Lessons for Lawyers from a Low Cost Indian Hospital
You may be surprised that a low cost hospital chain in India offers multiple lessons for lawyers. The World’s Cheapest Hospital Has to Get Even Cheaper (Business Week, 26 March 2019) explains how an already-low-cost operation can go even lower. That message may not be music to law firm partners’ ears, but it should sound melodious to clients.
The article tells a great story. Dr. Devi Shetty, a masterful heart surgeon
is the founder and chairman of Narayana Health, a chain of 23 hospitals across India that may be the cheapest full-service health-care provider in the world. To American eyes, Narayana’s prices look as if they must be missing at least one zero, even as outcomes for patients meet or exceed international benchmarks.
Cheapest plus outcomes exceeding norms sound too good to be true. Yet investment bank Jefferies estimated that Narayana “can profitably offer some major surgeries for as little as half what domestic rivals charge.” (Emphasis added.)
A new Indian law will push costs down even more. “Modicare, the national health insurance program that’s one of Prime Minister Narendra Modi’s signature initiatives… intended to give basic coverage for the first time to 500 million of India’s poorest.” When the government published the reimbursement rates, Dr. Shetty saw that the “rock-bottom payments mean that to thrive under Modicare, Narayana needs to find ways to cut costs further—and then keep cutting.”
How will Dr. Shetty accomplish this? I start by enumerating his methods, then turn to how they can easily apply to lawyers and law practice. Key elements to Narayrana driving costs lower include:
- Upskilling. Everyone involved in delivering healthcare must “work only at the top of his qualification, leaving simpler tasks to lower-paid workers.” For example, surgeons enter the operating room (OR) only for the hardest part of a procedure.
- Assembly Line. Funnel the most complex conditions to two specialized hospitals and apply assembly line techniques for surgical and medical care efficiency. By doing this, the “average Narayana surgeon performs as many as six times more procedures annually than an American counterpart.” An example of how this works: Narayana keeps “turnaround teams with fresh instruments, drapes, and other supplies on immediate standby, ready to roll the moment a room is available.” That reduces OR turnaround from 30 minutes in the West to 15 minutes. Assembly lines also confer a quality benefit: “huge volumes help surgeons quickly develop proficiency, the chain’s mortality rates are comparable to or lower than those in the developed world, at least for some procedures.”
- Thrift Everywhere. A long list of steps keep costs down. Examples include: source supplies locally; sterilize and re-use equipment rather than use it once only; use machines beyond warranty dates by having an in-house team to keep them running; and upskill patients’s families to bathe patients and change bandages in the hospital. On that last point, even in the US, families often do this when the patient returns home. With Narayana’s approach, the hospital enlists patients earlier and patients learn under supervision and get practice.
- Flat Fees. “In contrast to the ultra-itemized billing familiar to Americans, Modicare pays flat fees for every procedure, including the entire hospital stay required to get it done. (Narayana operates the same way.) ” Need I say more?
- Tracking Software. Narayana tracks high volumes of granular data about both inputs and outputs. One example: hospital administrators called out a surgeon who performed 80% of the pacemakers his unit implanted. That doctor said his patients were more complex but the data showed otherwise. Special snowflake anyone (more below)?
Here’s how these relate to large law firm practice:
- Upskilling in law means delegation. Both clients and firms benefit when partners delegate work to the lowest qualified individual.
- Assembly line in law is like law factory: automate and routinize wherever possible. Quite a few firms have taken steps in this direction with process mapping, low cost delivery centers, staff attorneys, and automation.
- Thrift may not enter your mind when you think of Big Law. It should. Smart firms have reduced the number of secretaries and the floor space per lawyer. And knowledge management represents a form of thrift: save time and improve outcomes by tapping know-how, either in documents or from colleagues.
- Flat fees… what can I say. It’s the same in hospital and law firms. Patients and clients alike value predictability and certainty. Moreover, flat fees motivate provider efficiency.
- Tracking software in law firms is more a collection of systems than a single, ERP-type one. Law firms have long tracked time. Now, they track their experience, their clients, and their documents (for security and GDPR compliance). Firms increasingly build data lakes and master data management systems to access all their data.
The legal market has long resisted learning from other industries. I have long found, however, comparison to health care particularly apt for lawyers. (See, for example, my 2002 presentation, Adopting Best Practices and Doing Away with Castes, which looks at doctors adopting checklists and asks why lawyers don’t do the same.)
The “special snowflake” reference above serves as shorthand for many lawyers’ views: “What I do is special. I face exceptional circumstances”. That’s almost always false, whether believed by doctors or lawyers. And if doctors, with lives rather than money on the line, can improve their practices and reduce costs, why can’t lawyers? And if law firms don’t, will law departments or law companies do so?
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