Healthcare Service Delivery Models for Emerging Economies: Insights from India

Models of Healthcare Delivery in India

The healthcare delivery system in India was majorly categorized into two heads: the public sector and the private sector. The public sector comprised the Government, which focused on providing the primary healthcare facilities through PHCs in rural areas with limited presence as secondary and tertiary care institutions in cities. India’s Government incurred a significant investment in schemes like NHM and Ayushman Bharat, which provided comprehensive primary health care through dedicated health and wellness centres. As per the Ministry of Health and Family Welfare, Government of India, nearly 72% of out-of-pocket expenditure on health accounted for primary care out of the 1.6% of total GDP earmarked for public expenditure in FY 2019–20 (National Health Systems Resource Centre, 2019; Roberts Singh, 2020). The private sector included the secondary, tertiary and quaternary care institutions, which provided care mainly to the metros and tier 1, tier 2 cities, which on account of unaffordability and location barriers, were not accessible to around 70% of the rural population.

Ayushman Bharat

It was the world’s largest government healthcare scheme launched by India’s Government under the Pradhan Mantri Jan Arogya Yojana (PMJAY) in September 2018. More than a business model, it was projected to provide comprehensive primary healthcare through health and wellness centres (Exhibit 2). It was aimed at secondary and tertiary care specialization with a health cover of ₹ 5 lakh (US$ 7,200) per family across 23 specialities for over 1,400 procedures through the Government as well as private hospitals. It was targeted at the rural poor and covered almost 107.4 million households accounting for 500 million belonging to the bottom 40% of the population’s economic scale (Roberts Singh, 2020). In the first two years of operation, the scheme had spent around ₹ 13,412 crore (US$ 2 billion) on health treatments, with 50% of beneficiaries being women, 80% from rural pockets and 70% availed surgical interventions.

The major obstacle in its implementation was the non-awareness of the beneficiaries with respect to their benefits. Instead of bridging this gap, intermediaries paved the way for corruption by accepting bribes to make the facilities available (Berger, 2014). Although applicable to daily wage workers, this micro-insurance scheme forced the beneficiaries to choose between daily earnings and health. Most chose the former since a family’s livelihood was given more weightage over health. This provided evidence that the direct costs of treatment and hospitalization had always been the priority of PMJAY, and in-process, it had substantially overlooked the compensation for wages during the period of hospitalization, not only for the patients but also for their caregivers. The patient attendants had to bear the transportation and food costs during the period to add up. Some existing plans by private hospitals provided a ‘hospital cash’ or ‘wage benefit’ in the subsidized or free models, which might be in the form of covered transportation or a fixed amount like the AECS. Also, the Government covered a pre-specified list of treatments and procedures with an upper limit on the coverage. While procedures were dynamic, with different patients requiring various care in terms of treatment medicines, the Government’s funds to the private counterparts were fixed irrespective of the expenses incurred. Hence the latter denied treatment to the patients, and the purpose of reaching the masses remained unserved.

Given the above scenario, Ratan Jalan, Founder and Principal consultant of Medium Healthcare Consulting elaborated, ‘The current restricted healthcare delivery models need to focus on preventive aspects in healthcare and create functional progressive referral systems managing the bulk of healthcare at the front of the primary healthcare level, for better healthcare delivery models’.

Background and Focus

AECS was founded by Dr G Venkataswamy in 1976 in Madurai in Tamil Nadu, India, to provide eye care, significantly disabling cataract blindness in patients. In developing countries, a cataract was a major cause of concern, forming 41.7% of blindness cases in South Asia in 2010 (Jonas et al., 2014). A cataract resulted in a cloud on the natural eye lens caused mainly due to the risk factors like poor nutrition and tropical weather. This needless blindness could be easily eliminated through intra-capsular surgery without an intra-ocular lens (ICCE) and extra-capsular surgery with an intraocular lens (ECCE). The former was cheaper, with the restored vision being moderate with aphakic glasses, while the latter was expensive due to artificial IOLs being implanted and restoring visions to normalcy. In 2018–19, Aravind’s outpatient visits exceeded 4.4 million, with 0.5 million surgeries, laser procedures and injections performed across all Aravind Eye Care centres (see Exhibit 3 for a reference of the assembly line of the approach followed across Aravind centres).

Operational Model and Its Uniqueness

Aravind’s cross-subsidization business model aimed to create an independent institution through revenues earned with zero dependencies on funding and grants (Krishnan, 2015). It operated in two sections to achieve its mission—the paying section and the free section. The poor were served for free or heavily subsidized through the revenues generated from paying patients capable of paying the market rates (Rangan & Thulasiraj, 2007) (refer to Exhibit 4 for an overview of Aravind’s business model). The same physicians provided primary services like surgery and comprehensive eye examination. The price discrimination was created using the add-on services like wards, air-conditioning, type of surgery and the variant of IOLs to be implanted. The quality of the procedure remained the same. At the same time, the paying patients paid extra for the luxury facilities provided. The patients had a free hand in selecting the type of service. If they opted for paying patients, an additional set of packages based on the services provided was displayed for their convenience as second-degree price discrimination.

