International Journal of Trend in Scientific

Research and Development (IJTSRD)

International Open Access Journal
ISSN No: 2456 - 6470 | www.ijtsrd.com | Volume - 2 | Issue – 2

Case Study on :“Marketing st

strategies
rategies of Henry Ford of heart
surgery - Narayana Hea
Health
lth Care also known as Narayana
Hrudayalaya, Leading India in World for Health care”

Dr. Manish Gupta

ASM's Institute Of Business Management and Research,
Chinchward, Pune, India

ABSTRACT
“Bengal Famine was not due to lack of food, it is Key words: Healthcare,
ealthcare, Technology, low cost
the lack of paying capacity to buy food”
food”– Dr.
Amartya Sen Background

In 2001, Shetty founded Narayana Hrudayalaya (NH), Devi Prasad Shetty (born 8 May 1953) is an Indian
a multi-specialty hospital in Bommasandra on the cardiac surgeon. Shetty was born at village Dakshina
outskirts of Bangalore.
lore. He believes that the cost of Kannada district, Karnataka, India. The eighth of nine
healthcare can be reduced by 50 percent in the next 55– children, he decided to become a heart surgeon when
10 years if hospitals adopt the idea of economies of he was in fifth grade at school after hearing about Dr.
scale. Apart from cardiac surgery, NH also has Christiaan
an Barnard, a South African surgeon who had
cardiology, neurosurgery, paediatric surgery, just performed the world's first heart transplant. After
haematology and transplant
plant services, and nephrology completing his graduate degree in Medicine and post-
post
among various others. The heart hospital is the largest graduate work in General Surgery from Kasturba
in the world with 1000 beds performing over 30 major Medical College, Mangalore, he trained in cardiac
heart surgeries a day. The land, on which the health surgeryy at Guy's Hospital in the United Kingdom.
city was built, was previously a marshland which was
He returned to India in 1989 and initially worked at
reclaimed for this purpose. The Health City intends to
B.M. Birla Hospital in Kolkata. He successfully
cater to about 15,000 outpatients every day. In August
performed the first neonatal heart surgery in the
2012, Shetty announced an agreement with TriMedx,
country in 1992, on a 9-day-old9 baby named
a subsidiary of Ascension Health, to create a joint
"Ronnie". In Kolkataa he operated on Mother Teresa
venture for a chain of hospitals in India. In the past
after she had a heart attack and subsequently served as
Narayana Hrudayalaya has collaborated with
her personal physician. After some time, he moved to
Ascension Health to set up a health care city in the
Bangalore and started the Manipal Heart Foundation
Cayman Islands, planned to eventually have 2,000
at Manipal Hospitals, Bangalore. Financial
beds.
contribution for the construction
onstruction of the hospital was
provided by Shetty's father-in-law
father Shetty also
The case highlights how successful entrepreneurship
founded Rabindranath Tagore International Institute
can be done using technologies, the case is unique as
of Cardiac Sciences (RTIICS) in Kolkata and signed a
it on social entrepreneurship, today is the world of
memorandum of understanding with the Karnataka
Start-ups
ups who use technologies, and case highlights
Government to build 5,000-bed bed specialty hospital near
how innovation ideas come from technologies use.
Bangalore International Airport. His company signed

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Feb 2018 Page: 918
 International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
a MOU with the Government of Gujarat, to set up a Ford of heart surgery" who follows economics of
5,000 bed hospital at Ahmedabad. He was elected as doing surgeries in mass of special kind with same set
the chief patron of Indian Association of Clinical of doctors having standardized procedure, kaizen
Cardiologists during the annual scientific session improvements in their processes. Six additional
IACCCON 2013 at Bangalore. hospitals were subsequently planned on the Narayana
Hrudayalaya model at several cities in India, with
He was a part of the seven-member panel of Board of plans to expand to 30,000 beds with hospitals in India,
Governors which replaced the MCI and served for a Africa and other countries in Asia. Shetty aims to trim
period of one year before it was further reconstituted. costs with such measures as buying cheaper scrubs
He is chairman and Founder of Narayana Health, a and using cross ventilation instead of air conditioning.
chain of 21 medical centers in India. He has That has cut the price of coronary bypass surgery
performed over 15,000 heart operations. In 2004 he (from Rs. 4lacs-3lacs) to 95,000 rupees ($1,583), half
was awarded the Padma Shri, the fourth highest of what it was 20 years ago. In 2013 he aimed to get
civilian award followed by the Padma Bhushan in the price down to $800 within a decade. The same
2012, the third highest civilian award by the procedure costs $206,385 at Ohio’s Cleveland Clinic.
Government of India for his contribution to the field He has also eliminated many pre-ops testing and
of affordable healthcare. He has been awarded Porters innovated in patient care such as "drafting and
award, BCG award, ET entrepreneur award twice training patients’ family members to administer after-
2013 & 2014, Nikkei Asia prize, Forbes philanthropy surgical care". Surgeons in his hospitals perform 30 to
awards. 35 surgeries a day compared to one or two in a US
hospital. His hospitals also provide substantial free
Trusted Brand Decorated with Awards and care especially for poor children. He performs free
Recognition surgery for the poor.

