Lessons from Mexican healthcare: 'doctors are more greedy than bankers'03 August 2012
In July, the Institute for Fiscal Studies published public spending projections for 2021-22, which show that the health budget is unlikely to grow significantly over the next decade.
Tiny increases in spending will not keep pace with demand, which means that we need to focus on getting more bang for our buck; or a lot more for a lot less. Disruptive healthcare innovations can turbo-boost the quality, safety and efficiency of care. Many of the most exciting models are coming from emerging economies where, because money is tight and need is great, necessity is the mother of invention.
SalaUno clinic in Mexico is a specialist centre of clinical excellence which offers sight-restoring cataract surgeries and other eye treatments at a third of the price other Mexican private clinics, and less than a third of that in the NHS, while delivering the same levels of quality. In Mexico cataracts are the second largest cause of impairment and the prevalence is rising, yet the poor are ill-served and private and even charitable solutions are out of reach for 65% of the population. Within two months of opening, SalaUno started to make money, and the goal is to expand so that by 2015 it has become the leading provider of low-cost specialised care in Latin America. To deliver high quality at low cost SalaUno has adopted lessons from aviation, the "lean" assembly line production methods developed by Toyota and used by world-leading eye centre Aravind in India.
The Reform thinktank held a roundtable seminar with the co-founder of SalaUno, Javier Okhuysen, to gain deeper insight into what they're doing and how they're getting on.
First, learn from the outside. The founders both have backgrounds in finance – banking and private equity – and they have assembled a management team which includes someone from Disney to focus on the customer experience and someone from Toyota to refine their operations. The former head of GE South America is on the SalaUno board and they frequently have management meetings with leading industrialists and business people, as well as placements from MBA students from Harvard and Princeton. SalaUno is building a business model that imitates someone else's innovation and translates it to a new country. "We're not here to invent things, but to replicate things, add some salsa and chili and make it Mexican." This year they won the entrepreneur of the year award in Mexico.
Second, measure everything you do. SalaUno is obsessed with quality and they measure everything in order to monitor performance against that objective. The operating model depends upon delivering surgeries at high volume – the surgeons there are ten times more productive than surgeons elsewhere in the country. In theory, practice makes perfect, because people who do the same cataract surgeries more frequently will become better at it, but the only way to ensure this is the case is to measure complication and error rates. "We will not expand the clinic and replicate the model until we have got it running like a Swiss watch", said Okhuysen. As quality improves and they get the benefits of economies of scale, costs come down. Modern IT systems that are easy to use and enable sophisticated benchmarking and analysis are essential, as in Aravind.
Third, culture matters more than anything else. The key is to reinforce culture with incentives. This has been the hardest element of the venture so far. They pay meticulous attention to recruitment and inductions as well as continuous professional development and performance management. In particular, they seek to attract young doctors who want to work in a dynamic organisation. They invest in clinical training, including sending doctors around the world to study at top centres, they give them time to do research and publish papers, and they use financial incentives. As well as a competitive basic pay, performance bonuses are granted for clinical quality (eg low complication rates) and patient satisfaction. "Being an ex-banker I can say that bankers are greedy but doctors are even more greedy". Yet they are firm about the rules of the game and the standards required, and they have fired underperforming clinicians in order to send a signal across the organisation.
What is needed to make this happen here? Right now, our current regulatory frameworks would make a SalaUno impossible in Britain. We need to lower the regulatory barriers to entry which have limited clinical benefits: right-touch regulation is regulation which is fit for purpose, with the minimum regulatory intervention to achieve the desired result. Regulation needs to be flexible and responsive; inflexible regulation makes things worse, not better, and distracts staff from time which they should be devoting to patient care. But the real resistance within care homes, GP practices, hospital wards or clinics is cultural: inertia and the belief that it is not possible to change. This is why new entrants are so important. We need an innovation revolution and this means liberating the entrepreneurs.