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Ten Times Better Healthcare for One-Tenth the Cost

In the interview with Arvind Jha, Health Minister Satyendar Jain humours about his “Zero Theory”: add one zero for 10x quality of service, and remove one zero for reducing the cost to one-tenth! That’s the AAP Mantra while approaching the problem of improving cost-effectiveness of any government service.

When faced with the problem of providing primary health care, the Delhi government came up with a revolutionary approach to multiply quality while reducing costs. A typical government dispensary costs about Rs 5 crores, has a large building where the doctor sees patients, medicine is provided, and only a few tests done. In comparison, the AAP government’s Mohalla clinic costs about ₹ 20 lakhs, provides air-conditioned comfort, consultation with the doctor, and 200+ tests. Patients care about the comfort inside the building, not the size of the building; small air-conditioned clinics at walking distance from their homes are appreciated. They care about what tests are performed, not about where the test samples are processed. By partnering with private testing firms, a ₹ 100 test is now done in ₹ 15 and results are delivered within 2-3 hours without investing in space, test equipment, and lab technicians. Patients care about whether all prescribed medicines are available in the clinic, not about how the medicines are procured. By centralizing procurement and distribution, every government hospital and clinic is provided requisite supply of medicines in a cost-effective manner. Thus, Mohalla Clinics are like Health ATMs; the average cost of an OPD is about ₹ 100 while that for a hospital visit is ₹ 600, and the patient saves time and money by not having to commute to a far-off hospital and experience long waits!

Traditional government’s measure of success is whether the allocated budget was spent for the said output. For e.g. was 50 crores spent on creating 10 dispensaries as promised? They don’t care about how many patients are benefiting from the dispensaries created. In case of the AAP government, the outcomes are even more important than outputs. Having done 3 crore OPDs in the previous year, we expect 4 crore OPDs this year, and 5 crore OPDs next year! The outcomes: number of OPDs and the cost per OPD are our measures of success.

There is no reason why a government cannot apply time-tested business principles to bring about efficiency and effectiveness in government services. For example, take a 200 bed government hospital in Burari with about ₹ 200 crore cost. While the patient care area was normal or below normal, extra large spaces were allocated to offices and store-rooms which provide no direct or indirect benefit to the patients. A store with ₹ 5 crore capital value was used to keep goods of about ₹ 1 lakh! The office of the medical superintendent was as big as a playground! After careful review and planning, the 200-bed/200 crore hospital was converted into an 800 bed hospital for an additional cost of only ₹ 60 crores -- only ₹ 10 lakh per additional bed! That’s economy of scale!

In our review of surgeries in government hospitals, we observed that there was a long list of pending surgeries in with dates far out as many as 2–3 years! Say you have a serious illness in early stages that needs surgery, it would have grown many-fold by the surgery date, who knows, the patient may not even survive that long. Our outcome of interest being patient’s recovery, the Delhi Government decided that if the surgery cannot be scheduled within a month, it can be done at any of the empanelled private hospitals, and the government will bear the charge. And what’s more — there is no income limit. Poor, middle-class, Rich all residents of Delhi can avail this facility. The economics of surgeries in private hospitals initiative is quite straightforward. First, we would need at least 2–3 years to create the setup to handle the load of surgeries. Second, we don’t have enough manpower. Third, more importantly, private hospitals have everything, but they are like an airplane flying at half capacity. The rate they give us is very less; if you pay one lakh, we pay 25–30 thousand. We get CHGS, bulk discounted rates. Why do private hospitals give bulk discounted rates? Because these patients are not their typical customers. The cost for the government to do same surgery in govt hospitals is more than that paid to private hospitals. In spite of owning land, building, equipment, the government’s running cost is higher than the price it pays to private hospitals. They have already invested in the fixed costs; if they can make any money from running costs, it is a win for them. Thus, it is a win-win-win situation, for the private hospitals, for the government, and for the citizen of Delhi. The same logic applies to diagnostic imaging such as MRI, CT-scan, PET-scan, and so on. If the diagnostic imaging cannot be done within a government hospital in a timely manner, it can be done in one of the empanelled private provider, paid for by the government at largely discounted rates.

Adopting the right technology has played a major role in bringing down the costs. For example, a tablet is used for entering and storing patient data in the cloud. That has taken away a large number of traditional costs for maintaining data on paper and the associated movement of physical paper.

With ten times better healthcare at one-tenth the cost, Universal Healthcare is quickly becoming a reality!

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