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“Focused factories” that disrupt traditional healthcare delivery

Focused factories for surgical interventions are units solely focused on one treatment — such as hernia repair or gall bladder removal — and address diseases that are widespread, well-characterized, and can be addressed with surgery.



The Current Paradigm

Hospitals in India (and around the world) are currently focused on bigger is better — building capital intensive centers which cater to a wide variety of patients and conditions. The range of conditions treated range from those which are truly complex, to simple diagnostic and therapeutic interventions. Even Ambulatory Care Centers (such as Apollo Clinics) address a wide variety of patients.


Such systems try to solve three kinds of problems under one roof:

  1. Those that involve intuitive medicine, requiring an array of specialists under one roof to find answers to complex diseases and administer multi-specialty treatment plans. The likelihood for success varies widely from one patient to another.

  2. Those that involve empirical medical, consisting of treatment for diseases where probabilistic statements about outcomes can be made. Prostate cancer surgery in the United States is such an area, where screening algorithms and intervention rules are well articulated, but there is still some uncertainty for an individual patient.

  3. Those that involve precision medicine, where the problem as well as solution is well understood. An ear infection that requires a drain to be placed through the ear drum is an instance of such a problem.


Why change the paradigm?

By the very nature of these medical problems, a single umbrella organization cannot setup systems and processes that do all of these jobs efficiently. Intuitive medicine requires a consulting-like approach, with a fee-for-service model — the outcomes are so uncertain that paying for results is not feasible. Empirical medicine, however, can adopt a pay-for-outcomes approach, whereas precision medicine can go down to a fee-for-process-compliance model. Combining these business models under a single roof is like trying to create a factory that produces both Ferraris and Maruti 800s.


The goal of “focused factories” is to solve ONE empirical medicine problem that is currently both under-addressed by existing medical systems, and unprofitable for these medical systems to address.


A treatment system oriented around empirical medicine requires a disease area that has adequate volume to support an economically viable enterprise. India offers such an opportunity, as has been demonstrated by the success of Aravind Eye Care in addressing “curable blindness”, provided the right model of care is built around it.


The “Ideal” Disease: thinking beyond scale

  1. Easy to Identify: The “ideal” disease can be quickly understood by the patient and his/her family or friends, enabling some of self-diagnosis that makes the secondary screening step more efficient.

  2. Easy to Screen: Once patients do get to the treatment center (or an outreach arm of the center), there should be an efficient mechanism to classify patients, in order to serve those who meet strict inclusion criteria, while referring complex cases to integrated medical centers.

  3. Short-term outcomes: In order to validate process adherence, a rapid, intra-operative or post-operative measure of success is crucial.

  4. Minimal post-operative recovery: A complex or lengthy recovery protocol is hard to administer in India. Closure of treatment within a single episode of care is ideal.


There are two ways to position such as enterprise, relative to incumbents. The first approach would be to go head-to-head against them, as a cheaper alternative. Alternately, our enterprise can be positioned as a referral institution, to elicit a cooperative response from incumbents. The growth of balloon angioplasty in the US is a case in point — in its early days, this intervention, provided by cardiologists, not cardiac surgeons, had a 50% treatment success rate. Those patients who could not be treated with balloon angioplasty were sent over by cardiologists to cardiac surgeons.


The surgeons found that a large number of patients who would otherwise not consider cardiac bypass as a first line of treatment, we now turning up at their doors with a referral in hand. They had no incentive to fight back, and this was compounded by their perception (later proved wrong) that balloon angioplasty would remain a sub-optimal treatment choice for the foreseeable future.


Even if hospitals frame us as a competitive threat, they have low incentive to fight if we reduce the number of unprofitable customers that come to their doors — patients that we should be able to treat profitably with our focus on doing one job very effectively.



Lessons from Aravind Eye Hospitals

Aravind Eye Hospitals is the prefect example of a focused factory. Its founder, Dr. Govindappa Venkataswamy (Dr. V), likened their operational model to that of MacDonalds — in terms of both scale and process-orientation. Aravind offers us several rich lessons on how to operationalize a focused factory. Some of these are:

  1. Find the right disease to treat: Aravind meets all the requirements of the “ideal” disease checklist. Patients are able to identify problems with their vision and attend an eye camp to be screened for cataract surgery. Positive surgical outcomes, after a single intervention, are immediately apparent.

  2. Cross-subsidization = competitive advantage: Aravind treats patients both rich and poor. The latter provides the volume that allows surgeons to gain a high level of proficiency, and this skill level attracts patients with the ability to pay. The wide variety of pathologies that an eye surgeon sees at Aravind has also made it an attractive training site for doctors from the US and Western Europe, providing a steady stream of free labor to Aravind.

  3. Social behaviors are integral to patient acquisition: While their eye camps were successful in identifying patients in rural areas, Aravind had challenges in getting those patients to their door because these patients had no previous experience in traveling independently to a large city to seek medical aid. Once they made arrangements for buses to carry both patients and their escorts to and fro, the conversion rates from screening to treatment went up dramatically.


The paradigm of intuitive, empirical and precision medicine, and the balloon angioplasty example, is from Clay Christensen’s work on disruptive innovation in healthcare, captured in his book, The Innovator’s Prescription. The section on “ideal” disease is my original contribution.

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