Reverse innovation in health care how to make value based delivery work

“A provocative volume of ideas.” —KENNETH L DAVIS, MD, President and CEO, Mount Sinai Health System, New York City “ a must-read for both health-care leaders and policy experts.” —ROBERT PEARL, MD, professor, Stanford University School of Medicine; author, Mistreated: Why We Think We’re Getting Good Health Care—and Why We’re Usually Wrong “If American health-care leaders not take this astounding book seriously, shame on them.” VIJAY GOVINDARAJAN is one of the world’s leading experts on strategy and innovation and is the Coxe Distinguished Professor at Dartmouth’s Tuck School of Business and a former Marvin Bower Fellow at Harvard Business School He is the author of a number of influential books, including the New York Times and Wall Street Journal bestselling Reverse Innovation RAVI RAMAMURTI, a top scholar in interna- tional business, is the University Distinguished Professor of International Business & Strategy and Director of the Center for Emerging Markets at Northeastern University in Boston His research and consulting work focuses on strategy and innovation by firms operating in, or from, emerging economies He is the author or editor of seven books, including Understanding Multinationals from Emerging Markets —DONALD M BERWICK, MD, President Emeritus, Institute for Healthcare Improvement; former Administrator, Centers for Medicare & Medicaid Services “Reverse Innovation in Health Care offers inspirational and practical insights It will be required reading for my leadership team.” —MARY ACKENHUSEN, President and CEO, Vancouver Coastal Health, Canada “ should be part of any consideration of how we improve America’s health-care system.” —JUDD A GREGG, former US Senator “Reverse Innovation in Health Care is a great and well-rounded approach to tackling many of the current health-care issues.” —TAWFIG AL RABIAH, Minister of Health, Saudi Arabia “This book is timely and very important for American physicians, health-care executives, and legislators to read Many of these case studies are very portable.” —JOHN COCHRAN, MD, former Executive Director, Kaiser Permanente Federation “ a rich new source of cost-saving medical innovation that deserves our most serious attention.” Also by Vijay Govindarajan HBR.ORG JACK E T DES IGN : MIC H A EL TAV I L L A ISBN-13: 978-1-63369-366-1 STAY INFORMED JOIN THE DISCUSSION VISIT HBR.ORG FOLLOW @HARVARDBIZ ON TWITTER FIND US ON FACEBOOK AND LINKEDIN 90000 781633 693661 GOVINDARAJAN RAMAMURTI —TOBY COSGROVE, MD, former President and CEO, Cleveland Clinic REVERSE INNOVATION IN HEALTH CARE M ANAGE M E NT REVERSE INNOVATION IN HEALTH CARE "Could save billions of dollars." —TOBY COSGROVE Former CEO, Cleveland Clinic HOW TO MAKE VALUE-BASED DELIVERY WORK VIJAY GOVINDARAJAN new york times bestselling author RAVI RAMAMURTI H A RVA R D B US I N E S S R E V I E W P R E S S US$35.00 HEALTH-CARE SOLUTIONS FROM A DISTANT SHORE H ealth care in the United States and other nations is on a collision course with patient needs and economic reality For more than a decade, leading thinkers, including Michael Porter and Clayton Christensen, have argued passionately for value-based health-care reform: replacing delivery based on volume and fee-for-service with competition based on value, as measured by patient outcomes per dollar spent Though still a pipe dream here in the United States, this kind of value-based competition is already a reality—in India Facing a giant population of poor, underserved people and a severe shortage of skills and capacity, some resourceful private enterprises have found a way to deliver high-quality health care, at ultra-low prices, to all patients who need it This book shows how the innovations developed by these Indian exemplars are already being practiced by some far-sighted US providers—reversing the typical flow of innovation in the world Govindarajan and Ramamurti, experts in the phenomenon of reverse innovation, reveal four pathways being used by health-care organizations in the United States to apply Indian-style principles to attack the exorbitant costs, uneven quality, and incomplete access to health care With rich stories and detailed accounts of medical professionals who are putting these ideas into practice, this book shows how value-based delivery can be made to work in the United States This “bottom-up” change doesn’t require a grand plan out of Washington, DC, agreement between entrenched political parties, or coordination among all players in the health-care system It needs entrepreneurs with innovative ideas about delivering value to patients Reverse innovation has worked in other industries We need it now in health care “The ideas in Reverse Innovation in Health Care could save American health care