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Entrepreneurial health care CEOs are finding inspiration abroad

Academic researchers suggest that innovation from other countries could cut care delivery costs by up to 50 percent. Some CEOs are taking this to heart and employing lessons learned abroad here in the U.S.

Gabriel Perna | November 18, 2019

Key Takeaway:
*Iora Health CEO Rushika Fernandopulle built the company using inspirations from Dominican Republic, Malaysia, South Africa and other places abroad.

*As medical spending in the U.S. continues to rise to unprecedented heights, health care CEOs can learn from outside the country to find innovative ways to lower costs and improve care.

*One researcher argues health care costs could be cut in half using innovations drawn from other countries.

*There are challenges in adapting international models of care to the U.S., but strategies can be adapted.

Some forward-thinking CEOs are looking to India and other countries where “constraint is the mother of innovation.” Early in his career and during training, for instance, Rushika Fernandopulle had the opportunity to witness health care in the Dominican Republic, Malaysia, South Africa and other places abroad. But this wasn’t just a case of medical tourism, Fernandopulle was taking notes for his future self to build a better care delivery model.

Iora represents a growing trend in health care. In Jackson, Miss., the University of Mississippi Medical Center drew on India as a model when building up its hub-and-spoke telehealth network. Ascension Health in St. Louis adapted ideas from India (and even traveled to the country itself) on driving down the cost and use savings to provide care for the less fortunate.  Sanford Health in Sioux Falls, N.D. has an international collaborative health care arm in nine countries with more than 80 locations.

In 2011, when he started Iora Health, a national primary-care provider based in Boston, Fernandopulle naturally drew on inspiration from what he learned overseas. Creating an innovative model of primary care, as he aimed to do with Iora Health, was going to require a lot more than just repeating the same mistakes that weren’t working in the American health care system.

Fernandopulle, Iora’s CEO, noticed other countries had a resourcefulness that Americans didn’t possess. For instance, unlike Americans, other countries didn’t overly rely on the doctor. Instead, they relied on community health workers who worked one-on-one with chronic disease patients and helped them execute on their health treatment plans.

“They did it because they had to. They didn’t have the luxury of expensive doctors. They had to figure out a way to get people who were much less trained to solve the patients’ problems. Yes, these [community workers] may be cheaper, but they may also be more effective than doctors because they are close to the patient. No matter how nice the doctor is, there is a social distance between you and the people you’re serving,” Fernandopulle says.

Iora’s usage of health coaches is a central focal point of its model. The company, which closed on $100 million in funding last year, has opened 48 clinics across the country since its inception and has seen tremendous success in improving the quality and cost of care. In one clinic, patients saw a 50 percent decrease in readmissions and a 20 percent decrease in ER visits.

From India to America

As health care spending in the U.S. continues to rise to unprecedented heights (up nearly 4 percent in 2017 alone), leaders of payers, providers and life sciences companies should be looking outside the country to find innovative ways to lower costs and improve care, argues Vijay Govindarajan, a Professor at Dartmouth’s Tuck School of Business and the author of Reverse Innovation in Health Care: How To Make Value-Based Delivery Work.

Govindarajan wrote the book with Ravi Ramamurti, Professor of International Business and Director of the Center for Emerging Markets, Northeastern University. The two looked at how organizations have turned to India as a source of inspiration on how to improve the health care system in America. India was the perfect example of innovation out of necessity.

“Because countries like India are very poor and have such few resources, the only way they can solve the problem is through breakthrough innovation. They can’t throw money at the problem because they don’t have money … India is a resource-poor country. You can see those lack of resources as a problem or as an opportunity. Constraint is the mother of all innovations,” Govindarajan says.

There are common sense approaches countries like India do that can save money for American health care organizations, he says. For instance, he points to a medical clamp used during open heart surgery that costs $160 and is thrown away after a single use. In other countries, they sterilize the clamp and use it 100 times — reducing the cost per use to $1.60.

“We spend $3.6 trillion in health care in America, but I believe you can provide the same care for half the cost. The same world-class health care to all Americans. Today, we can’t even guarantee that health care to all Americans,” Govindarajan says.

In the book, the two authors point to several organizations in the U.S. that have used India as an inspiration. One of the more prominent examples, according to Ramamurti, is Ascension Health, the largest Catholic not-for-profit health system in America, and its ability to find cost savings for a greater good.

“Like a lot of Catholic hospitals, they were struggling. They were subscale and not efficient in supply chain management and procurement. They consolidated and began to pool their purchasing power to the lowest cost. They saved a few billions of dollars and used that to provide relief to underinsured patients,” Ramamurti says. “As a socially minded hospital, they [made the decision] to take care of more people. ‘We don’t need anyone to give us anything. Let’s just do it.’”

Challenges exist but they’re not showstoppers

At Iora Health, Fernandopulle has used other international inspirations along with health coaches to set up the company’s innovative primary care model. This includes the use of lightweight technology platforms that were created in house.

The systems have been purpose-built for population health, rather than billing. Instead of the traditional fee-for-service payment model that has dominated health care for ages, Iora receives a flat-monthly patient fee, which makes billing more simplified. “The technology allows our distributed teams to help manage our patients,” Fernandopulle says.

Of course, it wasn’t easy for Iora Health to just take what they saw overseas and apply it to the American health care system. Fernandopulle notes that there are all sorts of reasons why things can’t be designed a different way in health care — payment, lawsuits, HIPAA violations, etc.

He modified the design of the Iora model to address many of the constraints — taking a page out of the book of Disney’s Imagineers, which come up with an idea and work backward on how to make it happen. For Iora Health, to solve the challenges of payment, the organization works strictly with Medicare Advantage plans and employers that allowed them to run its team-based care model.

“We’ve gotten out of the business of having health plans telling us what we can and can’t pay for. We receive the health care dollar and we get to decide what we pay for and then we make decisions on how we’re going to pay for these things,” Fernandopulle says.

International inspiration advice for other CEOs

Fernandopulle understands that people may have skepticism about adapting models of care from other countries. After all, as he notes, America offers the best treatment for many diseases and some of the most exceptional doctors in the world. To those people, he has a simple piece of advice:

“Be open to it,” he says. “There are plenty of things in the U.S. that we do a pretty lousy job of— managing chronic disease, engaging with communities. Other countries do a better job than us because, quite frankly, they’ve had to do a better job. Be open to the fact that we can learn from what other people can do.”

Govindarajan agrees with this logic and would even take it a step further. He advises CEOs and health care leaders to bring their teams to other countries for an educational experience.

“If you are humble and you have an open mind, go on a learning expedition to some of these hospitals in India, Africa, or somewhere else,” Govindarajan adds. “If you’re the CEO of a hospital, take your management team … you will come back with a completely transformed mindset. The best way to make America great again is to have a global mindset and not a protectionist mindset.”

About the Author

Gabriel Perna, Senior Manager, Digital Content

Gabriel Perna is the Senior Manager of Digital Content at Health Evolution. He brings 10+ years of experience in covering the intersection of health care and business. Previously, he was at Chief Executive, Physicians Practice and Healthcare Informatics. You can reach him via email or on Twitter at @GabrielSPerna