As per Dr Aravind Srinivasan, Director of Projects, AECS, 80% of eye healthcare costs were fixed while 20% were variable, which, when addressed systematically, led to the sustainable cross-subsidization model at Aravind. The operation procedure adopted in Aravind was as efficient as a fast-food chain assembly line following the mass marketing strategy employed by the likes of McDonald’s and Pizza Hut. Aravind managed to keep its cost low by catering to a high volume of surgeries given the vast expansion of cataract blindness in India without compromising quality. Given the high cost of imported IOLs, which were costly, leading to the expensive ECCE surgery, Aravind, in 1991, embarked on a journey to manufacture IOLs in its facility. This facility, named Auro Lab, a non-profitable charitable trust, produced state-of-the-art IOLs. When implanted, they regained vision close to normalcy; this convinced patients to get the cataracts treated earlier in their lives, which increased volumes. As the founder was popularly known, Dr V aimed to provide IOLs to all patients, paying and free, since in-house manufacturing reduced the cost to 100th in the US. Extending this vision further, Dr Srinivasan elaborated, ‘With the in-house lens costing at about US$ 2 on average, a common man with an ability to pay US$ 10 can afford it easily’.

Marketing through Community Ventures

Volume was the only source to reduce the fixed costs in an assembly line operation. The financial stability of Aravind’s practices was centred on the masses preferring Aravind over other establishments. To attract volumes, Aravind opted for a marketing strategy to make the rural masses aware of the vision-impairment problem and generate self-seeking healthcare behaviour. Marketing to low patients was achieved through a well-structured community outreach program. As per the annual report for FY 2018–19, 563,941 patients were screened in camps, 652,902 in the vision centres and 196,635 through the mobile units as part of the community outreach program. The local government organizations and service organizations like Lions Club and Rotary Club collaborated with AECS to spread the word for camps within a radius of 20–30 miles through announcements, local doctor referrals, street corners, bus stops and necessary supporting facilities for the visiting Aravind team like food and furniture. Camps were mostly held on weekends in town with over 15,000 people, and during non-festival weeks. The Madurai centre procedure was replicated remotely at the camps, with amenities such as eyeglasses available at the campsites. Patients referred for surgery were accompanied by Aravind staff members and were transferred to the main hospital by a hired bus or public transport. All these services, except the glasses, were rolled out free of cost.

These outreach camps were considered highly successful due to the spill over effect. It generated many new walk-in patients, which was economically profitable when the incremental cost was calculated alongside these camps’ incremental revenue (Gupta et al., 2018). The AECS grew to become a network of hospitals, clinics, community outreach efforts, factories, and research and training institutes in south India that had treated more than 32 million patients and had performed 4 million surgeries by the FY 2018–19. It gave such an efficient high-volume model, and it was rightly termed as ‘McDonaldization of Eye-Care’.

Healthcare Delivery Process

Dr Shetty developed a hybrid healthcare economic model in which the poor patients were served free or at reasonably low costs, subsidized through the funds generated by the paying patients. The surgeons at NH had impeccable experience in the field of cardiac care. Dr Shetty himself was the first cardiac surgeon in India to conduct neonatal open-heart surgery. Through its top-notch medical team, NH promoted high-quality care with more than 95% success rates, comparable with its counterparts in developed countries like the United States. NH followed the principle of ‘economies of scale’ to lower the cost of operation by attracting many patients in response to its quality care. High quality and low operation costs made NH possible to treat patients who could not afford operation costs (Taylor et al., 2017). The in-house trust established as a charitable organization at NH raises funds for the needy through their donors from associated organizations. Simultaneously, schemes like ‘Karuna Hrudaya’ ensured that financially constrained patients were subsidized to the extent that they could move ahead with the treatment. With persistent efforts, a whopping 2.5 million+ patients were treated every year across 24 locations in India, with almost half of them at highly subsidized packages or free of cost. ³

Working Strategy and Its Scalability

To enable affordable tertiary care for the masses, Dr Shetty termed his strategy the ‘Walmartization of healthcare’. NH utilized its strong reputation to increase the volume of procedures, which effectively reduced the unit costs through efficient capacity utilization. This also increased the institutions’ productivity while the numbers improved the skillset leading to benefits for all the stakeholders, that is, healthcare beneficiaries and professionals. The hospital ensured zero complacencies with increasing volumes and was equipped with state-of-the-art equipment, facilities and support services. In the early years of its functioning, NH handled approximately twenty open heart surgeries and twenty-five catheterization procedures, almost eight times the average of other Indian hospitals (Khanna et al., 2011) (refer to Exhibit 5 to view the state-of-the-art facility at NH).

