Jugaad Nation: How India Became a Frugal Innovation Hub for Healthcare

Jugaad, a popular Desi term for homegrown approaches, has come a long way

By Dr. Nayan Kalnad and Niranjan Bose

Note: This is the second part of a series on healthcare innovation in India. Please see here for Part One.

The culture of frugal innovation in India that has always existed is particularly exciting now, especially in the context of healthcare. Entrepreneurs are increasingly forming cross-industry bridges between India’s ample technological expertise and medical know-how. The evolving economic reality, market demands, and the digital revolution are utterly redefining healthcare, and how it will be delivered and experienced in the coming years.

Frugal Innovation, Cost-Conscious Innovation, or Frugal Engineering

These terms originally applied to actions like stripping nonessential or luxury features from a durable good (say, a car or phone) in order to make it marketable in developing economies. Now, they increasingly apply to innovations across several resource-strapped sectors.

Lean innovators combine the best practices of efficient manufacturing and lean supply chain with M & A expertise, challenging existing cost structures and operating models.

True Frugal Innovation Boasts All of These Characteristics

  1. A significantly lower price than first-world counterparts without compromising quality
  2. An efficient delivery process that enables products to reach users further, faster, more economically
  3. So-called ‘overlooked consumers’ or emerging markets can be targeted in the hope that bulk sales will make up for thinner profit margins

Despite lacking in funding and resources, or perhaps because of it, a host of new and reliable low-cost medical devices specially adapted to needs of low- and middle-income countries are on the rise, driven by increased demand for cost-effective healthcare. Large-scale manufacturing of these prototypes might initiate in India or China.

A Frugal Innovation Victory

The Jaipur Foot

The most historic, iconic frugal innovation success story for India is the prosthetic limb popularly known as the “Jaipur Foot.” According to the publication Prosthetics in Developing Countries, a prosthetic limb can cost between USD 125–1875 in developing countries, a fraction of the USD 5000–15,000 price tag it carries in the States. The Jaipur Foot, with a wooden interior and sponge-rubber protective exterior costs less than USD 5 to make, and can be constructed in less than three hours. Fitting it to a prosthetic limb can take just a day. Its cross-functional design can take on even the most exacting Indian terrain and lifestyle, and it costs the user less than USD 20.

Jaipur Foot checks all the boxes for a frugal innovation victory. On top of low manufacturing cost, high volume, and widespread emerging-market consumer base, it boasts a highly effective service delivery model that minimizes overhead costs while reaching remote users. Employing a hub-and-spoke delivery model, the Foot reaches patients through 22 centers countrywide, as well as 50+ mobile camps held in remote rural areas. This well-coordinated network enables Jaipur Foot to allocate resources to cut overhead or human capital costs, without hampering its reach.

Low-Cost Healthcare Delivery Innovations

Poverty, varied geography and poor infrastructure are not the only challenges India has faced in delivering quality healthcare. The government’s low spending on public health and insurance has left a lot to be desired, leaving rural populations underserved for decades. In the book “Frugal Innovation in Healthcare,” authors Aditi Ramdorai and Cornelius Herstatt describe how companies are innovating with regard to the “bottom of the pyramid” (BOP) segment — the lowest socio-economic segment, and what it takes to be successful.

For instance, low-cost, specialty hospital chains like Aravind Eye Care have brought down the cost of certain medical procedures significantly. Aravind Eye Care has a tiered pricing structure that allows it to cross-subsidize free care for the poorest patients by charging wealthier patients more for luxury amenities such as fancy meals or air-conditioned rooms. By screening 2.7 million-plus patients annually at remote clinics, and referring about 285,000 of them for surgery at its hospitals, Aravind generates ample volume. This nixes the dependency on government handouts or charitable donations.

Looking Past Tier One

Meanwhile, private-health hospital chains like Apollo and Wockhardt, which initially focused on India’s affluent middle and upper class for their revenue, are now scaling down and planning to expand in tier-2 and 3 cities. Patients from these areas would enjoy a double benefit: a reduction in out-of-pocket healthcare expenses that stem from high overhead, and doing away with the need to commute to bigger cities.

Western investment is on the uptick, too. Columbia Asia has its sights on India, which offers a departure from tedious over-regulation and the medical lobby’s political clout in countries like USA. The Columbia Asia model builds no-frills hospitals using standardized designs, connected like spokes to a hub that can handle more complex ailments. Services carry a relatively modest price tag. By targeting urban dwellers with an annual income between USD $10,000 — $20,000, Columbia Asia hopes to bag those customers not in the sights of fancier chains.

Smart Innovation for Specific Needs

While some innovators have focused solely on cost-cutting, others have entered the fray with a more revolutionary approach. Choosing the garage start-up route is Mumbai-based medical devices firm Biosense, which secured USD 500,000 in seed funding from multiple investors in 2013. Biosense’s first product ToucHb — a device that eliminates the need to draw blood to screen for anaemia — is especially significant for India, where over 50% of women are anaemic and encounter co-complications in childbirth. Moreover, India’s growing lifestyle disease burden is neatly served by Biosense’s uChek, a Smartphone-based diagnostic system for urine analysis, and SuChek, a blood-draw-based device, to screen for diabetes.

GE Healthcare has also developed affordable products targeted at the lowest-income segments in India, notably the world’s first PET/CT scanning system that can scan an entire organ with its 26 cm field of view and comes with highest NEMA sensitivity. Discovery IQ PET/CT can perform more number of scans in a day and each scan takes considerably less time. This way, this molecular imaging system is high on productivity as well.

Such merging of frugal innovation techniques specific to Indian needs and a Western-style focus on scale and profitability that has none of the shortcomings of a non-profit approach, would be just what the doctor ordered.

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