Awards & Recognitions for the Chairman Dr. Devi The entrepreneurship is of social type, not a free
Shetty charity, which is a viable self-dependent business
model, the wealthier get the benefit of subsidized rate,
Dr. Devi Shetty 19th Nikkei Asia Prize but the difference between actual and selling cost
2014 Economic & Business generates revenue for free surgeries at NH for poor
Innovation i.e. 5% of its patients get free surgeries , 27%
2013 Entrepreneur of the year at ET subsidized rates At NH Shetty and his family have a
Awards 75 percent stake in Narayana Hrudayalaya which he
2012 Indian of the year by CNN-IBN plans to preserve. Shetty has also pioneered low-cost
2012 The Economic Times diagnostic services.
Entrepreneur of the Year
o 23 heart surgeries a day
2012 Padma Bhushan
o Heart surgery for Rs.65,000
2010 Indian of the year by NDTV o Coronary angiogram for Rs.4500
2005 Social Entrepreneurship Award o World’s largest pediatric cardiac surgery unit.
2004 Citizen Extraordinaire, Rotary o In an Industry where disposables comprise 45% of
2003 Padma Shri the cost, it is the number game.
2003 Ernst & Young –Entrepreneur of o Large number reduces the cost and improves
the Year result.
2003 Sir M. Visvesvaraya Memorial o Two Health City projects of 5000 bed each.
Award o Break up complex task into many islands of
2002 Rajyotsava Award excellence
o Replacing the moving parts of a medical
Achievements equipment to PCB’s can reduce cost to any level
Shetty aims for his hospitals to use economies of Technological Use
scale, to allow them to complete heart surgeries at a
lower cost than in the United States. In 2009 the Wall Technology gives the rich what they already have but
Street Journal newspaper described him as "the Henry it gives the poor what they can never dream of having

