India might be the last place on earth where you’d expect to find health care inno­va­tion. Gov­ern­ment pro­grams have finally brought some infec­tious dis­eases under con­trol, but the nation’s ability to meet the basic med­ical needs of its cit­i­zens remains abysmal. Despite robust eco­nomic growth over the past two decades, the infant mor­tality rate is three times higher than China’s and seven times greater than that of the U.S. Of the 2 mil­lion Indians in need of heart surgery, fewer than 5% get it. The majority of the country’s esti­mated 63 mil­lion dia­betics and 2.5 mil­lion cancer suf­ferers haven’t been diag­nosed, let alone treated. Sev­enty per­cent of India’s 12 mil­lion blind people could be cured by a simple surgery—if it were avail­able to them.

Although India boasts 750,000 doc­tors and 1.1 mil­lion nurses, prac­ti­tioner den­sity is about one-​​fourth what it is in the U.S. and less than half that of China. Hos­pital beds are in short supply, and most med­ical facil­i­ties are dated, cramped, and often unhy­gienic. In a country where the nom­inal per capita income is only $1,500 a year, patients typ­i­cally have to pay 60% of health care expenses from their own pockets. Still, Indians believe that good med­ical treat­ment is some­thing everyone should have access to regard­less of their ability to pay.

Neces­sity spawns inno­va­tion. Despite the pressing demand and con­strained supply, a few rel­a­tively new Indian hos­pi­tals have devised ways of pro­viding world-​​class health care affordably—and to scale. These hos­pi­tals target well-​​off patients, which forces them to pro­vide care that meets global quality stan­dards. But their pur­pose is to serve everyone, including patients with very low incomes, which puts pres­sure on the orga­ni­za­tions to lower costs dra­mat­i­cally. Such a busi­ness model scales because the low costs of these hos­pi­tals attract large vol­umes of patients and allow the overall enter­prise to be prof­itable. As a result, the hos­pi­tals are able to sus­tain their oper­a­tions not through the usual gov­ern­ment sub­si­dies, char­i­table dona­tions, or insur­ance reim­burse­ments but through their rev­enues. Aravind Eye Care System, for instance, has paid for all its expan­sion projects from its profits, even though two-​​thirds of its patients receive free or sub­si­dized care. These extra­or­di­nary pri­vate Indian hos­pi­tals should serve, we believe, as an inspi­ra­tion to those in other devel­oping nations and as a wake-​​up call to hos­pi­tals in Europe and the United States.

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