billions of dollars Vijay Govindarajan and Ravi Ramamurti have identified a rich new source of cost-saving medical innovation that deserves our most serious consideration.” —TOBY COSGROVE, MD, retired President and CEO, Cleveland Clinic “Reverse Innovation in Health Care delivers an important message for healthcare reform: focus on delivery cost Vijay and Ravi show examples from near and far that bend the cost curve without sacrificing quality These innovations should be embraced and scaled as essential pieces of a rejuvenated US health-care system.” — JEFF IMMELT, former Chairman and CEO, General Electric; Chairman, AthenaHealth; Venture Partner, New Enterprise Associates, Inc “Reverse Innovation in Health Care is a book that should be part of any consideration of how we improve America’s health-care system to benefit our people Understanding how other nations approach health care is essential when looking at ways to reach a stronger and better system here This book gives us a great deal to think about and learn from.” — JUDD A GREGG, former US Senator; former Chairman, Senate Budget Committee; and former Chairman, Senate Committee on Health, Education, Labor, and Pensions “A provocative volume of ideas that could facilitate a needed transformation of our health-care delivery system.” — KENNETH L DAVIS, MD, President and CEO, Mount Sinai Health System, New York City “Reverse Innovation in Health Care is a great and well-rounded approach to tackling many of the current health-care issues by learning from nations that have implemented true value-based health care.” —TAWFIG AL RABIAH, Minister of Health, Saudi Arabia 250202_00a_a-d_i-viii_r2.indd a 20/04/18 5:55 PM “This book offers inspirational and practical insights on how to significantly improve the accessibility of health care in the face of everincreasing demand This will be required reading for my leadership team.” — MARY ACKENHUSEN, President and CEO, Vancouver Coastal Health, Canada “Compliments to Vijay and Ravi for having the courage to write on a very emotional and sensitive topic The ten reverse innovation lessons need to be deliberated upon earnestly so that millions of people who don’t have access to quality health care can benefit!” — RAJIT MEHTA, Managing Director and CEO, Max Healthcare, India “Both powerful and insightful, Reverse Innovation in Health Care exposes what is wrong with the American health-care system Through vivid examples, the authors show us that our nation’s biggest challenge and greatest opportunity is transforming the delivery system To improve medical care, achieve superior outcomes, and lower costs, we must learn from the success of others around the globe This book is a great place to begin and a must-read for both health-care leaders and policy experts.” — ROBERT PEARL, MD, professor, Stanford University School of Medicine and Stanford Graduate School of Business; author, Washington Post bestseller, Mistreated: Why We Think We’re Getting Good Health Care—and Why We’re Usually Wrong “At a time when the US health-care system is bankrupt, Govindarajan and Ramamurti offer concrete and pragmatic suggestions as to how we can improve quality and reduce costs Their ideas, if adopted, will transform health care in America A must-read for anyone who wants to make a real difference in this critical industry.” — JOHN LYNCH, former President and CEO, Knoll, Inc.; former Governor of New Hampshire 250202_00a_a-d_i-viii_r2.indd b 20/04/18 5:55 PM “Reverse Innovation in Health Care definitely delivers on its mission to show how to make value-based health care work The several compelling case studies from India and the United States clearly demonstrate how innovative health-care institutions deliver superior outcomes for patients at lower costs to them and society.” — ROBERT S KAPLAN, Marvin Bower Professor of Leadership Development, Emeritus, Harvard Business School “If American health-care leaders—clinicians, executives, board members, policy makers, and others—do not take this astounding book seriously, shame on them Herein lie badly needed, thoroughly disruptive solutions to our health-care mess Herein are pathways to better care, better health, and costs we can afford—all at once!” — DONALD M BERWICK, MD, President Emeritus, Institute for Healthcare Improvement; former Administrator, Centers for Medicare & Medicaid Services “This book offers inspiration on what is possible as well as badly needed guidance on how to achieve radical gains in health-system performance.” — ELLIOTT S FISHER, MD, MPH, John E Wennberg Distinguished Professor, Geisel School of Medicine at Dartmouth; Director, Dartmouth Institute for Health Policy and Clinical Practice “This book is timely and very important for American physicians, health-care executives, and legislators to read