Dr Devi Shetty is India’s leading cardiac surgeon and the former personal cardiac surgeon for Mother Teresa, was convinced that health care must be accessible to all irrespective of their financial status. His vision for health care was to generate a benefit of the economics of scale among healthcare activities and thereby make it accessible to a broader section of society.
Dr Devi Shetty was born on May 8, 1953. He was eighth among nine siblings. Shetty’s father had diabetes, and his mother also had health issues, so there were regular visits to the hospital by Shetty Siblings. During his school days, Devi’s teacher shared the incident of the first human to human heart transplant that took place in Cape Town. This incident has a profound impact on Devi’s mind, and he decided that he wants to be a Heart Surgeon.
Just because you are a terrible student — if you took up medicine — doesn’t mean you’ll be a poor doctor. Your rank in the school and academic performance has nothing to do with how good or bad of a doctor you are going to be. It has nothing to do with that. It will help you to get into the best medical school, but what you make after the medical school depends entirely on your passion. If you are willing to work eighteen to twenty hours a day and empathize with the patient, you understand their problem as your own problem, no matter what marks you got, you’ll excel.
He did his post-graduate studies at Kasturba Medical College in Manipal then later went to Guy’s hospital in London to hone his skills. In London, he got acquainted with the mission of United Kingdom’s National Health Service — to provide excellent health care to all.
In 1989, he brought his skill set back to India and became the first surgeon in India to perform heart surgery on a nine-day-old child.
Later, Dr Shetty partnered with Dr Alok Roy to form a nonprofit called the Asia Heart Foundation, in Calcutta followed by setting up a hospital, in 1997, called the Rabindranath Tagore Institute. Dr Shetty’s other activities included helping commission the BM Birla Heart Research Institute in Calcutta, in 1989, and he acted like Mother Teresa’s personal cardiac surgeon. All of these experiences were instrumental in shaping his vision to build Narayana Health, as we shall see.
During his initial professional days, Dr Shetty spent considerable time crafting his skills and performing up to eight surgeries each day.
Finally, with an investment from his father-in-law, Dr Devi Shetty founded Narayan Hrudayala (known today as Narayan Health) in 2000.
Dr Shetty would question why hospitals could not be like technology companies such as Infosys or Electronic City, whose world-class status is a result of their “quality going up as their costs decrease.”
The current business model is based on inspiration derived by Shetty and his founding team from multiple sources.
1. Inspiration from Walmart: They learnt that economies of scale could be derived only by increasing overall volume. Narayan Hrydayala was able to negotiate better terms with suppliers, preferred buying from Indian suppliers and generic drugs over branded. It went on to build a centralized warehouse and dedicated logistics team to ensure consistent performance across all locations. Specialized surgeon to spend time on improving their skills and repetitive tasks to be assigned to lower-cost workforce
2. Inspiration from Birla Group: Dr Shetty learnt the basis of Parta accounting system — tracking profit and loss account daily, i.e. Revenue for the day — the cost for the day = gross profit for the day.
3. Toyota production system: The senior team applied principles of just in time inventory to its supply chain practice.
4. Mayo Clinic: On building an excellent institute by focusing on the training of doctors and staff, and clinical experience.
5. Other hospital practices: It pays a slightly higher fixed salary to compare to other hospitals and no target based variable salary proportion to prevent the “man-with-the-hammer syndrome.”
6. The team learnt finance concept related to managing cash flows, capital deployment, IRR, and other non — financial parameters like average realization per occupied bed, consumption cost within hospital operations from Henry Singleton.
And the vision of Dr Shetty is live in action. Narayan Hrudaya is registering significant profits while providing healthcare facility at a discounted rate to almost 40% -50% of its customers. Also, it has enough leadership bandwidth to grow the company in future.
This article is a summarization of a chapter on Dr Devi Shetty in the book Intelligent Fanatics: Standing on the shoulders of the Giant by Ian Cassel and Sean Iddings.
