Aravind Eye Hospital
Improving Lives One Eye at a Time
A Brief Introduction
Imagine having the world as you know it cease to exist, the things you once saw be erased, and having no hope to gain control of your life. This is how life for many people in India once was, and how it still is for some even today. A cataract, a curable infliction of the eye, has attacked men and women of every age, sparing no one, not even a child. They build up in size over time, and leave many blind. Once struck, the individual in question can no longer work, and has no way to take care of themselves, making them entirely dependent on their family for support. Living in an already impoverished area, blindness has dire consequences, resulting in many cases of premature death. There is a simple procedure that can reverse the effects of cataracts and return sight to the user. However, this surgery is too costly for some to afford. In India, a country with an extremely high poverty rate, cataracts had become a major problem for the inhabitants. Cataracts have left millions to suffer with an unnecessary disability, but one man came about to challenge its hold on the people of India. Dr. Govindappa Venkataswamy revolutionized the medical field of eye care, and built a health institution that would allow everyone afflicted to get the help they needed, despite their ability to pay. This case analysis examines that institution, how it came into existence, how it operates, its creator, and the general background of the country of origination.
Poverty and Healthcare in India
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Poverty is one of the biggest social issues in India. According to the Indian government, of its nearly 1 billion inhabitants, an estimated 260.3 million are below the poverty line. More than 75% of these poor people reside in impoverished villages (Azad, 2008). The causes of rural poverty include inadequate and ineffective implementation of anti-poverty programs, and the unavailability of irrigational facilities. The poor irrigation systems result in crop-failure and low agricultural productivity, forcing farmers into a debt-trap. Economic development since independence has been lopsided. There has been an increase in unemployment rates that have forced many people into a state of poverty, and the population continues to grow at an alarming rate (Economy, 2009). Overpopulation of an already scarce job field has kept many individuals trapped by poverty.
India has a Universal Health Care System operated by the government, like many other industrialized countries. The governmental hospitals offer health care to the masses at the tax-payers' expense. The Indian government set up the health care system to help people who are below the poverty line, but many people have problems using the hospitals. One reason for this is the fact that there are an extremely low number of medical practitioners available for the people. Another reason is that most public hospitals are inefficient, and provide poor quality medical services to their patients. Quality could be better, but public hospitals generally only provide basic treatment, and have lower quality equipment to perform with. Inefficiency in the system is caused by the imbalance between medical providers and the needy population. For example, although India requires more than 74,000 hospitals to satisfy demand, it just has about 37,000 health care centers (Liberty, 2009).
Due to the impoverished people's lack of resources, they cannot afford to go to a private eye hospital to get their cataracts removed. And because of the limited availability and help from government hospitals, and their inability to perform eye surgery, most individuals are left with no choice but to remain blind. This in turn adds to the increasing rate of unemployment, as it is difficult for a blind person to get or maintain a job. And that leads to having even more people below the poverty line, as it is not only the individual in question, but their entire family as well. If there was a place they could go to be treated, it would help stop the cycle of poverty, and give them a fighting chance to live.
Enter the Vision, Aravind Eye Hospital
Aravind Eye Hospital has risen from its humble beginnings to promote eye health not only in India, but also throughout the world. Doctor Govindappa Venkataswamy, along with his sister and brother-in-law, started Aravind in 1976 (Maurice, 2001). This eye hospital was first opened in a rented house that contained only ten beds. The three founders were the only doctors at Aravind when it first opened. Since then it has grown little by little each year. This hospital has grown into a five-story building that is located in Madurai, in the southern Indian state of Tamil Nadu. This particular hospital now contains 1,900 beds. As of 2001, approximately 1.5 million blind people have left this one hospital with their sight completely restored. In addition to this, Aravind Eye Hospital has now expanded into a total of five hospitals throughout India (Maurice, 2001). The Aravind franchise includes a hospital created specifically to help restore sight to children (Maurice, 2001). The International Institute for Community Ophthalmology, which is a part of Aravind Eye Hospital, trains eye care workers from low-income countries. There is a medical research foundation as well as an eye bank that handles about 900 corneas a year that are associated with Aravind. Aurolab is a manufacturing facility that makes lenses, pharmaceuticals, and surgery supplies for Aravind (Maurice, 2001). Aravind Eye Hospital later branched out and opened Aurolab, despite disagreements from the Indian government, because imported intraocular lenses, IOLs, were too expensive for low-income patients to afford (Shah, 2004). Aurolab makes approximately 700,000 IOLs each year (Maurice, 2001). These IOLs are then sold, not only to Aravind but to eye care facilities in over eighty countries, for a price that is ten times less expensive than the same quality of IOLs used in western countries (Maurice, 2001). Aurolab also manufactures spectacles, sutures, and medications along with the IOLs, to sell to the hospitals for reduced costs (Chang, 2004).