and understand Health care is not underfunded in this country, and many of these case studies are very portable.” — JOHN COCHRAN, MD, former Executive Director, Kaiser Permanente Federation 250202_00a_a-d_i-viii_r2.indd c 03/05/18 10:29 AM “Given today’s imperative to implement new and more efficient ways to provide quality health-care services in the United States, we must all open our minds to the initiatives highlighted in this book Rethinking how we deploy care begins with efforts similar to those outlined here.” — ELLEN ZANE, CEO Emeritus and Vice Chair, Board of Trustees, Tufts Medical Center “A thoughtful book that appropriately pushes and challenges current boundaries and practices.” — STEVEN KADISH, former Chief of Staff to Massachusetts Governor Charlie Baker; Senior Research Fellow, Harvard Kennedy School’s Taubman Center for State and Local Government “As we confront the ongoing and ever-growing need to control healthcare costs, Govindarajan and Ramamurti raise intriguing concepts and examples in Reverse Innovation in Health Care from which we can learn and deliver value-oriented care.” — RAJ GARG, MD, JD, President and CEO, Cancer Treatment Centers of America 250202_00a_a-d_i-viii_r2.indd d 20/04/18 5:55 PM REVERSE INNOVATION IN HEALTH CARE 250202_00a_a-d_i-viii_r2.indd i 20/04/18 5:55 PM 250202_00a_a-d_i-viii_r2.indd ii 20/04/18 5:55 PM REVERSE INNOVATION IN HEALTH CARE HOW TO MAKE VALUE-BASED DELIVERY WORK VIJAY GOVINDARAJAN RAVI RAMAMURTI HARVARD BUSINESS REVIEW PRESS 250202_00a_a-d_i-viii_r2.indd iii 20/04/18 5:55 PM HBR Press Quantity Sales Discounts Harvard Business Review Press titles are available at significant quantity discounts when purchased in bulk for client gifts, sales promotions, and premiums Special editions, including books with corporate logos, customized covers, and letters from the company or CEO printed in the front matter, as well as excerpts of existing books, can also be created in large quantities for special needs For details and discount information for both print and ebook formats, contact booksales@harvardbusiness.org, tel 800-988-0886, or www.hbr.org/bulksales Copyright 2018 Vijay Govindarajan and Ravi Ramamurti All rights reserved No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher Requests for permission should be directed to permissions@hbsp.harvard.edu, or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163 The web addresses referenced in this book were live and correct at the time of the book’s publication but may be subject to change Library of Congress Cataloging-in-Publication Data Names: Govindarajan, Vijay, author | Ramamurti, Ravi, author Title: Reverse innovation in health care : how to make value-based delivery work / by Vijay Govindarajan and Ravi Ramamurti Description: [Boston, Massachusetts] : Harvard Business Review Press, [2018] | Includes index Identifiers: LCCN 2018002101 | ISBN 9781633693661 (hardcover : alk paper) Subjects: LCSH: Medical care—India—Quality control | Medical care—United States—Quality control | Medical care—India—Cost effectiveness | Medical care—United States—Cost effectiveness | Value analysis (Cost control) | Competition | Health planning Classification: LCC RA410.55.I4 G684 2018 | DDC 362.10954—dc23 LC record available at https://lccn.loc.gov/2018002101 eISBN: 9781633693678 250202_00a_a-d_i-viii_r2.indd iv 20/04/18 5:55 PM To our families VG: Kirthi, Tarunya, Adam, Pasy, and Michael; and in fond memory of Rangan Ravi: Meena, Bharat, Paige, Neely, Merritt, Gita, Aki, and Arjun; and in fond memory of Bala and Drew 250202_00a_a-d_i-viii_r2.indd v 20/04/18 5:55 PM 252 Index Narayana Health, 4, 13 Ascension and, 29, 149, 158–160 buying power of, 112 capital expenditures at, 67, 68 cost-consciousness at, 82–83 costs at, 210 cost structure of, 219, 220 culture at, 81–85 disease prevention at, 89–91 doctorpreneur behind, 43 education and research at, 221 employee costs at, 79 EMRs and IT systems at, 60–61 expansion of to other countries, 91, 92 hub-and-spoke model at, 85–87 IPO of, 22 key facts on, 73 labor costs, 218 microinsurance plan, 74, 86–87 mission statement of, 77 mortality rates, 22 Mother Teresa and, 71–72 Nairobi hospital, 38 pricing model at, 77–78 quality at, 212 results at, 72–74, 75 reverse innovation from, 158–160 rich and poor patients at, 48 specialization at, 55 subsidized care at, 22 surgical gowns and drapes, 83–85 task-shifting at, 63, 64 technology at, 87–91 ultra-cost-consciousness at, 65–66, 68 value-based competition at, 71–99 volume at, 56 See also Health City Cayman Islands (HCCI) National Accreditation Board for Hospitals & Healthcare Providers (NABH), 17, 22, 211 250202_99d_243-258_r0.indd 252 National Health Service (NHS), UK, 5, 22 cataract surgery, 33, 43 complication rates, 54 Nature, 11–12 Naturella, 10 