mamta is focussed on pregnant women and young children, Arvind Eye Care System deals with cataract and other eye problems, and Narayana Health specializes in cardiac problems, while diversifying into other areas. e-Mamta is primarily a government initiative, whereas the Kerala model is supported jointly by  government and community self-help groups. Both Arvind Eye Care and Narayana Health are private ventures. Their innovations are also of different kinds. The distinguishing features  of the Kerala Model  are the policy initiatives by the state government and an intense involvement of community volunteers. E-Mamta’s novel features are name based tracking of mothers and children, and automatic generation of work schedules for health workers. Both Arvind Eye Care and Narayana Health rely heavily on economies of scale.  Additionally, Arvind has attempted backward integration, and Narayana is well known for its tele- medicine initiatives. All the models are scalable and replicable. Arvind has been in existence for 40 years, Narayana for 16 years, Kerala Model is about 17 years old and e-Mamta  programme began seven years back.

New technical developments like tele- medicine, data analytics, automation of diagnosis and therapy, hospital information systems, and digitization of medical records,  continue  to influence the reach,  productivity, and quality  of health care facilities in India. It should also be noted that  a mere use of technology does not ensure the intended outcomes in the field of health care.  In the words of Dr. G Venkataswamy, the founder of Arvind Eye Care System, “Intelligence and capability are not enough. There must also be the joy of doing something beautiful. Being of service to God and humanity means going well beyond the sophistication of the best technology, to the humble demonstration of courtesy and compassion to each patient.”




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