Narayana health: Routines versus Agency

Abstract

Narayana Health (NH) needs no introduction in the healthcare space today. Founded in 2001 by Dr. Devi Prasad Shetty with the intention to provide low cost affordable healthcare to the community, NH has grown today to a network of 24 hospitals providing multi-specialty services across 18 locations in India. The unique operational model followed by NH aimed at maximising capacity utilization coupled with its “assembly model” strategy to maximise the volume of surgeries performed has not only given a new dimension to way healthcare is provided in India but also reduced the cost of surgery compared to industry standards (Tarun Khanna, 2011). With its focus solely on cardiac care in the initial years, NH has added other specialty services (including oncology, neurology etc.) in its portfolio over the years. Interestingly, the company started following an asset light model with even some inorganic acquisitions as it expanded its presence over the country while shifting from cardiac service to multi-specialty services. On one hand, critical to NH operations are the organizational routines followed by the company that help it increase the volume of surgeries performed. On the other hand, also critical to success for any hospital are its human assets i.e. the specialized doctors. This report aims to study the interplay between organizational routines and human capital and how this interplay may have an impact on the growth strategy followed by NH. While the organizational routines may have helped the firm function in a standardized manner with the final aim of maximising the volume of surgeries, the impact of following the routines needs to be analysed in a much deeper manner when the firm began to expand its services to other specialities (especially with some of the growth coming from the inorganic route). The routinized way of functioning can have an impact on the way new technologies are adopted at NH and also on how the newly acquired entities adapt to work in the NH way. While routines reduce the variations in decision making, they may act as a source of inertia in adopting new technology and new processes in the ever changing healthcare industry. We believe that the role of routines will start having a greater impact in the firm behaviour as the firm tries to expand in different geographies through its asset light model including inorganic growth. This we believe will pose a significant challenge to the way NH has been accustomed to work.