Nayak, K S., 58 need, turning into demand, 47 NEJM Catalyst, 23 net promoter scores (NPS), 184 Neurolutions, 161–162 nurse intensivists, 63 onconurses, 62–63 operating capital, 47 Oracle, 87 organizational thinking, 195–196 outsourcing, 112, 121 overutilization, 29 in the US, 170–171 Pacific Vision Foundation, 98, 163–165 Partners in Health, 173 Pearl, Robert, 105, 119, 204–205 PepsiCo, peritoneal dialysis, 58–59 Permanente Medical Group, 105, 119, 204–205 Perry County Hospital, 123–124 per-use contracts, 83 pharmaceutical companies, as barrier to innovation, 42 physicians attracting, 54 cost-consciousness and, 66, 68 density of, 41 as doctorpreneurs, 42–45 at HCCI, 112–113 labor costs and, 217–219 20/04/18 8:35 PM Index 253 in Mississippi, 127–128 at Narayana, 78 opportunities for change and, 201–202 reimbursement of, 66, 78 shortage of in India, 42 shortage of in Mississippi, 127–128 shortage of in Texas, 143–144 shortages of in the US, 127–128, 143–144 specialization of, 54, 55 policy, 36 universal health care and, 165–166 US, 6–7 Porter, Michael, 19–20 poverty, 41 Ascension and, 149, 156–157 dissociating health care from affluence and, 105–106 Indian exemplars and, 214 as motivator for innovation, 42, 45 Narayana and, 72–73 nonmedical expenses and, 47 paying patients and, 47, 48 technology and, 88 UMMC and, 139–140 preventable injuries, 152–155 primary care, 170–172, 181–183 prisons, UMMC in, 139 process innovations, 40, 63–64 at Ascension, 160–162 diagnostics on, 228–229 at Narayana, 78–81 self-service, 64–65 Procter & Gamble, 9, 10 productivity, 73 profitability, 15 of Indian exemplars, 215 at Iora, 176, 184–185 as means to an end, 47, 48–49 at Narayana, 74–75 purpose and, 46 at UMMC, 133, 142–143 universal health care and, 165–166 250202_99d_243-258_r0.indd 253 protocols, 55, 65 at Ascension, 149 for home-based care, 59 quality and, 66 Pryor, David, 152, 153–154 purpose, 24, 39, 46–49 at Ascension, 107–108, 148–149 at Care Hospitals, 45 diagnostics on, 224–225 at Iora, 172–174, 178 leadership and, 192–193 at LV Prasad, 52 at Narayana, 75–78 profitability and, 48–49 targeting rich and poor in, 47, 48 turning need into demand and, 47 at UMMC, 125–126, 132–136 universal health care and, 165–166 pyramid model, 50 quality, 169–190 at Aravind, 43 at Ascension, 151–154 as cost driver, 154 data sharing and, 60–61 disparities in care, 149–151, 161 frugality and, 85 HCCI and, 118–119 hub-and-spoke configuration and, 54–56 of Indian exemplars, 15, 17, 21–22, 211–214 at Iora, 182–183 in Mississippi, 126–127 at Narayana, 73 protocols and, 66 task-shifting and, 80 at UMMC, 143 US, 6–7 value-based care and, 20 volume and, 48 20/04/18 8:35 PM 254 Index Rabindranath Tagore Institute of Cardiac Sciences, 76 Raghuvanshi, Ashutosh, 75, 80, 81 on cost-consciousness, 82–83 on HCCI, 111, 117, 118–119 HCCI and, 107, 114–115 on iKare, 89 on quality, 85 on resource utilization, 82 on task-shifting, 90 Raju, B Soma, 45 Rao, Gullapalli N., 43–44, 52 voice prosthesis by, 59–60 Red Cross, 117–118 Reddy, Krishna, 55 regulated competition, 194, 216 regulation, 11, 99 as barrier to innovation, 42 bottom-up change and, 18–19 change opportunities and, 198–199 HCCI and, 109–110 in India, 16, 42, 45, 221 innovation and, 221 Iora and, 187–188 task-shifting and, 69, 194 UMMC and, 138–139 US versus India, 221 Renaissance Health, 175–176 Renault, 9, 10 research, 15 hospitals, 18, 219–221 Resource Group, 155 resources doctor shortages, 41, 42, 47 expertise, centralization of, 53 hub-and-spoke design and, 50–54 process innovations and, 63–64 profitability and, 48–49 shortages of, 47 utilization of, 29, 56, 79, 200 250202_99d_243-258_r0.indd 254 reverse innovation, 7–12 Ascension and, 158–160 consumers and, 199–200 defi nition of, 7, opportunities for, 197–205 promise of, 91–92 promoters of, 33 promoting, 191–205 research on, 10–11 Reverse Innovation: Create Far From Home, Win Everywhere (Govindarajan & Trimble), 11 risk tolerance, 186, 187 Robert Wood Johnson Foundation, 163–165 Rotary Clubs, 86 Royal Caribbean, 118 rural health care, 28, 123–146 Rural Health Care Program, 132 Saint Agnes Hospital, 157 scale, 34–35, 39–40 charity and, 77, 176 at Narayana, 81–82 at UMMC, 137 Schiller, 87–88 schools, UMMC in, 139 Sculley, John, 32 Shetty, Devi, 43, 192 Ascension and, 158–160 background of, 75–76 on cost-consciousness, 82–83 on dissociating health care from affluence, 105–106 Fernandopulle and, 173 HCCI and, 103–104, 108–110 hub-and-spoke model and, 85–87 Mother Teresa and, 71–72 pricing model of, 77–78 process innovation by, 78–81 20/04/18 8:35 PM Index 255 on purpose, 78 on regulations, 101 on staffi ng, 114 technology and, 87–91 ultra-cost-consciousness of, 65–66 value creation by, 72–75 vision of health care of, 87 on Walmartization of health care, 77 See also