India's New Coup In Outsourcing: Inpatient Care

Article in WSJ about the Indian (Asia) Apollo Hospital chain and how it is supplying care not only to Indians but to foreigners who are going there for lower cost hospital care. Since you need a subscription to access the article, I’ll quote liberally.

Apollo’s emergence as a global health-care provider in many ways tracks India’s economic trajectory over the past three decades. The company has capitalized on the high cost of health-care administration in the U.S. and demands of patients elsewhere, for fast, inexpensive treatment.

Hundreds of Apollo’s data processors work late-night shifts providing billing services and processing insurance claims for U.S. hospitals and insurers. Apollo laboratories perform clinical trials for Western drug companies, such as Pfizer Inc. and Eli Lilly & Co. Apollo even remotely evaluates X-rays and CAT scans.
Apollo’s range of medical services — from the back office to the operating room — highlights the contradictions of the global outsourcing debate. In seeking to provide a wide range of services at a large discount to Western competitors, Apollo is yet another Indian company threatening jobs in the U.S. and other countries. On the other hand, Apollo’s relatively inexpensive medical services have benefited patients from numerous countries.

The Indian government sees health care as a growth industry. Public and private Indian universities are churning out 20,000 doctors and 30,000 nurses a year, some of them destined for jobs in western countries. That is roughly triple the pace at which nurses were trained during the 1990s.

In the so-called medical-tourism business, the focus is on big-ticket surgical procedures from face-lifts to liver transplants. Asian countries such as Thailand, Malaysia and Singapore have taken the lead in this field. Promoting health-care services alongside tourist destinations, the countries attracted more than 600,000 patients in 2003 alone, according to officials in Thailand and Malaysia.

Apollo offers cardiac surgery for about $4,000, compared with at least $30,000 in the U.S. Apollo’s orthopedic surgeries cost $4,500, less than one-fourth the U.S. price. Consulting firm McKinsey & Co. says medical tourism could become a $2 billion-a-year business in India alone by 2012; the category is so new it previously wasn’t measured.

For now, foreign patients represent 7% to 9% of the overall mix at Apollo. Upon arriving in the country, they are greeted at airports by Apollo staff and whisked off to one of its hospitals. These outside guests are treated and housed in buildings with local patients, though they stay in private rooms with one-on-one nursing care. When fit enough to travel, some patients such as Mr. Salo visit seaside resorts as part of their package.

Westerners need to brace themselves for some real shocks. The sight of urchins and beggars roaming Madras’s streets was disturbing, (a Canadian patient) says. The 100-degree heat was oppressive. He faced “real doubts” about his decision when he entered Apollo’s emergency room and saw the ragged condition of local patients. Outside Apollo’s hospitals, clean water and blood supplies aren’t a given.

But the core of its business is a fast-growing class of Indians who have the money to forego free treatment at state-owned hospitals. Of India’s one billion people, roughly 250 million are considered middle-class. Complete checkups typically cost about $90 to $180. That is affordable to India’s growing numbers of call-center workers and engineers — though still out of reach for the very poor, estimated at about 300 million.

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