By Reenita Das  Contributor From Forbes

While the United States is under a chronic stupor as we decipher how to reduce the 17 percent of GDP on healthcare and prevent it from reaching 25 percent over the next few years, it is time for a change of perspective – to gather significant learnings and examples from emerging markets outside the U.S. regarding what we’re calling “value based healthcare.”

Frugal does not mean cost cutting, nor does it mean bare bones; it also does not mean taking an existing product and stripping it down. Frugal innovation is about rethinking entire business processes and realigning production processes to gain the same results or better with reduced costs. It is also important to note that high tech does not automatically translate to high cost.

The concept of frugal innovation is not new. General Electric GE +1.27% (GE) pioneered this concept almost a decade ago with the idea of “reverse innovation.” With their famous ultra low-cost electrocardiography (ECG) machine, GE showed the world the importance of building products based on actual needs rather than dumping high-end Western country products onto emerging markets. Additionally, Indian innovations like the Tata Nano car and Godrej’s ChotuKool refrigerator are two other examples built from similar concepts.

Today, the concept of frugal innovation is making global companies rethink how the impact of their highly resource-intensive innovation models face threats from many Indian and Chinese multinationals. In this regard, I have an inspiring story to share from the Narayana Hrudayalaya, an Indian-based multi-specialty hospital chain – renamed Narayana Health (NH) – spearheaded by the distinguished Dr. Devi Shetty who has successfully provided high-quality healthcare to the masses at a low cost. This model of frugal innovation is using IT infrastructure, advanced lean manufacturing principles and process control with environmentally friendly building construction to reduce costs. NH has ambitions of growing into a 30,000-bed organization over the next five years.

The concept NH has brought to fruition will emerge as a global industry model for its ability to reconcile quality, affordability, scale, transparency, credibility and sustainable profitability in emerging countries. From a humble beginning of 300 beds in 2001, NH has grown to over 6,200 beds and spread across 23 hospitals in 14 cities.  Most recently the company expanded outside the shores of India to Malaysia and the Cayman Islands.

The Cayman Islands project is highly visible. The world is watching to witness the success or failure of a low-cost hospital model in the West. Similar to Narayana Health, Health City Cayman Islands is a 104-bed multi-specialty tertiary hospital catering to the population of the Caribbean but also becoming a hub for medical tourism for the U.S. The goal of this project is to show the world it is possible to provide high-quality healthcare in the developed world at a low cost. The Cayman Islands project will begin by offering healthcare services discounted at approximately 30 percent of U.S. rates, and prices are expected to continue to reduce with time. As the Cayman Islands recognize Indian medical degrees, the medical team of doctors, nurses and technicians is largely Indian. The goal is to continue expanding the team to reflect global partners.

Their plan reflects 2,000 beds, a medical university and an assisted living center over the next ten years with a total investment of $2 billion. The NH Group also plans to expand into Africa and other countries as the model is easily replicated. Currently, challenges continue to be regulation and recognition of Indian doctors and degrees.

However, ultimately, the goal for these models is not purely replication into the emerging world.  Rather, what we should foster and rally for is the concept that what may be great for the emerging world may also be equally useful and beneficial for the globe. The past is built on affluent hospital models; the time has come to rethink, especially in light of the realities U.S. healthcare faces today.

For more on this story go to:

http://www.forbes.com/sites/reenitadas/2014/03/17/are-the-days-of-building-affluent-hospitals-dead/