Narayana Health Shetty, Viren, 106, 112, 113 Shouldice Hernia Hospital, 32 Sisters of Charity, 147–148 Sisters of St Joseph Health System, 148 skepticism about India, 16, 17–19, 207–222 at UMMC, 130–132 Skype, 87 smoking cessation, 47 social justice, 149, 157 Southwest Airlines, 63 special interests, as barrier to innovation, 42 Iora and, 187 specialization, 54, 55, 134–136 at Iora, 185–187 Speranzo, Tony, 162 Spivey, Bruce, 163 Srinivasan, Aravind, 91, 173 staffi ng costs, at Narayana, 79 creating new job categories and, 61–63 at HCCI, 114 at Iora, 177 labor costs and, 217–219 at LV Prasad, 51–52 in Mississippi, 127–128 See also physicians; resources; task-shifting standardization, 154–156, 160–162 Stanford Hospital, 89 Stanford Medical School, 31 Steward Health Care, 31 250202_99d_243-258_r0.indd 255 St John Providence Hospital, 157 St Vincent’s Medical Center, 153 subsidized care, 47, 48, 165 at Narayana, 73 at Pacific Vision, 165 profitability and, 48 suppliers, change opportunities and, 203 supplies, 57–59 at Ascension, 155–156 at HCCI, 115 manufacturing, 83–85 at Narayana, 83–85 reusing, 82–83 US versus India costs of, 219 Surgery Center of Oklahoma, 31 Swasthya Slate, 60 task-shifting, 25, 40, 61–65, 69 creating new job categories and, 61–63 diagnostics on, 228–229 down-shifting, 182 examples of places using, 31 to family members, 64–65, 79–80 at HCCI, 116 at Iora, 29, 98, 170, 172, 179–183 at LV Prasad, 44, 51 at Narayana, 78–81, 90 process innovations and, 63–64 regulation and, 194 share-shifting, 182 at UMMC, 141 in the US, 92 technology, 24–25 change opportunities and, 204–205 cost-consciousness and, 68 diagnostics on leveraging, 226–227 EMRs and IT systems, 60–61 in home care, 57, 58–59 human side of, 145–146 at Iora, 172, 183–185 20/04/18 8:35 PM 256 Index technology (continued ) leveraging, 40, 56–61, 128–132 at Narayana, 87–91 per-use contracts for, 83 at UMMC, 123–124, 128–132, 137 value-added innovation using, 59–60 Teisberg, Elizabeth, 20 telehealth, 28 data sharing in, 137 future of, 143–144 insurance reimbursement for, 132–133, 135, 138–139 in intensive care, 31 at Iora, 184 at Narayana, 90–91 regulation and, 69 scaling, 34 technology leveraging and, 56–57 at UMMC, 97 Telemedicine magazine, 134 TelEmergency, 131–132, 134 See also University of Mississippi Medical Center (UMMC) Temasek, 185 Tersigni, Anthony, 108, 147, 148–149 HCCI and, 158–160 on pilot programs, 152 purpose of, 161 vision of, 150 See also Ascension Health Thompson, Gene, 106 3nethra, 60 Toyota Production System, 68, 78, 195–196 transparency, 31, 193 Trimble, Chris, 11 TriMedx, 67, 83, 108, 156, 159 TripleCare, 32 Trump, Donald, 161 Tufts Medical Center, 137 turnaround times, 63–64, 79 Turning the World Upside Down (Crisp), 23 250202_99d_243-258_r0.indd 256 Uber, 194 UMass Memorial Medical Center, 31 UMMC See University of Mississippi Medical Center (UMMC) United Health Foundation, 127 United Kingdom cataract surgery in, 33, 43 complication rates in, 54 National Health Service, 5, 22, 33, 43, 54 Netcare Group, 33 United States applicability of reverse innovation to, 215–222 core health-care problems in, 95 cost-consciousness in, 68 costs in, 3–4, costs of care in India versus, 14, 15 disparities in quality of care in, 149–151 equipment utilization in, 54, 82 health-care delivery, 12 health-care statistics on, 208 hub-and-spoke system in, 55–56, 92 Indian-style innovations in, 18–19 influence of on global health care, 103–105 innovation drivers in, 193–194 knee/hip replacements in, 101–103 potential cost reductions in, 35–36 protocols in, 65 renal care in, 58–59 serving the uninsured in, 163–166 state of health care in, 5–7 task-shifting in, 65 technology leveraging in, 61 universal health care in, 165–166 unsustainability of health care in, 92 value-based care in, 20 volume in, 92 See also Health City Cayman Islands (HCCI) United States Department of Agriculture (USDA), 132 20/04/18 8:35 PM Index 257 University of Michigan, 195 University of Mississippi Medical Center (UMMC), 26, 27–28, 34, 96, 97, 123–146 access to care and, 126–128 adoption at, 138 diabetes care, 140–143 expansion of, 134–136, 139 future of, 143–144 home-based care in, 139–143 hub-and-spoke model at, 125–126 insurance reimbursement at, 132–133, 135, 138–139 lessons from, 144–146 quality at, 124–125, 143 results at, 141–143 skepticism and pushback toward, 130–132 specialist care in, 134–136 technology leveraging at, 128–132 University of Texas Southwestern Medical Center, 3–4 unnecessary procedures, 66 value at Ascension, 160–162 innovations maximizing, at UMMC, 141–143 value-based care, 19–25 at Ascension, 160–162 consumers and, 199–200 core principles of, 23–25 drivers behind in India, 40–45 examples of, 30–33 promoting, 191–205 at UMMC, 133–134 value-based competition, 71–99 