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 International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
Use SMS, AI, Robotics and mix of technologies in o India’s per capita income is expected to register a
healthcare i.e like NH hospital S.M.S. each senior CAGR of 11%between FY16-21E
staff of a hospital each day about expense at that o Deaths due to NCDs are expected to be 74%of
hospital on operations, sets weekly, monthly targets total deaths in 2030 compared with 60%in 2012
for cost saving in their areas , so that next day o <20% population has health insurance, INR
surgeries the doctors team can look into save some 20/day premiums for coverage of INR 0.5mn are
cost and improving EBIT. available
Telemedicine for access to remote areas in north east
like Agartala, principles of Telemedices: Key Growth Drivers
o National Health Policy 2017 has set Ambitious
o Less than 1% of the sick requires an operation Targets: Universal healthcare coverage -Increase
o If you do not need to operate, you don’t need to health expenditure as a percentage of GDP from
touch the existing 1.15 % to 2.50 % by 2025
o If you don’t need to touch, you don’t need to be o Demand Outstrips Supply:~1.7mn beds required
there to meet India’s healthcare needs by 2025
o 6 hours following the heart attack is the golden o More Lifestyle Centric Diseases and Rising
period. Urbanisation:35% cardiovascular-ailment related
o A joint venture of Indian space research share in incidents of death by 2030 compared
organization, Asia heart foundation Narayana with 31% in 2015
Hrudayalaya and various state governments o Share of Older Population to Rise: 27% of total
o 22 telemedicine centers population will fall in 45-60+ age group by 2021
o Over 16,000 patients treated free from 22% in 2011
o Free telemedicine software from SN informatics o India’s Recognition at World Stage in
o Free MRI Scan Healthcare Solutions:Tertiary care facilities at
o Trans Telephonic ECG Network lower cost with ease in visa procurement to drive
o Digital X-ray – a Joint Venture with Texas patients from South East Asia and Middle East
Instrument
o Mobile Diagnostic Lab Present in 2017 Narayana a Leading Pan-India
o Use of global supply chain logistics for generic Multispeciality Healthcare Group
medicines and medical equipment. NH’s footprint in India: Mumbai, Kolkata,
o Close link with pharma & medical equipment Ahmedabad, Raipur, Jamshedpur, Durgapur,
majors for clinical trials , offering at reduced cost, Guwahati, Kakriyal, Jammu, Palanpur, Mahuva,
guaranteed volume. Bellary, Shimoga, Bengaluru, Mysore, Delhi NCR,
Jaipur.
Indian Healthcare Industry at a Glance Sector
Outlook: Reach region wise:
o Indian healthcare market is expected to reach Northern Region, 2 hospitals and 1 upcoming facility
US$280 bn by 2020, a CAGR of 23%between in NCR, Operational beds: 335
FY15-20E Eastern Region: 9 hospitals
o Hospital segment constitutes ~71% of the market Operational beds: 1,934
o Medical tourism to contribute 15-20%to hospital Kolkata has 6 hospitals (3 are acquired)
revenue by FY20 from 5-10% currently Karnataka Region: 7Hospitals, Operational beds:
2,161
Inadequate Infrastructure: Western Region: Hospitals, Operational beds: 1,011
o Out-of-pocket expenditure on healthcare is ~61%-
the highest in the world
o 7beds per 10,000population vs global average of
26 beds
o 3% specialist physicians cater to rural areas which
comprises >70% of population

Growth Prospects:

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 International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
Existing Hospital o Da Vinci Robotic Surgical program has so far
performed over 150 surgeries in last 10
Planned Healthcare Facilities
Operational months of commissioning
Facility51 beds o NH has started advanced gastroenterology
20 Owned / Operated 4,721 Beds programs at facilities in Mysore and Jaipur
Hospitals(1) o Performed 72 liver transplants till date
4 Managed 720 Beds o Major emphasis on diseases such as
Hospitals(2) Parkinson’s, DBS, Epilepsy treatment
7 Heart Centres 376 Beds o NH delivers specialized care in complex
19 Primary Healthcare 10 Beds trauma, polytraumaand related sub specialities
Facilities(3)
1 Hospital in Cayman 105 Beds Six core specialities contribute 89% to group’s
Islands revenues: Cardiac and Renal Sciences, Oncology,
7181 capacity beds Gastro Intestinal Sciences, Neurosciences
5932 operational beds Orthopaedics
2.7million rupees average effective cost per
operational bed. NHL recognized that “Poor people in isolation are
30+ Specialty weak but together they are very strong” started
343 + Procedures/Day Yeshasvini micro health insurance with premium Rs.
14330 Full time employees & Associates including 5/ Month, with Govt. of Karnataka as partner, Govt.
3011 doctors which contributes Rs.7.5/ Monthwith aim that:

Today in 2017 as per NHL, they have 51 health care Unless you address the problem of paying capacity
facilities, 20 owned hospitals with 4721 beds, 4 building hospitals is not going to solve the health
managed hospitals with 720 beds, 7 heart care problem, High interest rate, 35% occupancy in normal
facilities with 376 beds, 19 primary health care hospitals giving heart care in general, rural
facilities, and 1 hospital in Caymen Island with 105 indebtedness is mainly because of health problems.
beds. Total 7181 bed there in NHL, they are
performing 343/ day heart surgeries and procedures, Yeshasvini micro health insurance is a joint venture of
14330 employees with 3011 doctors are working in the Karnataka State Co-operation Dept. and Narayana
NHL, NHL had in 2017 turnover of @ Rs.188 Crore Hrudayalaya/ Asia Heart Foundation. It has 1.7
with profit before tax @ Rs 15 Crore. Million farmer members in the first year, 2.5 Million
Evolving Case Mix with Leadership in Cardiac & farmer members in the second year, 85,000 farmers
Renal Sciences and Growing Share of Other had free medical treatment, 22,000 farmers had free
Specialities: surgeries,and 1400 farmers had heart surgeries.
Arogya raksha yojna:
De-risking business model by expanding the service
spectrum (1):  A comprehensive Health scheme for Anekal
The department of cardiology carried out the first Taluk, Bangalore
TranscatheterAortic Valve Implantation (TAVI) in  Joint venture of Narayana Hrudayalaya, Biocon
India and ICICI
o ~35,000 angiogram, ~12,000 angioplasty,  Free OPD consultation
~2.25 Lacsdialysis sessions conducted in  Diagnostics at discounted rates
FY17  3 days inpatient treatment
o Performed 35 heart transplants and 2,976 renal  Cashless surgical facility
transplants till date
 Generic drugs at 30% of the market rate.
o NH operates one of the largest Bone Marrow
 Provide a vehicle for the common man to
Transplants unit in the country with over 160
contribute a tiny amount of money every month to
BMTs done in FY17
cover his healthcare.
o NH’s unit at Howrah is recognized as the
Centre for Excellence in the field of Oncology