Always on Time
Marked to Standard
The Aravind group worked with approximately 1.3 million patients in 2000 (Maurice, 2001). This is about 85-90% more than most other hospitals in India. Also, Aravind holds mobile 'eye camps' throughout the year to raise eye care awareness in India (Maurice, 2001). These eye camps screen villagers on a Sunday, then bus the patients into Aravind in the evening (Chang, 2004). The surgeries are then performed on Monday. There are usually 300-400 cases on Mondays, with the record being 500 cases (Chang, 2004). Most eye surgeons in the world perform less than 350 surgeries each year. At Aravind, the average number of surgeries per doctor is 2000 per year. Aravind looks to multiply its benefits by hiring and training local doctors and surgeons. Even though Aravind pays slightly more than the government hospitals, seven to ten doctors leave each year. The reason is, since Aravind is nonprofit organization, it is unable to compete pay wise with private practice institutions (Maurice, 2001).
The Path to Aravind
As previously mentioned, Aravind was founded by Govindappa Venkataswamy, who is commonly known as Dr. V (Maurice, 2001). Dr. V does not view his job as work, but rather as something that he is excited to be able to do. According to Dr. V, if there is something you can do, you should do it. Dr. V was born in 1918 and died at the age of 87 on July 7, 2006 ('Govindappa', 2009). He received a Bachelor's of Arts in chemistry from American College in Madurai in 1938. Then, in 1944, he received a doctor of medicine from Stanley Medical College in Madras. Finally in his education he received a doctor of ophthalmology from the Government Ophthalmic Hospital in Madras in 1951. From 1976 until his death in 2006, Dr. V was the chairman of Aravind Eye Hospital. In 1956 he was named the head of the Department of Ophthalmology at the Government Madurai Medical College. At the same time, he was an eye surgeon at the Government Erksine Hospital. He held both of these positions for twenty years until his forced retirement from the government hospital in 1976 ('Govindappa', 2009). Dr. V was partly influenced in the creation of Aravind by his mentor, the philosopher and mystic Sri Aurobindo, whom Dr. V was a disciple of for fifty years (Maurice, 2001). When Dr. V was asked about the influence of his mentor into Aravind, he made the following statement: 'You do your best in your job and higher ideas come to you, and then you try to realize those ideas too (Maurice, 2001).' Dr. V was also motivated from his work at the government hospital (Shah, 2004). The government asked him to have four camps a year while he still worked with the government hospital in 1961. This also proved to be a part of his opportunity identification. He saw the number of patients attending rise each time the camp was held (Shah, 2004). The fact that eighteen million people are blind by curable cataracts worldwide is another part of Dr. V's opportunity identification (Chang, 2004). This number is growing at an alarming, nearly epidemic rate. Blindness causes reduced life expectancy, and productivity is lost for both for the blind as well as for those that care for them (Chang, 2004).
Dr. Govindappa Venkataswamy ' A True Social Entrepreneur
Dr. V had entrepreneurial quality, which is one of the four categories used to evaluate Ashoka nominees (Bornstein, 2004). People with entrepreneurial quality seek to change an entire field, not just get something done locally. People with this trait not only want to express their ideas, but they want to go out and be a part of solving the problems by executing their ideas (Bornstein, 2004). Dr. V has shown entrepreneurial quality through his work at standardizing the procedures for cataract surgery because this allowed the change to spread throughout the field, not just at his hospitals in India. Another way he has shown entrepreneurial quality is through the training that Aravind does for doctors in other countries. Finally, the fact that Dr. V did over 100,000 eye surgeries successfully himself shows that he was willing to be a part in executing his idea ('Govindappa', 2009).
The Six Qualities of Social Entrepreneurship
Dr. V has also demonstrated the six qualities of a successful social entrepreneur as laid out by David Bornstein (2004). These six qualities are as follows: the willingness to self-correct, the willingness to share credit, the willingness to break free from established structures, the willingness to cross disciplinary boundaries, the willingness to work quietly, and a strong ethical impetus (Bornstein, 2004). Dr. V asked for help from business schools to on how to keep doctors from falling back into complacency at their own hospitals after completing training with Aravind (Shah, 2004). This shows his willingness to share credit because he publicly sought their help. It also shows his willingness to self-correct because when he saw the problem of doctors becoming complacent, even after receiving Aravind's training, he took active measures to fix the problem. He also shared credit with the other doctors that work with him, acknowledging the fact that Aravind could never have become such a success without the hard work put forth by everyone involved. And as mentioned earlier, the government was against the creation of Aurolab (Shah, 2004). By creating the facility anyway, Dr. V demonstrated his willingness to break free from established structures. Dr. V was able to cross disciplinary fields from medical and into manufacturing when he opened Aurolab. Also, by working privately at creating Aurolab and making it affordable, Dr. V demonstrated his ability to work quietly (Shah, 2004). Dr. V has repeatedly demonstrated his strong ethical impetus. During an interview Dr. V said that the focus of Aravind was on honesty and respecting the patients (Shah, 2004). Also, he said he tries to choose compassion over cost. This is exemplified when they spend more than the fixed charge for a patient because they do not charge the extra cost to the patient. R.D. Thularsiraj, the executive director of Aravind, says that Dr. V instituted a system of values into the hospital that has the effect of guiding their work to wanting to help others and away from focusing too much on money (Maurice, 2001). Finally, Dr. V has capacity building programs that basically work to instill integrity and quality into new hospitals (Shah, 2004).