key actors in US, 198 variable costs, 49 controlling, 67 250202_99d_243-258_r0.indd 257 Venkataswamy, Govindappa, 43, 163 job categories created by, 61–62 venture capital, 161–162 Virginia Mason Medical Center, 30, 195–196, 197, 200 Virtual Care Center, 31 virtuous cycles, 39 visionary leadership, 192–193 vision care at Pacific Vision, 163–165 task-shifting in, 61–62, 63 technology innovation in, 60 See also cataract surgery; LV Prasad Eye Institute volume at Aravind, 91 focused factory model and, 53–54 at HCCI, 115–116 hub-and-spoke design and, 50, 55–56 at Narayana, 73 profitability and, 48–49 specialization and, 54 targeting rich and poor and, 48 US, 55–56 in the US, 92 US versus India, 219 Wadsworth, Eric, 63–64, 68, 177–178, 188 Walmart, 9, 10, 113, 118, 199 wellness programs, 53 worry scores, 180 Wound, Ostomy and Continence Nurses Society, 152–153 Wright, Wayne, 101–103, 118 Yeshasvini, 86–87 Zane, Ellen, 137, 194 Zocdoc, 32 20/04/18 8:35 PM 250202_99d_243-258_r0.indd 258 20/04/18 8:35 PM Acknowledgments Although we’ve known each other for more than four decades, our intellectual journeys followed separate trajectories for many years One of us (VG) was studying strategy and innovation in large US multinationals, and the other (Ravi) was doing the same with firms in emerging markets Our paths intersected when Western multinationals became increasingly interested in emerging markets, and firms in emerging markets became increasingly interested in the rest of the world, including the United States and Europe And so, in 2010, we began to collaborate around the topic of “reverse innovation.” We first explored reverse innovation in analytical terms, and then we zeroed in on its relevance in a very important industry—health care We published our initial ideas in 2013 in the Harvard Business Review article, “Delivering World-Class Health Care, Affordably.” This book is the culmination of six years of research on how the United States and other industrialized countries can benefit from innovations in health-care delivery in poor countries like India Needless to say, those lessons are also relevant to other poor countries, where billions have no access to health care Our research took us to more than two dozen hospitals, and we interviewed over 125 health-care executives in India and the United States For the first phase of our research, we are deeply indebted to the leaders of innovative Indian hospitals who threw open their doors to us Among them are Dr Aravind Srinivasan, Dr R D Ravindran, and R D Thulasiraj of Aravind Eye Care System; Dr N Krishna Reddy and Dr B Soma Raju of Care Hospitals; Dr K S Nayak of 250202_99e_259-262_r1.indd 259 20/04/18 12:46 PM 260 Acknowledgments Deccan Hospital; Dr B S Ajaikumar and Dr Naveen Nagar of HCG Oncology; Anant Kumar and V Srinivas of LifeSpring Hospitals; Dr Gullapalli N Rao of LV Prasad Eye Institute; and Dr Devi Shetty, Dr A Raghuvanshi, and Viren Shetty of Narayana Health The logistics of our field visits and research were expertly organized by Mahesh Sriram For the second phase of our research, in the United States, we are grateful to Dr Anthony Tersigni, John Doyle, and Rhonda Anderson of Ascension; Dr Rushika Fernandopulle of Iora Health; Dr Kristi Henderson, formerly of University of Mississippi Medical Center (now with Ascension); Dr Bruce Spivey of Pacific Vision Foundation; Liam Donohue and Payal Divakaran of 406 Ventures; Diane Daych of Apple Tree Partners; Ellen Zane of Tufts Medical Center; Dr Gary Kaplan of Virginia Mason Medical Center; Dr Kevin Curtis of DartmouthHitchcock; Dr Richard Friedlander of Netcare (South Africa); and Anssi Mikola of HNG (Finland) Several colleagues gave us constructive feedback, some of them multiple times, and shaped the book in profound ways Among them are Lisa Adams, Dr Don Berwick, Sujana Chalsani, Dr David Chang, Dr Elliott Fisher, Dr Richard Fried, Robert Hansen, Punam Keller, Karen Koh, Tim Lahey, Russ Moran, Alan Mullaly, Merritt Patridge, David Puvirajasingam, Suzie Rubin, Steve Spear, Albert Wocke, Gary Young, and Mike Zubkoff We owe a special debt of gratitude to Eric Wadsworth of the Tuck School and Dartmouth Medical School, who educated us on the US health-care system and fundamentally shaped our research design and strategy We cannot thank Eric enough for his deep insights and generosity A project of this scale and scope requires resources VG would like to thank Tuck School’s deans—Paul Danos (former dean) and Matt Slaughter (current dean)—for their generous financial support Ravi would like to acknowledge the support of Northeastern University’s Center for Emerging Markets and its benefactors, particularly Dave Nardone and Venkat Srinivasan 250202_99e_259-262_r1.indd 260 20/04/18 12:46 PM Acknowledgments 261 We were lucky to have an