What Is Reverse Innovation?

The locus of innovation in the global economy is changing, and so are patterns of dissemination. Poor countries no longer just borrow innovations from developed countries.⁹ They also contribute innovations to the rest of the world, including developed countries. We call this transfer of new ideas and innovations from poor regions to rich “reverse innovation.”

Innovations arising in poor countries typically involve practices that maximize value (i.e., the ratio of benefits to price), by making products extremely affordable and easy to use, while also keeping quality high. Although these innovations arise from conditions of poverty and scarcity, they can address needs in conditions of wealth and abundance perfectly well.

Reverse innovation can take on many forms. An American multinational corporation could develop a product for its consumers in poor countries and then turn around and sell the product back home, as an entry-level product or to a niche market. For example, General Electric developed an extremely low-cost, portable ultrasound machine in China and later sold it in many countries, including the United States.

Alternatively, an emerging-market firm could develop products tailored to the unique requirements of poor countries and then market such products to rich countries. Reverse innovation can also occur indirectly through knowledge transfer. For instance, an established company or a startup in the United States might be inspired by business models and management innovations adopted in poor countries and could bring those models to the United States, disrupting the industry.

Reverse innovation in health-care delivery is still a nascent phenomenon. It is a “next practice,” the importance and significance of which will grow in the next decade as the United States and other rich countries confront the challenge of maximizing value by dramatically lowering costs.

Few American hospitals operate internationally, and none has a subsidiary in India. As such, reverse innovation in health care must occur indirectly through knowledge transfer, which requires that leaders of US health-care organizations cultivate a global mindset. Leadership requirements for developing a global mindset include:

• Curiosity about health-care innovations in poor countries;
• Willingness to acquire knowledge about such innovations through immersion experiences in poor countries;
• Ability to modify and adapt such innovations to suit the unique US context.

Reverse innovation first came to our attention in our work with General Electric, a multinational company that took a product developed in China for the Chinese market—an inexpensive and portable, high-quality ultrasound device—and marketed it successfully in the United States. What began as a defensive move to counter Chinese competitors in China became a big hit for GE not only in other emerging markets but also in the United States, particularly in rural and far-flung areas, where the nearest large clinic or hospital was hours away. The low-cost ultrasound also pioneered new applications for situations in which portability was critical or space was constrained, such as at accident sites and in operating suites. We wrote our findings up as an article for Harvard Business Review, with GE’s CEO, Jeff Immelt.¹⁰ We challenged other multinationals to see the innovation opportunities in emerging markets in a new light.

Subsequently, we discovered that reverse innovation was already occurring in several companies, including Harman International, PepsiCo, Procter & Gamble, Walmart, Renault, and John Deere. For example, Harman, a German manufacturer of high-end auto infotainment systems, engineered a new system that would work in smaller, cheaper Chinese cars—and in the process created a platform for new systems in cars all over the world. John Deere developed a smaller, cheaper tractor, specifically for the Indian farmer, and that tractor found a global market. Procter & Gamble innovated a low-cost feminine-hygiene brand, Naturella, for Mexico, which it subsequently marketed in thirty countries. French multinational Renault designed a low-cost car, the Logan, for price-sensitive customers in Eastern Europe and subsequently sold it in developed markets by adding safety features, style, and metallic colors. Walmart innovated small-format stores in South America to meet the needs of local consumers and then brought the concept back to the United States. We wrote about these corporate developments in a New York Times best seller, Reverse Innovation: Create Far From Home, Win Everywhere.¹¹

In parallel, we wrote an academic article on reverse innovation that won two best-paper awards and generated a new line of research in international business.¹² More recently, we wrote a McKinsey Award–winning article for Harvard Business Review on how to engineer reverse innovations.¹³ Today, reverse innovation is part of the business lexicon. Even journals in other fields are taking note of it. For instance, an editorial in Nature observed: “Technologies such as [a solar-powered desalination unit in southern India]—engineered to be inexpensive and off-grid as a matter of necessity—may one day end up in rich countries, as fresh water and other resources become increasingly scarce around the world.”¹⁴

Through all this we have learned one important lesson: innovations created for large, low-resource, emerging markets have a powerful potential to transform and even disrupt business models in the United States and other first-world countries. Innovation for poor countries typically involves maximizing value—that is, making products ultra-affordable and easy to use while also maintaining high quality.¹⁵

Higher quality, lower costs, expanded access to the underserved. This is exactly what is needed in US health-care delivery.

