The Henry Ford of Heart Surgery

An excellent article on Heart Surgery.

The Henry Ford of Heart Surgery

Dr. Shetty at Narayana Hrudayalaya Hospital in India is able to drive the cost of heart surgery down to just $2,000 on average. In the US, the same procedure cost between $20,000 and $100,000 depending on complexity. By economies of scale, Dr. Shetty managed to drive cost down without compromising on the quality of procedure. He has 1,000 beds hospitals compared to 160-beds (on average) in the US. His Cardiac surgeons performed more than double cardiac surgeries than cardiac surgeons has performed in the US.

The more surgeries performed by doctors, the more experience they gain and better they are. Also with more number of patients, surgeons can specialize in a particular area. The mortality number also supports that quality has been better at Dr. Shetty's hospitals, and even better when adjusted for patient conditions.

Profit at Dr. Shetty's hospital was 7.7% after tax compared to on average profit after tax in the US, which has been 6.9%. As mentioned in the article, Dr' Shetty is planning to take number of total beds from 3,000 to 30,000 and will continue to reduce cost by bypassing medical equipment sellers and directly purchasing from suppliers.

Tariffs on Chinese tires

What a bad idea! Obama's decision of imposing tariffs on Chinese tires doesn't make any sense at all. Nice article on Economist on it.
Economic vandalism

"A protectionist move that is bad politics, bad economics, bad diplomacy and hurts America. Did we miss anything?"

Healthcare Reform Bill

Obama’s healthcare reform bill which doesn’t provide any clear picture continues to drag his approval rating down (only 49% - down from 60% in April). He was able to avoid mistake of Clinton administration by not imposing his predetermined plan and let Congress comeup with the plan, but that has resulted in five different healthcare bills. These different plans have created so much mess which no one understands.

Very good analysis in today’s FT “The prosaic professor” and an interesting opinion “Pull the Plug on ObamaCare” in WSJ.

Healthcare Reform

A very nice article in Financial Times on the recent healthcare reform.

Cost control not coverage is the key to health reform

I agree that the president’s objective is off the mark. Rather than focusing on cost cutting, the president’s focus is on making bill revenue neutral. This may provide increase healthcare coverage but definitely not going to reduce cost, which is the root cause of problem.

Microfinance Bubble

Here is the reply from Vikram Akula on WSJ article on Credit Bubble in Microfinance.
What Microfinance Crisis in India?

Microfinance in Rural India

A recent article in WSJ reports that credit bubble is being created in Microfinance.
A Global Surge in Tiny Loans Spurs Credit Bubble in a Slum

Social benefits to rural population compare to greed of richer: Though there is a possibility of bubble it is still beneficial to rural population which has nothing to lose.

1) Surge in microfinancing will allow more rural population to start their own small entrepreneurial venture allowing them to have an opportunity to come out of poverty.
2) Easy access to credit may allow people to borrow more than what they can afford leading to higher default rate. It may be risky bet for financiers, but it is not bad for poors since if they default on their loans they are at the same position where they were before.
3) I believe microfinancing originated with the idea of helping poor people first then anything else (making profit). SKS Microfinance has been able to do both successfully. It seems that entrant in this industry seems to forget that this is not the same industry where normal business principal can be applied.

There are around 150 millions rural household in India. With average loan size of $300 per household, total microfinancing business size will be around 45 billions dollars. A 10% default rate will be $4.5 billions at risk which is a very tiny number compare to trillion dollars mortgage mess and other crisis.
A nice article on Economist
Microcredit may not work wonders but it does help the entrepreneurial poor

The Bush Economy

Nice article on WSJ

http://online.wsj.com/article/SB123215327787492291.html

The article talks about the mistakes made during Mr. Bush's presidency. Also talks about the Fed funds rate which was kept low for long and compare against what it should be per Taylor's rule.