outstanding editorial team to help us with the book The fabulous duo of Art Jahnke and Nancy Zerbey helped recast our research in an engaging, storytelling style And at Harvard Business Review Press, we were fortunate to have as our editor the oneand-only Melinda Merino, who helped sharpen our arguments and make the book a whole lot punchier Jon Zobenica was a meticulous copy editor, and Jennifer Waring oversaw production We would like to dedicate this book to our wives, our children, and their families, whose love and support have sustained us through this and every other project we’ve undertaken We would also like to dedicate the book to three people who left us prematurely in the recent past Here are a few words about each of them VG was extremely close to his brother Rangan who, after earning his undergraduate degree in engineering, went on to get his MBA from the prestigious IIM-Ahmedabad Rangan knew more accounting than VG did, even though VG was trained as a CPA That is what motivated VG to pursue an MBA Later in life, deriving inspiration from VG, Rangan completed his doctorate in strategy, then published his doctoral thesis as a book, which he dedicated to VG It seemed as though the brothers had come full circle When he was diagnosed with cancer, Rangan was determined to write a book on the engineering principles of costeffective industrial construction, based on his experiences as CEO of one of India’s largest construction companies VG and his wife, Kirthi, spent time with Rangan just before he passed away What amazed them was how passionate Rangan was about his book project He dictated chapter outlines to his executive assistant He was in a race against cancer to finish it He saw the book as his legacy VG wishes he knew enough engineering to complete Rangan’s unfinished manuscript Bala, Ravi’s brother, was one of six siblings, all boys, born to middleclass parents As the number five and number six siblings, Bala and Ravi were especially close and grew up together for their first seventeen years When he was two years old, Bala developed a high fever that led to 250202_99e_259-262_r1.indd 261 20/04/18 12:46 PM 262 Acknowledgments convulsions, which resulted in a lifelong physical disability This disability limited Bala’s activities—but never his spirit or his determination to lead a full life He completed college, volunteered in a village for two years, got married, had a lovely family, and pursued a career as an HR executive Whatever fate dealt him, Bala faced with courage and good humor He always focused on the other person, not himself, and on the good news, never the bad His courage, positive outlook, and big heart were an inspiration to all who knew him Drew was the older brother of Ravi and Meena’s daughter-in-law, Paige Drew trained as a pediatric cardiologist and married May Ling, also a cardiologist With two-year old Claire they attended Paige and Bharat’s wedding—as groomsman and bridesmaid— even though May Ling was due to deliver their second daughter, Norah, any day A few years later, their third daughter Caroline arrived Drew loved baseball and hanging out with his family Then, out of the blue, he was diagnosed with advanced cancer Drew and his loving family lived as normal a life as possible, even as he underwent treatment Drew is sorely missed by his family and friends As we conclude this book on health-care innovations, we would like to dedicate it to the fond memory of Rangan, Bala, and Drew Vijay Govindarajan (VG), Hanover, NH Ravi Ramamurti, Lexington, MA 250202_99e_259-262_r1.indd 262 20/04/18 12:46 PM About the Authors VIJAY GOVINDARAJAN (VG) is widely regarded as one of the world’s leading experts on strategy and innovation He is the Coxe Distinguished Professor of Management at Dartmouth’s Tuck School of Business and a former Marvin Bower Fellow at Harvard Business School He was the first Professor in Residence and Chief Innovation Consultant at General Electric With GE’s CEO Jeff Immelt, he wrote the Harvard Business Review article “How GE Is Disrupting Itself,” which introduced the concept of “reverse innovation”—any innovation that is adopted first in the developing world In November 2012 HBR named reverse innovation one of the “Great Moments in Management” in the last century Govindarajan is the New York Times and Wall Street Journal bestselling author of Reverse Innovation and a two-time winner of the prestigious McKinsey Award for the best article published in HBR In the latest Thinkers50 rankings, he is rated the #1 Indian Management Thinker Govindarajan has been identified as a leading management thinker by influential publications including Bloomberg Businessweek, Forbes, the London Times, and the Economist Prior to joining the faculty at Tuck, Govindarajan was on the faculties of Harvard