Historically, innovations in medical science and technology have flowed from rich countries to poor ones: pharmaceuticals, clinical procedures, biomedical devices, and medical equipment have all followed this customary path of invention in the United States and other developed countries and then adoption and adaptation in developing countries. But when it comes to health-care delivery, the United States has been less innovative. We see a powerful opportunity for innovations in health-care delivery to reverse their traditional direction and flow the other way, from poor countries to rich ones.

Can practices that originate in emerging markets like India actually work in developed countries?

The Indian Exemplars in Health-Care Delivery

To test our hypothesis, five years ago we began studying a small group of extraordinary Indian hospitals. Narayana Health, where Deep got his heart fixed, was part of this sample. By 2012, it had grown into a multispecialty tertiary-care complex with five thousand beds. We also included Aravind Eye Care System, which was famous for performing more cataract surgeries than any other hospital in the world and with great medical outcomes, yet charging only $100 for the procedure from start to finish.¹⁶ After digging deeper and checking out upward of forty hospitals, we discovered several more that were providing world-class health care at ultra-low prices (see table 1-1). Together, these hospitals (seven in all, which we call our “exemplars”) cover the gamut of medical services, from maternity care to open-heart surgery, and they charge just 1 percent to 12 percent of US prices (see table 1-2). All the hospitals are privately owned, and all but two are for-profit hospitals.

As shown in table 1-2, Care Hospitals offers knee and hip replacements for a little over $3,000, including imported implants. LifeSpring performs vaginal deliveries for $120 and cesarean deliveries for $300, including pre- and postnatal care. Health Care Global (HCG) Oncology provides a full set of radiation treatments for $1,500 and radiosurgery using CyberKnife for $3,800. Deccan Hospital offers peritoneal dialysis for $8,200 a year. The much higher prices for treating the same condition with hemodialysis in the United States are also shown in table 1-2. Despite ultra-low prices, the Indian hospitals report excellent medical outcomes and, like Narayana, they are all profitable—even though many of their patients are too poor to pay even their very low prices. The most rewarding part of the research was meeting the inspiring founders of these hospitals—mostly doctors who were trained abroad and wanted to bring modern medicine to average Indians. Faced with shortages and constraints at every turn, they improvised and innovated relentlessly. They used every trick in the book to improve quality, lower costs, and expand access to middle-class and poor Indians with annual incomes of a few thousand dollars at best.

What can these hospital systems teach us about effective health-care delivery? We published our initial thoughts in a groundbreaking November 2013 Harvard Business Review article, “Delivering World-Class Health Care, Affordably.” We noted how these hospitals had to focus on quality to attract the well-to-do, while driving down costs relentlessly to make care affordable to the poor. In this way they became at once extremely high-quality and ultra-low-cost players who extended the same world-class care to both the rich and the poor.

An HBR webinar based on the article garnered an audience of over one thousand from around the world. The article was picked up by several newspapers and magazines. We also wrote fifteen articles on HBR-online about various promising reverse-innovation ideas that we had come across. We wrote op-ed pieces in The Washington Post, The Boston Globe, Forbes, Wired, and other publications describing the innovative practices of Indian health-care exemplars. Now, with this book, we bring together all of our research on reverse innovation in health care to show how revolutionary practices in India can help improve health-care delivery everywhere.

We wrote this book because we believe the Indian exemplars are the Fords and Toyotas of health care.

The health-care-delivery innovations that we describe in this book can be applied in every poor country and in every rich country—not just in India or just in the United States. In fact, we’ve presented our research on reverse innovation in health-care delivery in major forums of medical professionals in countries ranging from the United States, Brazil, and India to Singapore, South Africa, and Thailand, with consistently positive feedback.

