Business models in global health: Heart Institute of the Caribbean

by admin on January 3, 2011

Should the Heart Institute of the Caribbean expand to West Africa?
Student observations on the organization’s success and future goals

In late 2010, a small team of MIT students took a look at the organization from the outside and, as a course assignment, prepared an executive summary aimed at its board of directors. This article presents their overview and assessment of the organization, and their thoughts on challenges and opportunities. Keep in mind that this a class assignment drawing largely on publicly-available materials and in some cases direct, though limited, interaction with the organization. We share the student’s work in the hopes that others will build on it in keeping with the creative commons license.

By Richard Riley, Gabrielle Tiven and Noam Josephy

Background on HIC

Dr. Ernest Madu, a cardiovascular specialist, established the Heart Institute of the Caribbean (HIC) in 2005 to provide high quality cardiovascular care to Jamaica and the entire Caribbean. Cardiovascular conditions represent the leading cause of death and disability in the region, yet prior to the inception of the HIC, no center in the area provided comprehensive high quality treatment.

HIC is the Caribbean’s only cardiovascular center and now has sites in Kingston, Mandeville and Ocho Rios, Jamaica. It provides a quality of care comparable to that found in the United States at 10% of the cost. Services are open to all who come, regardless of ability to pay, and HIC spends over $1M annually serving low-income patients. The center engages in outreach efforts to encourage exercise and healthy eating. It provides a wide range of screening tests, diagnostics and procedures. According to Dr. Madu, everything that a patient could get at the best U.S. hospitals can be obtained at the Heart Institute of the Caribbean. HIC has also recently begun discussions to create a follow-up program that uses SMS texts to relay information to patients as they recover.

Accounting for Success

HIC is able to serve all patients, regardless of ability to pay. It achieves this by lowering costs significantly below U.S. expenses, and cross-subsidizing so that wealthier patients pay more and fund the care of poorer patients.

Lowering expenses

The Heart Institute keeps costs down by:

  • Buying durable, modular components: HIC purchases carefully selected equipment that will last a long time and can be used for many different purposes.
  • Producing some drugs and treatments internally: HIC produces some simple drugs and treatments internally to save significantly.
  • Using telemedicine: By connecting every center to a central server, one set of specialists can serve all three HIC sites, the staff can consult with doctors abroad.
  • Implementing electronic medical records: HIC streamlines its administration by using electronic medical records, which lowers costs and helps improve accuracy and completeness of records.

Cross-subsidization

By providing world-class quality of care, HIC attracts wealthy Jamaicans would have otherwise flown to Florida or other parts of the U.S. for specialty health care. These patients keep their money in Jamaica now, and pay less than they would have paid by going abroad. Every patient who pays full price subsidizes more than four low-income patients who receive the same quality of care (2).

Training & staffing

As the only cardiovascular center in the Caribbean, HIC has become a key place for Jamaican (and other Caribbean) doctors to train. This saves the Jamaican government money: if students go abroad for medical school at the government’s expense, those who specialize in cardiovascular medicine now have a place to practice and a reason to return home. HIC realizes the need build local staff to service the medical equipment the center uses, so it has helped the University of Technology in Jamaica start a biomedical engineering and technician program.

Current and future focus

After five years in Jamaica, HIC operates three sites and serves thousands of patients a year with advanced care. In order to ensure the organization’s sustainability in the future, we believe HIC should focus on measuring its impact on Jamaican’s health, maintaining a focus on the organization’s core mission of providing diagnostics and procedures, and ensuring that there is strong leadership to continue work in Jamaica even if the founder’s focus shifts elsewhere.

Dr. Madu has announced that he plans to open a Heart Institute of West Africa in Port Harcourt, Nigeria. We support HIC’s expansion plan, but also strongly believe that the organization must find the right location and conditions for a new site to work.

  • The cross-subsidy model is critical to HIC’s financial sustainability. In Jamaica, 1 paying patient subsidizes 4 patients who cannot pay full price. In Nigeria, will the Heart Institute find the same ratio? What if there are 8 or 9 people for every person who can pay? Is this difference driven by income level, disease burden or both? Also, What price can HIC charge the full-freight patients in Nigeria? These questions can only be answered with a thorough market study.
  • On the revenue side, importing drugs and equipment to Nigeria may be much more expensive than shipping them to Jamaica. How will transportation costs differ?
  • Wages are also a big component of costs. Can HIC find cardiologists who are willing to live in Port Harcourt, Nigeria and earn a “reasonable” local wage? Having a supply of Caribbean doctors and medical students is key to making the model work in Jamaica. What if there are not enough Nigerian cardiologists to support the model? Also, what if there are not sufficient local university resources to train lab technicians and other skilled support staff?

Looking ahead: student thoughts

We recommend that the Heart Institute expand smartly. The organization must first ensure that the Jamaican sites are profitable and have competent, long-term managers. Then, HIC should understand specifically what makes the model work in Jamaica. Before expanding to another country, the organization must do extensive research to understand whether critical elements of demand, costs, and staffing will be similar or different from Jamaica. Then, HIC can decide whether the model needs any adjustments to fit into a new setting.

Download the student presentation on Heart Institute of the Caribbean (pdf).

Was this article useful to you? Please give us feedback on how to improve sharing our work by leaving us a comment or e-mailing us at ghd.projects.lab@mit.edu.

Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

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