Business School, INSEAD (Fontainebleau), and the Indian Institute of Management (Ahmedabad, India) The recipient of numerous awards for excellence in research, Govindarajan was inducted into the Hall of Fame of the Academy of Management Journal and ranked by Management International Review as one of the Top 20 North American Superstars for research in strategy 250202_99f_263-266_r1.indd 263 20/04/18 12:50 PM 264 About the Authors Govindarajan has worked with CEOs and top management teams in numerous Fortune 500 firms to discuss, challenge, and advance their thinking about strategy His clients include: Boeing, Coca-Cola, Colgate, Deere, FedEx, GE, Hewlett-Packard, IBM, JPMorgan Chase, Johnson & Johnson, New York Times, Procter & Gamble, Sony, and Walmart He has been a keynote speaker in the BusinessWeek CEO Forum, HSM World Business Forum, TEDx, and the World Economic Forum at Davos Govindarajan holds both a doctorate and an MBA (with distinction) from Harvard Business School Prior to this, he received his chartered accountancy degree in India, where he was awarded the President’s Gold Medal by the Institute of Chartered Accountants of India for obtaining the first rank nationwide RAVI RAMAMURTI is an expert on strategy and innovation in emerging markets He is the University Distinguished Professor of International Business & Strategy at Northeastern University’s D’Amore-McKim School of Business He founded and heads the university’s Center for Emerging Markets For more than thirty-five years he has studied the strategies of firms in and from emerging markets After earning his BSc degree (in physics) from St Stephen’s College, Delhi University, India, Ramamurti obtained his MBA from the Indian Institute of Management Ahmedabad, where he received a Gold Medal for graduating at the top of his class He holds a doctorate from Harvard Business School, where he was awarded a Dissertation Fellowship grant In recognition of his “outstanding contributions to the scholarly development of the field of international business,” Ramamurti was elected a Fellow of the Academy of International Business in 2008 He was elected by members of the Academy of Management to serve on the board of its International Management Division (2003–2008) Ramamurti has been a visiting professor at Harvard Business School, at the University of Pennsylvania’s Wharton School, and at MIT Sloan 250202_99f_263-266_r1.indd 264 20/04/18 12:50 PM About the Authors 265 School of Management He has also been a visiting professor at Tufts University’s Fletcher School, CEIBS Shanghai, and IMD Switzerland He has been recognized globally for his thinking and teaching on strategy and innovation in emerging markets Along with doing research and consulting for firms and governments in more than twenty emerging markets, Ramamurti been an adviser to the United Nations, USAID, and the Fulbright Program He was also principal adviser to the World Bank’s board on privatization and to The Economist Group for its online courses on emerging markets Ramamurti’s pioneering work on the strategies of multinationals from emerging markets, and how Western multinationals should respond to these new rivals, has led to the publication of six books in this area, including three with Cambridge University Press He has also published articles in leading academic journals, including the Academy of Management Review, Global Strateg y Journal, Journal of International Business Studies, and Management Science, and in practitioner journals such as California Management Review and Harvard Business Review His 2011 Global Strateg y Journal article “Reverse Innovation, Emerging Markets, and Global Strategy,” coauthored with Vijay Govindarajan, won the 2012 EBS Universität prize for Best Article on Innovation Management, and in 2017 it won the inaugural prize for the Best Article published in GSJ Ramamurti is a frequent keynote speaker in academic and practitioner meetings and is quoted regularly in the business press His consulting clients have included several public and private firms in the United States and around the world 250202_99f_263-266_r1.indd 265 20/04/18 12:50 PM 250202_99f_263-266_r1.indd 266 20/04/18 12:50 PM ... Inc.; former Governor of New Hampshire 250202_00a_a-d_i-viii_r2.indd b 20/04/18 5:55 PM Reverse Innovation in Health Care definitely delivers on its mission to show how to make value- based health. .. Breakthrough Business Model of Indian Exemplars 39 How Value- Based Competition Works Value- Based Competition in Action 71 Narayana Health PART TWO Reverse Innovation in Health- Care Delivery Four... the innovative practices of Indian health- care exemplars Now, with this book, we bring together all of our research on reverse innovation in health care to show how revolutionary practices in India