Since Dr. Shetty’s firm Narayana Hrudayalaya Private Ltd concluded an agreement with the Cayman Islands government in April 2010, outlining a number of laws that the government has agreed to amend or introduce to facilitate the planned medical facilities, not much has happened. However, Shetty and his team of local advisers have no doubt that the government will implement the necessary changes in early 2011.
“There are really no obstacles,” says Shetty, referring to conversations with Premier McKeeva Bush in November who was “very clear that these things will be amended”.
More specifically, the agreement with the government requires amended or new legislation to allow for foreign medical qualifications, the importation of human organs, tissues and body parts, including non-foetal stem cells, obtained by lawful means for use at the hospital and a cap limiting malpractice and medical negligence awards to a maximum of US$500,000 per person on non-economic loss.
“The one reason we chose the Cayman Islands is this is a small country with a very responsible government, which wants things to happen,” Shetty adds.
What has become known locally as the “Shetty hospital” is in fact planned as a facility that combines a hospital with assisted living facilities and an academic institution. Shetty envisions the facilities as a “health city” rather than a hospital.
While the hospital will cater primarily to American patients travelling to Cayman for cardiology, orthopedic, cancer, organ transplant and major surgical procedures, additional facilities will offer US residents a much more cost-effective combination of assisted living and medical care than currently available in the US.
Shetty expects that demand for the services will be driven by an ageing population and continuously rising medical costs in the US. While some have expressed doubts over Cayman’s ability to be a low cost destination for medical tourism, Shetty says that the cost benefits derive from a comparison to the most expensive country for healthcare – the United States.
“So when you talk about the cost arbitration it is primarily because we want to address the most expensive healthcare destination,” Shetty says.
“Our target is to reduce costs by around 50 to 60 per cent of the current prevailing charges in the US.”
He explains that there are 37 million baby boomers in the US, who are in their 60s. “Whatever savings they have today, average people, they will not be able to manage for more than seven, eight years in the US. They have to look for an alternative place to settle down, to look after their healthcare cost and other expenses.”
The main issue with assisted living costs in the US is that healthcare provision is typically outsourced. Elderly people showing any symptoms have to be transported to hospital, a process that not only increases costs but which can also be “demoralising” for patients, says Shetty.
Cayman’s medical facilities in contrast will feature assisted living, a large hospital, a nursing school and a medical school. Residents in the assisted living facilities will be able to receive the majority of examinations, such as ultrasound, ECG or X-ray and treatment, including blood sugar tests, the application of insulin or physiotherapy, in their own home. The only time a sedentary patient will have to go to hospital is if they need a CT scan, an MRI or similar things. And assisted living facility in the Cayman Islands, close to the US, will also be ideal for families to visit, says Shetty.
“Everything can be done in their house and it comes at a tiny fraction of the cost at the hospital. If you have a health city you can do all that,” he states, adding with regard to the current cost of healthcare in the US that even “if you are a millionaire in the US you cannot afford it”.
Part of the aniticipated cost savings will come from the fact that medical and nursing students will provide much of the assisted living care as part of their training.
Revenue will be generated in multiple areas from treating patients, assisted living, educational institutions and many other activities revolving around that, says Shetty. “You never create one cash cow; that is not the idea.”
Assisted living and tertiary care in the Cayman Islands can only be successful if the low cost of treatment and care is combined with sufficient volume. According to Shetty, this could mean ultimately 10,000 people living in this “health city”. The government has approved 1,500 assisted living units in its agreement with the developers.
In terms of tertiary care there is currently no option for health insurers to send US patients to the Cayman Islands, but, drawing from his experience in India, Shetty says patients will be able to get a procedure done in the Cayman Islands and be reimbursed by their health insurers.
A project of this magnitude will undoubtedly change the Cayman economy, Shetty believes. The current economy in Cayman is to a large extent dependent on tourism and financial services and therefore cyclical, he says. Once medical tourism and assisted living are being promoted, “the entire economy of this country is going to change, because a few thousand people are going to come here.”
Despite this potential for economic transformation, Shetty does not share the concerns over cultural changes that the medical centre could bring to Cayman.
“Suppose the Cayman Islands liberalises gambling, they could make ten times more money than by running this hospital,” he says. “Then the culture will change, because of the kind of people who would come here.”