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 International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
Training people for health care is the key to give Financial Data 2017:
people quality care via: IGNOU Courses at Narayana
Health:  The facility at Cayman Islands showcased
 Diploma in Community Cardiology exemplary performance achieving an EBITDA
 Diploma in Community Nephrology margin of 13.3% in Q4 FY17 translating to 7.6%
 Diploma in Community Neurology EBITDA margin for the year. The unit achieved
 Diploma in Community Endocrinology this feat within 3 years of its operations
 NH entered into an agreement for healthcare
Key Highlights 2017:
services with ~300 capacity bedded Dharamshila
 Narayana Institute of Cardiac Sciences, Hospital & Research Centre to mark its maiden
Bengaluru, became the first hospital in the country foray in NCR
to introduce a new smart-generation catheter  Operating revenue of INR 4,835 mn in Q4 FY17,
device that will correct electrical signals causing an increase of 13.1% YoYtranslating into INR
disturbance in the heart rhythm 18,782 mn in FY17, an increase of 16.4% YoY
 Q4 FY17 YoY growth in EBITDA by 23.4% to
 Da Vinci Robotic Surgical System, installed at INR 659 mn and FY17 YoY growth in EBITDA
MazumdarShaw Medical Centre, Bengaluru, by 30.2% to INR 2,463 mn, reflecting an EBITDA
crossed the milestone of performing more than margin of 13.6% in Q4 FY17 and 13.1% in FY17
150 surgeries within 10 months of its respectively
commissioning  FY17 PAT after minority interest and share in loss
 Narayana Multispeciality Hospital, Raipur, of associates at INR 831 mn reflectingYoY
performed the first Leadless Pacemaker Implant growth of291.3%
across Central India  Net debt of INR 1,826 mn as on 31stMarch, 2017,
reflecting net debt to equity ratio of 0.19
 Goodwill earning Rs 541lacs in 2017 compared to
2016 Rs.541lacs.

Consolidated Financial Performance

As on March 31st, 2017, the consolidated net debt was Rs1,826 mn representing a net debt to equity ratio 0.19
Profit and Loss Statement(1) Particulars Q4 FY16 Q4 FY17 FY16 FY17
Total Operating Revenue 4,276 4,835 16,138 18,782
Purchase of medical consumables, drugs and surgical 1,025 1,084 3,871 4,359
equipment-Net of change in Inventory
Employee (Excluding Doctors) Expenses 780 839 3,025 3,395
Doctors Expenses 934 1,102 3,522 4,213
Other Admin Expenses 1,044 1,209 3,974 4,526
Total Expenses 3,784 4,234 14,393 16,493
Other Income 42 57 147 175
EBITDA 534 659 1,893 2,463
Depreciation and Amortization 212 212 761 799
Finance Costs 64 56 294 218
Profit Before Tax & Exceptional Items 257 391 837 1,446
Exceptional Items 96 0 110 13
Tax Expense 77 150 301 524
PAT before MI and share of loss of associates 85 241 426 909
Share in (loss)of associates and MI -34 -18 -217 -79
PAT after MI and share in loss of associates 50 223 212 831
Total Comprehensive Income, net of tax 41 221 204 831