To be sure, we’ve also encountered our share of skepticism about whether the Indian hospitals can really do what we describe—that is, provide world-class care at ultra-low prices—and whether their practices can be applied in other countries, especially rich countries such as the United States. In appendix A, we catalogue all the particular doubts we’ve encountered, with our response to each: For instance, can quality of care really be that good when prices are so low? Are prices so low in India because labor is cheap, or because the Indian hospitals don’t have to invest in education and research like leading hospitals in developed countries do? Or is it because regulation is lax in India and there are no malpractice suits? If you have such questions, take a look at the sidebar “India? Really? Countering Skepticism about Transferring Practices from India to Developed Countries,” or better yet, take a detour through appendix A.

Bottom line: these are all good questions, but they are not grounds for dismissing the Indian innovations as irrelevant to developed countries. This would be similar to discarding Toyota’s manufacturing innovations in an earlier era as irrelevant to developed countries.¹⁷ Reverse innovation in health care is not optional. It is oxygen.

How are the Indian exemplar hospitals able to deliver high-quality care to everyone—rich, poor, and virtually penniless—and make money doing it? The short answer: they perform this seeming miracle by creating cultures, organizations, and practices that foster value-based health care.

Value-Based Health Care

The value-based health care that has proven so elusive in America is alive and well in this handful of exemplary hospitals in India.

For more than a decade, leading thinkers in health-care policy have argued passionately for patient-centered, value-based health care as the solution to America’s health-care crisis.¹⁸ Led by Michael Porter, Clay Christensen, Regina Herzlinger, Donald Berwick, Paul Farmer, and Jim Kim, these thinkers imagine a health-care system in which the goal is not profit, or volume, or growth, or even treatment interventions, but value. Porter, for example, defines value as “health outcomes achieved per dollar spent,” and he describes value-based competition as a system in which all players—providers, insurers, employers, suppliers, and customers—focus on creating value for patients.¹⁹ Choice and competition are regarded as “powerful forces to encourage continuous improvement in value and the restructuring of care.”²⁰

Proponents would like to see value-based health care replace America’s prevailing fee-for-service system, in which players focus on volumes of patients and procedures rather than on value or outcomes. They point out that the prevailing system has led to zero-sum competition in which everyone tries to shift costs to someone else, rather than positive-sum competition in which all participants win.²¹ Value-based care would compel providers to lower costs and improve patient outcomes.

Michael Porter and Elizabeth Teisberg spell out several principles of value-based competition, including the following:

1. Players should focus on creating value for patients, not just lowering costs.
2. Competition should center on medical conditions over the full cycle of care.
3. High-quality care should be less costly.
4. Value should be driven by provider experience, scale, and learning at the medical-condition level.
5. Innovations that increase value should be strongly rewarded.²²

More recently, Porter has spelt out the principles of value-based care, and he also strongly advocates for integrated practice units that provide patients seamless care as they are served by different specialists, as well as the bundling of prices for major procedures instead of the fee-for-service system.²³

The United States falls short on the defining characteristics of value-based care, notwithstanding many efforts at reform, including those launched in the last few years by the Centers for Medicare & Medicaid Services. Value-based care is a breathtaking prescription for change that Porter and Lee have described as “a fundamentally new strategy,” the adoption of which will be “neither linear nor swift.”²⁴

Indeed, top-down reforms aimed at creating value-based competition have been slow to gain traction in the United States. We’ve seen a long list of experiments and incremental fixes, such as safety protocols, fraud chasing, health maintenance organizations, hospital consolidation, electronic medical records, and so on. They have moved the system in the right direction, but never quite gathered momentum, and in 2018 the jury was still out on the experiments included in the Affordable Care Act of 2010 and the Medicare Access and CHIP Reauthorization Act of 2015. Meanwhile, the usual complaints about US health care continue, with good reason.

Value-based competition in the health-care sector has become an urgent necessity, and the way to achieve it is through a combination of bottom-up and top-down reform. In the bottom-up approach, which this book focuses on, individual health-care players, new entrants, and startups could disrupt the industry by applying business models founded upon principles of value-based competition. Bottom-up change doesn’t require a grand plan out of Washington, DC, agreement among our divisive political parties, or coordination among all players in the health-care system. It just needs entrepreneurs and intrapreneurs with innovative models for delivering value to patients. We’ve all seen it work in other industries. In fact, it’s another thing that America does best.