Since the humble beginning of NH, the mix of paying, subsidized and free patients had been optimal to sustain and scale its charitable mission. The backbone of such operations was the internal financial control of spending, which was monitored continuously by the finance department through a ‘daily accounting system’. This considered the daily spending on patients, supplies and salaries, which helped the doctors schedule surgeries that could be accommodated concurrently with funds’ availability. The staff salaries were comparable to the Indian standards, but the mission activities demanded longer working hours, which was fulfilled considering this venture’s humanitarian aspect. Given the high volumes, the hospital maintained its inventory of supplies and requirements centrally through comprehensive hospital management software, which indicated its technological advancement. These systems also helped the trust plan for fund shortage periods beforehand by connecting with various foundations who generously helped this noble cause.

Also, NH had established strong relations with leading Indian pharmaceuticals like Ranbaxy Laboratories Ltd, Dr Reddy’s Lab Ltd, Biocon Ltd and CIPLA, which enabled its access to the most advanced set of drugs at reasonable prices. It introduced generic drugs in its line of operations, which were considered 80% cheaper than imported medication. NH’s reputation and its medical professionals increased the exposure of these drugs to other hospitals, which reduced their costs. It acted as a source of cost reduction through discounts for increasing sales.

Addressing Community Needs

Dr Shetty envisioned uninterrupted and accessible cardiac care for the rural population. Since the cardiac specialists were highly skewed towards the metro and tier-2 cities, he introduced telemedicine for delivering specialized care (Exhibit 6). Instead of being examined by general physicians, this technology enabled the patients’ virtual examinations from the in-house specialists at NH. Coronary Care Units (CCUs) were established and connected to a nearby NH centre. These units were equipped with beds, medication, ECG machines, videoconferencing apparatuses and staff trained to handle the equipment. ECG images were transmitted via a web-based software program, and the general practitioners made the diagnoses following the instructions of the specialists. Specialists took virtual rounds of patients under observation while the severe cases were transferred to the NH premises for surgical interventions. These arrangements made cardiac care reach patients who would have received a generic treatment and, in turn, led to the enhancement and hands-on speciality training for the doctors posted in rural areas. With extensive consultations, the cost was reduced to a few ₹/patient, which helped NH associate with the government agencies to provide these services for free.

Community outreach camps organized by NH were a significant step towards taking cardiac care to the masses. As they were referred to, Mobile Cardiac Diagnostic Labs was a ‘mini-hospital on wheels’ consisting of doctors, specialized equipment like ECG machines, defibrillators and generators and trained staff on board. These labs, organized in association with social service organizations like Rotary Club and Lions Club, toured within a 1,000 km radius of the city to provide primary check-ups and ECG reports with facilities to refer the patients for surgical treatment at the closest proximity NH establishment. An insurance program, ‘Yeshasvini’, was also launched in 2002 under Dr Shetty’s guidance, through which an initial premium was collected from the beneficiaries, which entitled them free treatment across the state. ⁴ This also led to an accumulation of funds to provide the promised benefits and resulted in higher occupancy of medical establishments in the state.

Background and Focus

The first Sri Sathya Sai Sanjeevani Hospital (SSSSH) was set up in Naya Raipur, Chhattisgarh, in November 2012, in a record time from inception to reality in 9 months under the guidance of Shri C. Sreenivas, Chairman of Sri Sathya Sai Health and Education Trust. An acclaimed Institute of National Service provided completely free treatment in paediatric cardiac care. Shri C. Sreenivas, with his aim to serve the cause of a ‘Right to Healthy Childhood’, founded this unique model, which focused on the treatment of Congenital Heart Disease (CHDs). CHD was one of the most life-threatening diseases directly attacking the young of the world. It had been identified as a global health problem and accounted for one-third of all significant congenital abnormalities (Exhibit 7).

CHD’s significant causes were malnourishment (47%), underweight (43%), poverty and unavailability of proper treatment. India’s annual birth cohort was about 26 million; it was estimated that about 1.7 million children were born with defects, which accounted for almost 10% of the total newborn deaths and 4% of the under-five mortality in the country. India, as a country with a 1.3 billion population, CHD had an incidence rate of 8 to 9/1,000 live births, leading to an annual estimate of 300,000 CHD cases, out of which 40% suffered from crucial CHD with a need for early intervention (Saxena, 2019; Sharma, 2020). The CHDs, when detected in time, could be cured with adequate medical care and lead to increased life expectancy in more than 90% of the cases (Kothari, 2014). Besides, the conditions of 4Ds—defects at birth, deficiencies, diseases and developmental delays and disabilities affected approximately 10% of the child population.