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 International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
Future Since most data on case is already on net, the need to
take interview and permission from lead character has
Year 2008, India world’s largest mass healthcare not been done.
provider
The story of success and social entrepreneurship
 We produce the largest number of doctors,
which is giving free treatment to poor is truly
technicians and nurses in the world
inspiring to look into such a business model, which
 Policy changes can be self-sustaining and profitable. The marketing
 Pharmaceutical capacity strategies and technological techniques used by NH
 Of course by default are unique in its self.
Questions: 4. Short term and Long Term Issues
Q1. Trace the entrepreneurial qualities and discuss. Short term effect of NH on Health care in India has
Q2. What is USP of Narayana Healthcare? had deep impact; the business model is being copied
Q3. What are the marketing and business strategies by several Indian state govt. health care schemes so
adopted by NH that led to so fast growth of NH in the that they can give healthcare services to poor.
country and now going all over world?
Q4. What is the business model made by Narayana Globally NH is bringing India fame in Health
Health? Which now Govt. are following? management model which other countries now want
to follow. Patients in our SAARC countries are
References: coming to know about India’s true strengths.
Long term effect of NH is that it is making Healthcare
1. Narayana affordable year on year, year on year more state govt.
Health.//en.wikipedia.org/wiki/Narayan_Health. in India adopting its model and model becoming
2. www.narayanhealth.org/narayana_health_city. global.
3. www.internationalpatientcare/naryanahealth.com.
4. www.indiahospitaltour.com/narayana_hospital_he 5. Teaching Notes – Course of Studies and Topic
althcity_banglore.htm Relevance
Case Study Notes: The case highlights use of:
1. Area and Title selection Criteria:  Operations management techniques in health care
services like mass production/ services, economy
Health care is major service contributor to GDP of of scale, global purchasing, Kaizens.
India, players like Narayana Health (NH) is leading
 Business and marketing Strategies used by NH
in Health care sector for India In globalisation, the like USP, business model, operation strategies like
title is based on Wall street Journal’s reviews on work Blue Ocean.
NH, who call NH as Henry ford of Heart surgeries.
 Use of technologies in NH like Telemedicine,
generic medicine, S.M.S, new technologies of
2. Protagonist (Lead character) selection Criteria
medical science in surgeries, medical devices like
The protagonist in this case study is an entrepreneur low cost MRI.
who is trying to solve health care issues in the country  Services and goods concepts: How each of the
by his techniques and use of management ideas. components in same needs analysis to cut cost
adds value to customers.
3. Data Source and Story Development for Case  How poor countries like India can afford
Construction (Hook Effect & Current Scenario) healthcare for masses.
 Resource mobilizations can happen by looking
Data for the case was collected from internet search
internally first.
on NH and Dr. Devi Shetty, Wikipedia, NH website
giving investors financial reports and assessment from
investors view point.

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 International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
6. Students may refer to following books:- Conclusion

 Baporikar.N. (2008). Case Method- Cases in Going through the case you feel proud we have such
Management, Himalaya Publishing House, good people and who do such good entrepreneurial
Mumbai. work for the society.
 Kim.W.C& Mauborgne. R. (2015). Blue ocean
strategies, Harvard business Review press,
Boston.
 Prahalad.C.K.(2010), The Fortune at that bottom
of Pyramid, Dorling Kindershy, New Delhi.

7. A Brief Analysis of Issues of the Case and

Resolutions to issues
Read the case 2-3 times, highlight the areas important
and make gist and notes on key areas.

The analysis can be done by following ways before

framing the resolutions:
1) Analysis:

 PEST Analysis, SWOT, GE matrix, BCG &Ansr

of Matrix, Porter’s 5 Force analysis, Value
analysis, margins analysis, why–why analysis.
 Bottom of the pyramid model of marketing goods
and services
 Rapid expansion and vertical integration strategies
use.
 Global marketing strategies used
 Use of goods and services concepts: How each
product has blend of both.
 Use of Blue ocean strategy by protagonist.

2) Collect more data from net

Detailed data can be collected through inter- net and
this will help to solve this case study in a better way.

3) Create Innovate ideas:

Out of box thinking is required to solve such case
studies.

8. Anything unique about the Case Development

Process followed?
The case highlights how successful entrepreneurship
can be done using technologies, the case is unique as
it on social entrepreneurship, today is the world of
Start-ups who use technologies, and case highlights
how innovation ideas come from technologies use.
For developing the case lot of data on same was taken
from website and financial reports of the company.

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