Case study 1

Narayana Hrudayalaya Heart Hospital: Cardiac Care for the

Introduction:

Narayana Hrudayalaya (NH), means God’s compassionate Home, in Sanskrit. Situated in the
south Indian city of Banglore. Almost everything about this heart hospital was unique from
its building and equipment to the doctors, nurses, and their treatment and care of patients.
Founded in 2001 by Dr. Devi Prasad Shetty (co-founder of Asia Heart Foundation). AHF is a
non-profit organization. Initially, this organization assisting in commissioning the BM Birla
Heart Research Institute, Calcutta in 1989, and the Manipal Heart Foundation, Banglore in
1997. Then the AHF decided to promote its hospital in Calcutta, Rabindranath Tagore
Institute (RTI) of cardiac Sciences.

The cost-cutting strategy of NH:

Dr. Shetty knows the scenario of the Indian health care system. Being a reputed researcher in
the field of cardiac care he knows the fact that, how one Indian is more vulnerable to cardiac
diseases. As per the fact given in the case study only 8% of people in the world can afford
tertiary heart care. Our Government only spent 1% of its GDP on Public Health care while
other developed nations are spending more than us, which is a very small number in a
populous country like India. So Dr. Shetty decided to provide cardiac care at an affordable
price. As the services provided at the hospital are not of low quality. They provided the same
service, the same quality at an affordable price. How is it possible? It is only possible because
of its cost-cutting strategy.

1) They performed more number of operations per day compared with other hospitals.
They focused on volumes, they attempted to drive unit costs lower through a high
level of capacity utilization and productivity. They applied the Economies of scale to
reduce the cost for each operation.

2) Other hospitals only performed two blood tests on a machine each day, they
performed 500 tests per day. This is only possible because they are more focused on

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 process innovation rather than product innovation. This also helps them to minimize
the cost.

3) They try to reduce capital expenditure, buying low-cost medical equipment. They
never purchased the costlier equipment, they take that costlier equipment at rent and
paid monthly rents for that equipment and paid reagents that they buy to run the
machines.

4) They don’t sign a long term contracts with supplier. They bargain with supplier which
help them to reduced the costs.

5) They used generic drugs 80% cheaper than the market rate.

6) They spent only 22% of their total revenue for staff salaries. They gave fixed salaries
to the employees. They are well paid but they have to serve the longer hours in
comparision with other private hospital.

7) Infrastructure: compact, design, reduced entry, spaces, fabricated structure simplifies

8) They embraced the new technology to reduced the cost like instead of performing
chest X-rays with a film that costs Rs. 50 rupees and required processing, they used
digital X-rays that did not incur recurrent costs.

9) They also implemented the comprehensive hospital management software for their
operations, which help them to maintain minimum inventory and allowed quicker
processing of tests.

10) They are monitoring their funds daily. This is the brand value chain for better
understanding the financial impact of brand marketing expenditures and investments.

Brand Building exercise:

Narayana Hrudayalaya is a big brand in the field of cardiac care in our country. They position
their brand name in the minds of the customer. They are focused on affordability, high
quality, accessibility, and low mortality rate widely, we can consider these as success factors
of the hospital. For establishing their brand they used telemedicine, mobile cardiac diagnostic
lab, training the next generation, Yashasvini-the insurance scheme, and they collaborate with
Government organizations to build trust among the people.

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Telemedicine:

Sensing the need for immediate treatment and care in the rural area Dr. Shetty established
nine coronary care units across India, linked to NH or RTI (depending on the proximity).
Using the updated technology the specialists of NH or RTI guide the general practitioner to
provide the essential treatments to needy.

Mobile cardiac Diagnostic Lab:

The hospital organized outreach camps organized by local associations for cardiac diagnosis
and care. In each weekend they sent two buses equipped with essential items for on spot
treatments to rural areas, up to 800 km away from the hospital. On average, each camp
screened 400 people a day free of costs.

Training the next generation:

They provided training to the young generation. By equipping general practitioners with
skills to handle emergency and non-intervention cardiology, this program would enable a
higher proportion of the population to have access to cardiac care. They arranged a separate
department at the hospital for the training of the nurses, during those training periods at NH
they are provided intensive instruction under the supervision of a specialist and they have to
serve at least six months in a critical care units. So , Nurses are well known across the state
for their abilities and dedication.

Yeshasvini:

Under this scheme, people underwent low-cost treatments. As mentioned in the case study by
early 2005, 2.5 million members of state cooperative enrolled in this scheme. Again Dr.
Shetty and his team consider new avenue for similar programs such as insurance schemes for
teachers in Karnataka. Driven by yeshashini’s success, Dr. Shetty aspired to organize a self-
help group in the state.

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 They are also collaborating with reputed government organizations like ISRO, the
state government of Karnataka, etc to build trust among the mass. They use government
infrastructure for their insurance scheme. These are the brand resonance model of NH.

Key takeaways:

They are following the strategic brand management process to established their brand as they
identify the market of India and need of the people and develop their strategy to target only
cardiac care. Their POP is providing quality service and cardiac health care. Their POD is
they provide service to the needy at an affordable rate. Secondly, they designing and
developing a brand marketing program by introducing yashasvini insurance plan, mobile
diagnostic lab, telemedicine, and collaboration with the government. Thirdly, they also
measuring and interpreting the brand performance by evaluating the performance of each
scheme introduced by them. For sustaining and growing their brand equity they are planning
to establish the Health city which aims to wal-martization of healthcare beyond their
specialization. They are establishing customer based brand equity which supports the brand
extension. As they already established their brand name using that successful brand name
people can easily connect to other cares as well, so they are planning for brand expansion in
forms of Health city.