Operational Model

‘Investment into Health’ was the unique approach of the free healthcare service delivery model of Sri Sathya Sai Sanjeevani Centres. With this aim, two more child heart care centres were successfully established in 2019 in Palwal, Haryana, and Kharghar, Navi Mumbai. The Centre’s business model aimed to address CHD’s national problem by offering diagnostic and interventional cardiology services through surgical treatment of CHDs, totally free of cost. The medical expenses for a typical paediatric cardiac surgery administered in SSSSH were in the range of ₹ 200,000–1,500,000 (US$ 2,700–20,000). On the flip side, more than 25% of the Indian population earned less than ₹ 150 (US$ 2) daily. ⁵

The Raipur centre, which had an eight-year standing, had developed a team of highly competent medical professionals, including cardiologists, surgeons, anaesthetists and intensivists, assisted by a compassionate nursing and support staff. The centre had a total capacity of one hundred beds, with four highly specialized operation theatres and one catheterization lab (Exhibit 8). These centres attracted high patient volumes by their high quality, success rates and utterly free-of-cost service with no billing counters. Complete care was ensured for the patients through OPD consultations, inpatient and post-operative services, including revisit and second-opinion consultations. The beneficiaries mostly belonged to the low socioeconomic strata, and the parents were identified as daily wagers. To ease the burden of zero income when the patients were treated, these attendants were allowed free accommodation and food for the entire period of treatment on the hospital premises. During their visit, the staff planned Edu-care sessions on family planning, children’s dietary requirements to avoid malnutrition and skill-based training. This led to the formation of a sustainable ecosystem, which ensured the beneficiaries not only received treatment as well as education in terms of children and skillsets but also had a sense of gratitude for the hospital and the responsibility of giving back to the society the gift of life, which their wards had received for free from the hospital.

The comprehensive care structure established by these centres was limited to surgical treatment. It included early detection, screening, improving mother and child health and nutrition, in-house nursing and other specialized staff training and promoting scientific research on CHDs. This amalgamation of aspects of society, spirituality and service was eccentric and made this free model self-sustainable by creating a holistic ecosystem that had reduced the global burden of CHD.

Community Outreach Programmes

With a vision to create a holistic and sustainable impact on society, SSSSH, Raipur, designed a program to emphasize the tenets of screening, preventive and educative spectrums of child heart care. While the curative aspect was catered through the hospitals, the preventive aspect was nurtured through the Department of Public Health and Research community outreach initiative. A humble beginning was marked in September 2013, as the Divine Child Health Program (DCHP) reflected the sense of duty of SSSSH centres to contribute to the population’s health in general and Chhattisgarh’s local communities in particular.

The DCHP was a comprehensive early detection and health screening program for school-going children in rural areas based on Indian government’s Rashtriya Bal Suraksha Karyakram (RBSK). In the first five years of its operation, over 10,700 screenings were carried out in schools and Anganwadi centres (AWCs). The medical intervention and approximately 15 CHD diagnosed cases had been operated on in the Raipur centre. Health education was incorporated as an integral component of the health screening program, which led to changes at the societal and community level. Experts’ counselling and lectures covered topics like water and sanitation, food habits, alcohol, tobacco and beetle nut habits, dental and oral hygiene using innovative audiovisual aids (See Exhibit 9 for a Health Education session by Public Health Team at SSSSH).

Under the community outreach initiative, the critical activities undertaken are as follows:

Divine Mother and Child Health Program (DMCHP): In 2017, the DCHP was converted to DMCHP by including the maternal care component. This program focused on pregnant women through antenatal screening camps, fetal echo and mother support activities, and the children in Chhattisgarh’s rural areas.

SSSSH as an initiative was sustainable due to the combined efforts of the people who believed in the divine presence and had followed the directions of the founder, Bhagawan Sri Sathya Sai Baba. It included the generous contributions made by the institutional donors in the society, who believed in the cause of affordable child health care and individual donors, who, with a sheer sense of astonishment at the success of the free model, made generous contributions towards a healthy future of many beneficiaries. The harmonious relationship with government programs like NHM and RBSK, leading to treatment and surgical referrals, was also an avenue for remunerations to support its operational volume, thus promoting the ‘no billing counter’ model as a part of the SSSSH mission. With the establishment of three Paediatric Cardiac Hospitals on similar lines and after the seamless continuum of care to anyone who came to the doorsteps of Sanjeevani, sceptics of the ‘Free Healthcare’ model turned into believers and later supporters. The hospitals collaborated with the government, institutions and individuals to expand the length and depth of services offered. This aspect of sustainability through contributions from society in general and individuals in particular formed the backbone of the institution’s achievements, which had set a target of performing over 25,000 surgeries by the end of 2022.