But what kinds of bottom-up, radical innovations are likely to be consistent with value-based competition, and where should one look for answers? Proponents of value-based competition see a future in which care will be organized by medical condition and delivered by integrated practice units. They see careful cost accounting and bundled payment systems. They see a concentration of high-cost resources in centers of excellence supported by a network of providers with wide geographical reach. They see purpose-built IT platforms and a renewed emphasis on prevention over treatment.

But we see India.

And what we see is value-based health care: high-quality, low-cost care that offers universal access to consumers and delivers profits to the bottom line.

You’ve seen the Indian prices. And as we note in the sidebar “India? Really?” and in appendix A, several of the hospitals are accredited by Joint Commission International (JCI), the global arm of the Joint Commission, an independent, nonprofit organization that accredits more than 21,000 health-care organizations in the United States, or by its Indian equivalent, the NABH. Some of the exemplar hospitals also benchmarked themselves against international standards for medical care. Aravind Eye Care System’s overall incidence of complications was as good as or better than those of the United Kingdom’s National Health Service. For coronary-bypass procedures, Narayana Health’s thirty-day mortality rate, at 1.4 percent, was lower than the US rate of 1.9 percent.²⁵

All seven hospitals aspire to make health care a human right. They share a strong commitment to providing quality health care to the poor and middle class, most of whom are uninsured. Universal access is the goal of the physician founders, and free care is often the only way to get there. Our exemplars succeeded not by charging exorbitant prices but by cutting costs to the bone. For example, since its founding, Aravind has provided free or highly subsidized eye surgery to anywhere from 2.5 to 3.0 million people—or 50 percent to 60 percent of its surgical patients. Similarly, free or subsidized care has accounted for 50 percent of the cases at LV Prasad Eye Institute since inception and, in 2016, accounted for 51 percent at Narayana Health and 20 percent at HCG Oncology.²⁶

Despite providing high-quality care at ultra-low prices, and despite their willingness to provide free and discounted care, the Indian hospitals are all profitable, and five have raised capital in private markets to fund their growth. The December 2015 IPO of Narayana Health in India was oversubscribed 8.6 times.²⁷ The company raised $100 million in India, and its market capitalization in 2017 was over $1 billion. Similarly, in 2015, Care Hospitals was purchased by a private-equity firm at a valuation of about $300 million, and in 2016 HCG Oncology went public with a market valuation of $276 million.²⁸ Over the years, Aravind has garnered a net surplus equal to between 35 percent and 50 percent of revenues. Remarkably, since its inception in 1976, it has covered the cost of all its free medical care and capital expansion out of operating surpluses.²⁹

We see the management innovations of Indian exemplars as a powerful answer to many problems in US health care today. We found that the value-based competition in Indian hospitals has five core principles, which will be further illuminated in the next two chapters and which are briefly introduced in the sidebar “The Five Core Principles of Value-Based Health Care as Practiced in India.” They can help bring about bottom-up transformation of the health-care sector, because they are not contingent on fundamental changes in the regulatory environment. Moreover, organizations are welcome to adopt parts of the business model even if they can’t adopt the model in whole. Some is better than none, but firing on all five cylinders will allow health-care organizations to really push the limits of performance.

We think the five principles can be applied in all countries, including developed countries, and not just in India. Lord Nigel Crisp, who ran the United Kingdom’s National Health Service, also believes poor countries can teach rich countries useful lessons. In fact, he wrote a book explaining why: Turning the World Upside Down.³⁰ Recently, NEJM Catalyst, an affiliate of the New England Journal of Medicine, featured an article on what US hospitals can learn from India’s private heart hospitals.³¹ And the British journal The Lancet carried a comment titled “Can Reverse Innovation Catalyse Better Value Health Care?” It concluded that “Western health systems can learn a lot from health-care providers in LMICs [low-income and middle-income countries], who have progressed with far fewer resources and in far more challenging conditions.”³²

We believe it is time for US health-care reformers to get out of their hospitals, lecture halls, and caucus rooms and take a good look at what is going on in poor countries such as India and in hospitals such as Aravind Eye Care, HCG Oncology, LV Prasad Eye Institute, and Narayana Health.