He says a healthcare project such as this one will essentially attract students, doctors and professionals “who have a different state of mind”.
“When you start a hospital there won’t be a big negative impact on the culture. In fact the youngsters of this country they look at the doctors and may want to emulate them,” he suggests.
Gene Thompson, Shetty’s local partner, says that part of the reason the project has taken a phased approach is “to allow things to catch up” with the development.
Shetty adds that the meaning of ownership in a global economy has changed, naming Toyota as an example for a Japanese company that in truth is rather global. Ownership is defined by the people who are managing it, says Shetty. “Eventually the local population has to take over.”
The training of locals will therefore be an essential function of the facility, Thompson says, noting Shetty’s desire to be involved in the schools and to make local people part of the medical institution.
Initially the medical centre will be staffed with doctors primarily from the United States, and Canada. After announcing the project more than one year ago, Shetty says, he has received about 1,500 applications from doctors in the US, including senior, established ones, some of whom “are very famous”.
“When we start off, they are going to be the doctors who grant these services. Later on under them we will get some assistance from India and other countries,” Shetty says.
What eventually will need to change is the infrastructure of the Cayman Islands, Shetty and Thompson concede.
At first this will not be necessary, they say, for a hospital of only 200 beds, but eventually the infrastructure will have to catch up in terms of airlift, ground transportation and additional hotel rooms to effectively deal with the number of patients that the health project aims to attract.
“We have had initial discussions with all of the utility providers and appraised them of the situation and there did not appear to be significant challenges,” says Thompson.
Government has also agreed to upgrade Owen Roberts airport “within a reasonable time period” to handle the proposed number of patients, but this was an initiative that the government had wanted to launch anyway, he adds. Under the project development plans this would be required in four to five years.
To start construction, the project team has looked at a lot of properties of about 100 acres but not made a decision yet. Once the assisted living facility is added the medical facilities will need up to 500 acres.
“The property part is well accounted for,” says Thompson. “We recognise that it is something we have to make provisions for going forward and that will happen in due course.”
Healtcare – a global economic driver
Shetty believes that the 21st Century will be dominated by the healthcare industry. “Today it is a 4.5 trillion dollar industry. This second largest industry in the world, and only 8-10 per cent of the world’s population have access to affordable high quality health care. The rest of the world is not going to sit by. They need this industry,” he says predicting mammoth growth.
Unlike other industries the healthcare industry is service and labour intensive, something that will only increase with technological innovation and greater specialisations, he points out.
At the same time, Shetty is adamant that the way healthcare is delivered must change. Newly developing countries with large populations have to drive down the cost of healthcare to make it as widely accessible as possible. In addition ageing populations and an increase in average life expectancy by up to 20 years, he anticipates for the near future, will force healthcare systems to change.
In India, Shetty’s hospitals managed to cut costs significantly, whereas in the rest of the world the cost of healthcare has exploded. However, healthcare will not continue as a “monopolistic industry” that is able to pass on its “inefficiencies to patients because they have no choice”, says Shetty.
“Our assessment is that all over the world the cost of healthcare will come down by 75 per cent. The time is gone when you can say it’s a premium.”
The industry will benefit largely from the economies of scale resulting from the application of healthcare in a globalised economy.
“Today you are able to get a mobile phone for less than a few dollars. Why?” asks Shetty. “Because in the developing countries millions of mobile phones are sought and they add to the volume. The same thing is going to happen to healthcare.
“Today when a cancer tablet is produced, it is very expensive because only Americans and Europeans can buy it. When the whole world can buy it, the cost of the tablet comes down significantly.”
The initial stage of the project, a 200-bed hospital, will be self-financed. Long term, Shetty and his team are open to consider outside investors, willing to commit for seven to 10 years.
“Primarily because we believe that it is important for the region,” says Shetty. He is convinced the medical centre will be a landmark project that other countries will be envious of.
“Let’s face it. For the Cayman Islands and its future, this is a phenomenal project.
“All the other countries will follow it, because every country wants to promote medical tourism.”
Shetty and Thompson expect the necessary legislative changes for early 2011, paving the way for a project start in mid-2011 and the hospital being operational 18 months later in 2013.