In the mid-1990s, Shetty began experimenting with a business school concept alternately called upskilling or task-shifting. The idea is for everyone involved in a complex process to work only at the top of his qualification, leaving simpler tasks to lower-paid workers. In a hospital, this might mean that the costliest staff—experienced surgeons—enter the operating theater only to complete the most difficult part of a procedure, leaving everything else to junior doctors or well-trained nurses. Then they move to the next theater to perform the same task again.
This is from Ari Alstedter, “The World’s Cheapest Hospital Has to Get Even Cheaper,” Pocket Worthy. (Originally published in Bloomberg Business Week, March 25, 2019.)
Tyler Cowen over at Marginal Revolution published it as a link today. It’s fascinating all the way through. It’s a beautiful study in applied economics. If I were still teaching, I would use it in every course I teach. The above quote is a nice illustration of comparative advantage.
READER COMMENTS
john hare
Jul 18 2020 at 5:50am
I found time to follow the link this morning. This looks like the results of profit based competition and free enterprise. Mother Teresa’s work is not scaleable is a classic line. Firing a doctor for installing excess pacemakers. Specializing, fixed prices for the stay, training family, and other economies are fascinating reading. As is the Indian government Modicare trying to get prices down by paying less than cost.
Opening a branch in the Cayman islands to service American medical tourism is smart business.
Bill
Jul 18 2020 at 11:07am
This brought to mind the account* of how John D. Rockefeller and his team at Standard Oil approached innovation-cost saving-lower prices in the kerosene industry.
* Ron Chernow, TITAN: THE LIFE OF JOHN D. ROCKEFELLER, SR. Vintage Books, 1998
Steve
Jul 18 2020 at 5:19pm
This story has the quality of a late fable by Tolstoy, with a good man, using simple common sense to bring good things to the poor, in an exotic, far away land. But hospitals like Cleveland Clinic, Mayo Clinic and Intermountain Health have been using precisely the same strategies to reduce costs for years. You might want to sit down with a couple of American hospital administrators and go through this article with them, and find out why our hospitals don’t or can’t implement these easy-to-understand savings methodologies.
john hare
Jul 19 2020 at 5:14am
It seems to me that reducing costs of the care incurred by the hospital is hijacked by the billing system that doesn’t result in noticeably lower prices to the consumer.
SaveyourSelf
Jul 21 2020 at 11:34am
“Modicare=” Centralized healthcare rationing for India. It’s hard to watch others make the same mistakes as the U.S. and England. 1st semester economic models predict prices drop in the presence of competition. Competition means large numbers of buyers and sellers. Government sponsored healthcare is the opposite of competition, and predictably produces the opposite results.
In US hospitals, specialization in medicine is also present, particularly in the operating room, but tort is a bigger concern. It’s harder to relinquish control to other people when you bear the risk of lawsuit from their errors. That said, the only differences I noted in the article from American hospital practice was reusing transfusion tubing between patients and having family perform floor nursing activities in the hospital.
David Seltzer
Jul 21 2020 at 5:21pm
I served in Southeast Asia, 1962 to 1964. In triage, often a Master Chief Hospital Corpsman would guide a young medical officer through a particularly difficult procedure.
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