Indian Practices in the West

To assess the likelihood that reverse innovation can seriously influence US health care, we undertook the second phase of our research project, looking for US health-care organizations that were already using Indian-style innovations. And we found quite a few. After interviewing industry experts and checking many leads, we selected four organizations to research in depth (see table 1-3). Each of these organizations used one or more principles of the Indian exemplars to cut health-care costs, improve quality, or expand access—sometimes all three. We see these organizations as role models for changing US health care from the bottom up, and in the second half of the book we will closely explore their accomplishments. Many other US organizations are also experimenting with similar innovations (see the sidebar “Examples of Value-Based Care” later in the chapter), but the following four examples will be treated in depth in the second half of the book. Let’s take a quick look at our featured US innovators.

Health City Cayman Islands (HCCI): Attacking High Costs

The most direct route for reverse innovation may be that taken by exemplar Narayana Health, which in 2014 opened Health City Cayman Islands (HCCI), a 104-bed hospital just a one-hour flight from Miami. HCCI is close enough to the United States to attract Americans, but is free of many of America’s cumbersome regulations. Using frugal practices honed in India, it offers world-class surgery, to Caribbean populations as well as Americans, at 25 percent to 40 percent of US prices. By late 2017, it had an impressive record of medical outcomes—zero mortalities over five hundred surgeries—and received accreditation from Joint Commission International. At the same time, it was in advanced discussions with American insurers and self-insured employers, hoping to persuade them to use the hospital for tertiary care. If the discussions bear fruit, US patients could be offered care with zero copayments and zero deductibles, plus free transportation and lodging for the patient and (if necessary) a chaperone, for one to two weeks. For US insurers, the cost savings from using HCCI could be even greater. A team of American doctors that visited HCCI came away very impressed and warned: “The Cayman Health City might be one of the disruptors that finally pushes our overly expensive US system to innovate.”³³

University of Mississippi Medical Center (UMMC): Improving Access for Rural Communities

One reason that innovations flow from poor countries to rich countries is because rich countries have regions or market segments with the same problems as poor countries. We found that situation in Mississippi, the state with the fewest doctors per capita in the United States and one where the average person has to drive forty minutes to reach a community hospital and several hours to reach UMMC, the state’s only academic medical center—problems similar to those often seen in rural India. So it’s not just coincidence that Mississippi was the first state to implement a comprehensive hub-and-spoke 24/7 telehealth network that connected health workers at understaffed community hospitals with specialists at UMMC in Jackson. It started in 2003, when Dr. Kristi Henderson, in the UMMC trauma unit, first used basic videoconferencing technology to link the medical center with rural hospitals, and it has expanded since then to link thirty-five specialties at UMMC with counterparts in two hundred rural hospitals across the state. As in India, the hub-and-spoke network has improved access to health care for poor rural communities, while lowering costs and improving quality and patient experience. It has even revived community hospitals that were losing patients and money, and it has relieved the pressure on UMMC’s resources, allowing the experts there to focus on the patients who need their care the most. Of chief importance, it has saved thousands of lives.

Sixty million Americans (one-fifth of the country’s population) live in rural areas that could benefit from a hub-and-spoke arrangement of the kind Kristi Henderson implemented in Mississippi. There is no need to reinvent the wheel.

Ascension: Improving Access for the Uninsured and Underinsured

Ascension, the nation’s largest nonprofit health system and the world’s largest Catholic health system, has a worthy mission: to serve “all persons, especially those living in poverty and who are struggling the most, and to deliver compassionate, personalized care, and lead health-care transformation in the United States.”³⁴ In recent years, that has meant finding a way to provide high-quality care to uninsured and underinsured Americans.

