Reverse Innovation in Health Care

Health care in the United States and other nations is on a collision course with patient needs and economic reality. For more than a decade, leading thinkers including Michael Porter and Clayton Christensen have argued passionately for value-based health care reform: replacing delivery based on volume and fee-for-service with competition based on value, as measured by patient outcomes per dollar spent. Though still a pipe dream here in the United States, this kind of value-based competition is already a reality--in India. Facing a giant population of poor, underserved people and a severe shortage of skills and capacity, some risk-taking private enterprises have found a way to deliver high-quality health care, at ultra-low prices, to all patients who need it. Govindarajan and Ramamurti studied these Indian value-based models in depth. After investigating forty health care organizations and conducting field research on sixteen, they identified seven "exemplar" providers that consistently delivered high-quality health care at ultra-low cost, while being profitable, financially sustainable, and able to scale up their operations. Their secret sauce consists of five principles that work