SAUSALITO, CA (ASRN.ORG) -- A renowned Indian heart surgeon has struck a deal to build a 2,000-bed healthcare city in the Cayman Islands to target American patients and insurers searching for deeply discounted medical care.

The British Caribbean territory agreed to the deal with Dr. Devi Shetty, a low-cost healthcare pioneer renowned as Mother Teresa's heart surgeon. The Caymans fulfilled its part of the bargain last week by passing legislation that caps medical negligence claims at $600,000.

The tiny, affluent territory west of Jamaica has 55,000 residents and is under pressure from Britain to diversify its economy and move away from its tax haven image.

The healthcare city will cost about $2 billion and encompass a hospital, medical university and assisted-living facility and target American patients and insurance providers seeking deep cost reductions.

Construction is set to begin this year on the initial $100 million phase, with a 200 to 300-bed facility expected to be complete in about 18 months.

The project has attracted significant interest. Templeton emerging markets expert Mark Mobius, who oversees some $50 billion in assets, recently said the project could be very attractive to outside investors.

Shetty would not discuss specific investors, although JP Morgan Chase & Co, American International Group Inc and the chairwoman of Biocon Ltd, a large Indian biotechnology firm, already own more than 25 percent of the Shetty family's Bangalore-based hospital group, Narayana Hrudayalaya Private Ltd.

Its 1,000-bed flagship hospital performs more than twice as many cardiac bypass surgeries and pediatric surgeries in a year than similarly sized U.S. hospitals.

Citing his high-volume, low-cost hospitals in India as his model, Shetty estimates the Cayman facility will draw 50 percent of its patients from the United State

U.S. insurers and employers are under pressure to reduce costs for high-tech procedures for heart, cancer, orthopedics, nuclear medicine and organ transplants, Shetty said.

"It will be much easier for insurance companies to buy an air ticket and ask them to go to the Cayman Islands and get a heart bypass done and have a two-week beach holiday and come back at perhaps less than 50 percent of the cost," he said.

The Cayman Islands are politically stable, English-speaking and close to Miami, which makes the modern large-scale facility an attractive medical tourist destination for Americans, Shetty said.

The Caymans' incentive package for the new hospital includes duty waivers on $800 million of medical equipment, recognition of Indian medical credentials and a discount of up to 30 percent on work permit fees for the influx of foreign workers expected to staff the hospital.

The average cost for a heart bypass is $144,000 in the United States, five times higher than neighboring Mexico at $27,000. Costa Rica charges $25,000 and Colombia $14,800 for the same procedure.

Even with the higher cost of doing business in the Cayman Islands, Shetty estimates a heart bypass will cost less than $10,000.


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