Ascension has done that well, using strategies similar to those used by Indian exemplars. Like the exemplars, it uses an inspiring purpose to devise breakthrough innovations that have lowered cost and improved quality in ways that other US hospitals may not have considered pursuing. Like the Indian hospitals, it uses a sliding scale to charge for services, and treats the uninsured poor with margins earned by serving the insured rich. To drive down costs, improve quality, and achieve a national scale, Ascension merged several independent Catholic hospitals and implemented programs to reduce variability in care, standardize supplies across the system, leverage volume discounts, and streamline the supply chain. By 2016, Ascension was saving $1 billion a year, or 5 percent of total revenues, in supply-chain costs alone.³⁵ And to encourage reverse innovation, Ascension has sent dozens of key employees to India to study Narayana Health’s practices, and it became a coinvestor in the Health City Cayman Islands venture to get a firsthand feel for how to implement Narayana’s breakthrough innovations in health-care delivery.

Iora Health: Improving Quality

One of the biggest problems with the fee-for-service system and with an overbuilt health-care system is overutilization of medical and physical resources. Some experts believe that from 25 percent to 40 percent of US medical care isn’t needed.³⁶ This indicates not only wasted money but also the possibility of worsened health, owing to the increased risk of medical complications and infection. Iora Health’s founder, Dr. Rushika Fernandopulle, felt he was more likely to find answers for America’s health-care problems in poor countries. Inspired by what he had seen in countries like Haiti, India, and Malaysia, he concluded that the key to keeping people healthy is focusing on primary care. So, at Iora he employs a task-shifting delivery structure that leans heavily on “health coaches,” nonmedical staff who personally guide patients toward healthier living. As with Indian paraprofessionals, these health coaches are not just less expensive than doctors and nurses but are also much better communicators than most doctors. And Fernandopulle backs it up with both a custom-built IT system that enables complete and continual communication between health workers and patients, and a capitation-only payment system that eliminates incentives for unnecessary tests and procedures. Fernandopulle’s innovative model has seen a 40 percent drop in hospitalizations and a 30 percent to 40 percent drop in ER visits, leading to a 15 percent to 20 percent drop in total health-care costs.⁵³ By 2017, just six years after its launch, Iora had thirty-four locations in eleven cities. It employed four hundred people and had raised more than $125 million in venture capital.

Scaling, Replicating, and Transforming Health Care

These examples show that Indian-style innovations are working in the United States, even within the existing regulatory environment. UMMC’s telehealth model has already been scaled geographically across Mississippi, across many specialties, and across hospitals, schools, correctional institutions, and homes. Ascension has demonstrated that large, established hospitals and hospital systems can save hundreds of millions of dollars by leveraging scale and improving processes across their national networks, freeing up resources to serve more uninsured and underinsured patients. Iora has taken its business model of doubling down on primary care to eight US states and aims to have one to two million patients within a decade. As the youngest of the four, HCCI is still in the process of scaling up, but it is only a matter of time before a large US employer or insurer signs up to use its services. Together, these cases show how the three core problems of US health care—cost, quality, and access—can be attacked through bottom-up innovation by both established health-care players and new entrants in a scalable, profitable, and sustainable way.

We are optimistic that others will replicate these strategies. Progressive, established health-care providers will do so to prepare for a future of value-based care, and even if that takes longer to materialize than expected, they still have much to gain by replicating the strategies of Ascension and UMMC. New entrants will embrace disruptive business models, such as those of Iora and HCCI, because there are great rewards awaiting anyone who can end the industry’s wasteful practices. As already noted in the sidebar, many Western health-care providers are already beginning to transform the industry from the bottom up.

But it’s too early to declare victory. The current crop of bottom-up experiments are but “green shoots.” To put it another way, we think of them as faint signals coming from the future. Our goal for this book is to amplify those signals to embolden others to launch new experiments.

We expect innovations in one sphere to trigger reactions in others, because the players in the health-care system are interdependent. Regulators or self-insured employers may force hospitals to change, and hospitals may persuade suppliers and insurers to change. Startups like Iora may wake up established providers. Foreign entrants like HCCI may disrupt local players. Over time, these changes will cascade through the system, until things reach a tipping point, when the status quo will become unsustainable and transformation of US health care will become a sudden reality. That’s how innovation works—first gradually, then suddenly—and we believe the same dynamic will play out in health care in the coming decade.

