In 2009, John Doyle, Chief Strategy Officer, Ascension Health, finally found the full-blown healthcare model that Ascension was looking for, and he didn’t find it in the United States. He found it in India.
Ascension’s president and CEO, Anthony Tersigni, had recently returned from a business trip to Grand Cayman with some interesting news: an Indian healthcare company called Narayana Health was planning to build a medical complex on the Caribbean island, about 450 miles from Miami. The Indian group was calling it Health City Cayman Islands (HCCI), and was talking about building a hospital, a medical school, and assisted-living facilities. Care was going to be first-rate, and prices would be a fraction of those charged in American hospitals. Tersigni asked Doyle and his team to find out more about it.
Doyle tracked down Narayana’s founder and chairman, Devi Shetty. Not surprisingly, Doyle and Shetty hit it off right away. “We bonded based on the values of our organizations,” Doyle remembers. “Both organizations have concern for the poor and vulnerable, and we both feel compelled to make services available to people in need, regardless of their ability to pay, understanding the obvious difficulties of providing healthcare for all in a high-cost environment.”
Shetty invited Doyle to come to India to see what Narayana had done there. “It was a life-changing experience,” said Doyle. “It affirmed what Ascension’s leaders had been saying for years — that if you want to see new forms of innovation, you need to talk to new people. If you keep talking to the same people, you’ll keep getting the same answers. Similarly, if you want to find solutions, you have to look in places where there are extreme challenges. Places like India. As an organization, we had been pushing ourselves to be in places that are not usual for us, to find new people to collaborate with, and new ideas that might work for us.”
Shetty and Doyle immediately began sharing innovations. Narayana signed on with TriMedx, Ascension’s medical-equipment-servicing company, and Ascension began testing iKare, Narayana’s bedside clinical decision-support software. Ascension began sending physicians and administrators on trips to Bangalore, where Narayana had an open-door practice-sharing policy, to see what practices could be brought back to the United States. And in 2012, Narayana and Ascension signed a partnership agreement to build Health City Cayman Islands.
The partnership called for a $40 million equity investment split between Ascension and Narayana. For Ascension, it was a big opportunity to partner with and learn from a reputable healthcare provider. The learning came fast. Accustomed to hospital construction costs in the United States, which then ranged from $1 to $2 million per bed, Ascension was interested to learn that Narayana expected to build a 104-bed hospital on Grand Cayman, an island with no native building materials, at only $700,000 per bed. Ascension spent about $1 billion on buildings each year and was looking for lessons in capex frugality, so the organization sent its building-management team to Cayman to watch and learn from the building operation there, starting from the ground up.
“That hospital building is the very model of efficiency,” Doyle says. “Built to purpose, highly functional, and bright, it feels like a healing environment, and it does what it’s supposed to do at half the cost we would pay here in the US. Dr Shetty would say, ‘John, we start every project as if we’re poor and we’re broke — because we are! ’ And every time he says that, I’m chagrined, because at Ascension we start every project like the $20 billion company that we are, and [encounter] all of the complexities that that implies. What Narayana offers is a mirror for an organization like Ascension.”
Over the following few years, Ascension institutionalized the reverse-innovation process, assigning a full-time staff person to oversee the transfer of knowledge and sending more than a hundred people — doctors, administrators, and support staff — to Bangalore and Grand Cayman to see the Indian operation firsthand. By 2017, openness to new ideas, even foreign ideas, was becoming part of Ascension’s DNA and leadership training.
“We hunger for innovation,” Doyle told us. “We know we have to transform, and we believe ideas come from all kinds of places. When you see how people are being cared for at Narayana and having great outcomes, it opens your mind to another set of possibilities.”
Excerpted fromReverse Innovation in Health Care: How to Make Value-Based Delivery Work, by Vijay Govindarajan and Ravi Ramamurti (Harvard Business Review Press)