Rob Katz

Can a Hospital Be a Breakthrough Innovation?

Sasha DichterGuest blogger Sasha Dichter is Director of Business Development at Acumen Fund. Before joining Acumen, Dichter held senior positions in the corporate citizenship departments of GE Money and IBM. He earned a B.A., M.A., and M.B.A., all from Harvard University.

By Sasha DichterLifeSpring’s maternity hospital outside of Hyderbad, India, is full of surprises. While the building is simple, and the maternal services they offer are low cost, the facility is immaculate and the quality of care is world-class. Expectant mothers dot the waiting room, along with their mothers or mothers-in-law, who do most of the talking. New babies gurgle, smile, cry and sleep. The energy in the halls is palpable.

LifeSpringI first visited LifeSpring on Mother’s Day, where, as part of a free vaccination offering, the hospital sat new mothers and their families for photographs. Later that week, I visited with LifeSpring manager Anant Kumar and Acumen Fund Fellow Tricia Morente.

LifeSpring addresses a powerful and daunting problem. Fewer than half of Indian women are cared for by a skilled attendant during childbirth, and the chances, over a lifetime, of an Indian woman dying due to complications in pregnancy and childbirth are 1 in 70.

Mr. Ayyapan, the Chairman and Managing Director of Hindustan Latex Limited–a large Indian public sector company–and his team created LifeSpring to address this problem. Acumen Fund then joined in as a 50/50 joint venture partner to help take the concept to scale.

Lifespring’s maternity care hospitals offer a low-cost alternative to public clinics, which are free but often low quality. At LifeSpring, expectant mothers pay 1500 rupees (about US$35) to deliver a baby. This price point seems to make sense, and Mr. Kumar told us that the mothers typically decide based on quality of service, and the fathers based on price. The opinion that prevails will often depend on the education level of the mother.

Already, LifeSpring’s occupancy ratio has surpassed its targets, with more than 1500 customers coming in per month, and there are plans to build 5 more small, 30-bed hospitals before the end of this year.

At Acumen Fund, we talk a lot about looking for “breakthrough innovations.” What does this mean? The iPhone is a breakthrough innovation–fancy, high-tech, and paradigm-breaking. But what about a small, simple maternity hospital on the outskirts of Hyderabad?

Innovations–regardless of sector or target market–begin with an insight. In LifeSpring’s case, the insight was that the free care offered by India’s public hospitals was not good enough. Ayyapan and Anant’s innovation was to create a hospital with world-class care (LifeSpring is ISO 9001 certified) at a price that poor people can afford. Since the economics are working well, the innovation is poised to scale: one hospital today, 5 planned by the end of this year, and hopefully 50 or more in the years to come.

But the surprises run deeper than this first insight. For instance, Tricia Morente (an Acumen Fund Fellow spending this year working with LifeSpring) had explained to me that LifeSpring calls expectant mothers “customers” and not “patients.” In Tricia’s words, this is because “pregnancy is not an illness.” I smiled the first time I heard this, thinking back to the medicalized pregnancies that have become the norm in the United States (I’m the parent of two children, ages 1 and 4).

I realize now that I didn’t fully understand the power of treating “customers” until I spoke to? Anant Kumar. “The first time doctors come into our hospital,” Anant said, “we train them on talking about ’customers,’ and they maybe get it right 1 out of 10 times. After some time with us, the number jumps up to 6 out of 10 times, and we want it to keep improving. It really means a lot for a doctor, who is educated and from at least a middle-class background, to treat poor people with this kind of respect.”

Respect. We talk every day at Acumen Fund about how treating poor people as customers forces an organization to treat them with respect and dignity, and to listen to their needs. To be reminded of this lesson by the head of one of the enterprises we invest in was humbling. Kumar said that he sometimes thinks it would make more sense to recruit nurses from the hospitality industry (hotels and the like), because it may be easier to teach nursing skills than it is to teach good service! And while he was saying this, I couldn’t help thinking of the hospitals I’ve been to in the United States, and how scarce a commodity dignity is once you put on a hospital gown.

Putting dignity at the center of high-quality, low-cost maternal care in a 30-bed hospital outside of Hyderabad? Now that’s a breakthrough innovation.

This post first appeared on the Acumen Fund blog.