The Future Is Far from Home

It’s time to move beyond the myth that health care in America and other developed countries is so expensive because it is so good. By many measures, it’s no better than the care delivered by some of our Indian exemplars. And while we know that costs in the United States will never fall to the level of costs in India, we believe that innovations we observed in India can help drop US costs by 20 percent to 30 percent, saving as much as $1 trillion a year.

Washington hasn’t been helpful. Government policy experts consistently misdiagnose the problem and engage in endless debates about how to pay for health insurance for everyone. Instead, they should be finding new ways to rein in the galloping costs of health care and improve its quality. If productivity and effectiveness can be improved, the United States will have enough money, and more, to treat every American needing care.

Regulators, consumers, hospitals, employers, suppliers, and insurers should all prepare for change. In fact, they should welcome it, and as we explain in the final chapter of this book, each of them has an important role to play.

We know that Indian hospitals, doctors, and administrators have traditionally looked to the West for advances in medical knowledge, and we think it’s time the West started looking to countries like India for innovations in health-care delivery.

How the Book Unfolds

Because the challenge of health-care reform is so big and far-reaching, we have written this book for a broad audience. It is meant for clinical and nonclinical executives of health-care organizations around the world; health-insurance companies; Fortune 500 companies that develop drugs, medical devices, and new procedures; biotech firms; and companies that provide diagnostic services. It will also interest small- and medium-sized companies as well as startups in Silicon Valley and elsewhere that are looking to disrupt existing practices in the sector. It should also be of considerable interest to health-care policy makers everywhere, as well as to academics and consultants working in health care. The book should capture the attention of the general public, too, not only because the Indian exemplars are intriguing and instructive but also because they will be disruptive. It is our hope that the book helps mobilize grassroots support for deep, lasting, and patient-centered health-care reforms in the United States and elsewhere.

In the next two chapters, we take a deeper dive into the exemplar Indian hospitals and show how these organizations apply the five core principles of value-based delivery to great effect. They have revolutionized health-care delivery by streamlining operations, standardizing procedures, reconfiguring their organizations, leveraging technology, experimenting with new methods, valuing every patient, living their mission, and implementing innovations that work.

The full business model that the Indian exemplars use is presented in chapter 2, and illustrated with an in-depth case study (Narayana Health) in chapter 3. We believe it is a very powerful model of value-based health care, and an engine both for social good and for bottom-line results.

In part 2 of the book, “Reverse Innovation in Health-Care Delivery: Four New Models for the United States,” we take an in-depth look at the US health-care organizations introduced above that are already using Indian-style innovations. We illustrate how each one uses one or more principles of the Indian exemplars to cut health-care costs, improve quality, or expand access—sometimes all three. We see these organizations as role models for bottom-up innovation to deliver value-based care in the United States.

In appendix A, as noted before, we address skepticism about whether India can really offer lessons for health-care reform in the United States. In appendix B we provide an innovation-diagnostics tool kit to help health-care organizations apply the Indian innovations and transform their organizations.

It’s important to repeat that while this book explores innovations that we hope will transform the health-care systems in the United States and other rich countries, the same breakthrough models can—and should—be implemented in developing countries, beginning of course in India, where there is a track record of success. In fact, many Indian innovations are already being applied elsewhere in the developing world. Narayana Health has entered into a partnership to build a multispecialty hospital in Nairobi, Kenya, for instance.⁵⁴ And another exemplar, Aravind, has conducted community ophthalmology training in thirty countries, many in Latin America and Africa.⁵⁵ New global players are also emerging. In 2016, the profit-minded, Dubai-based Abraaj Group bought India’s fifth-largest private hospital group, Care Hospitals, which performs open-heart surgeries for $3,000. Abraaj plans to transplant Care Hospitals’ business model to countries in Africa.⁵⁶ We hope this book can help accelerate that kind of dissemination.

While we have focused on solutions from Indian health-care providers, we know there are many other solutions in countries around the world. We hope this book will encourage readers to take a hard look at what’s working in other countries and to imagine what it would take to make those solutions work elsewhere. Reverse innovation is an equal-opportunity strategy.

Let’s begin with a deeper look into the core principles of value-based health care practiced by the Indian exemplars.