Structuring Sustainability, the Core of Aravind
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Dr. V wanted to reach those who had not been reached before, and help the poverty stricken individuals, who without his help, would not be able to see. He removed barriers, promoted community involvement, and had a growing market model for healthcare. Even after his death, his dream is still living on. Aravind continues to explore new approaches to the primary eye care market, and continuously seeks new innovations to help the population.
When opening the first hospital in Madurai, in Tamil Nadu, his sister and her husband, both eye surgeons, joined Dr. V in his efforts. To cut costs, all three doctors took significant pay cuts since bankers would not finance a clinic that, regardless of ability to pay, gives eye care to the rich and poor. Dr. V even mortgaged his house to get the necessary finances to start the hospital. Within a year, all the efforts paid off and the hospital quadrupled in size. There are now five Aravind Eye Hospitals, and all are self sustaining, thanks to a blueprint copying system that has allowed for easier knowledge transfusion throughout the hospital chain. Dr. V took the unusual step of asking even poor patients to pay whenever they could, believing that the volume of paying business, which amounts to approximately 30% of clients, would sustain the rest (Aravind, 2007). Two thirds of patients receive the free outpatient services, while paying patients receiving additional amenities, such as private rooms for extended recovery, and hot meals. The profit made from every one paying customer covers the costs of two patients that cannot pay. Aravind is famous for its fee structure. The consultations are free for poor patients while others pay 50 R's (their currency, approximately $1 US). Impoverished patients can be expected to pay as little as nothing, or up to 250 R's, which is as much as they can spare. A subsidized rate is 750 R's (approximately $15 US). The regular patient fee, which is aimed for middle income patients, is 3,500-6,000 R's. For a Phaco surgery, the rate is 6,500-12,000 R's (Saravana,2002). This is a need based transparent financial system, and it is this kind of trust and care Aravind has built that attracts paying patients. The lower than market cost for even the paying patients, at least 25% lower, attracts them also.
The Business Model of Aravind
Aravind Eye Hospital operates with a business model unlike that of any other business in the health care industry, bearing striking similarities to the fast food industry instead. Dr. V. was impressed with how a chain like McDonalds could offer the same quality product no matter where you went, and still get it to you quickly (Health, 2007). He became adamant about the fact that a hospital could be run under the same principle, and trained his employees to treat large amounts of people without sacrificing quality. Today, Aravind's network of hospitals has the distinction of being the most productive eye care organization in the world in terms of surgical volume and the number of patients treated. The success of Aravind's business model is dependent on numbers, as it is the high-volume of low cost procedures that offsets the costs associated with delivering such a high quality service. In order to reach more patients, Aravind Eye Hospital advertises its services heavily, and is benefited by the positive word of mouth that has quickly spread about them. They have also implemented technology that allows his staff to serve people that are not able to come to the hospital; they do this by video conferencing, instant messaging, online patient questionnaires, and through the use of web cams. One example of how they have used technology to help their business can be seen through the internet kiosks the place in remote villages. Here, they have women trained to take pictures of the patient's eyes using a webcam, then they send the images to the Doctor along with the filled out patient questionnaire. The doctor then receives the file via e-mail almost instantaneously, and is able to interact with the patient through an online chat program. This is made possible because of collaboration with the University of Berkeley Information Technology center, with a low cost Wi-Fi connection. This provides access to the patient, and a remarkable cost reduction. This also allows the staff to provide consultations with people who would otherwise not be able to make it to the hospital, and makes it easier for the team to transfer information between each other (Aravind, 2007).
What Makes Aravind Different
A core part of Aravind's model is to never turn away a patient due to economic reasons. In fact, it has even been recorded that Dr. V once accepted a chicken as payment for surgery. The goal of Aravind is to help as many people as they can, not to make a profit. Their business model is formatted in a way that provides a level of self-sustainability that allows them to use all income towards expanding their processes, improving their work, and keeping services free to those who need them. Dr. V set up this model believing that people will pay when they can, even if it's months after their surgery. Aravind's business model originally focused on just eye surgery and care, but after time it expanded into manufacturing in order to create low cost lenses. This change in the model was necessary because importing the lenses from the West was too expensive, and in order to comply with their vision of providing eye care to the disadvantaged, they needed to come up with a way to lower costs. Another way they have put into their system to help them reach more clients is by using a two tiered pricing structure. Wealthy people are expected to contribute more, and for every one paid surgery, Aravind can afford to do many free surgeries. And because Aravind is the best eye hospital in the region, wealthy people choose to go there. In order to maintain maximum levels of efficiency and resource usage, the hospital staff performs just their specific specialization, and the surgery procedures themselves are standardized. And to make sure that all who want to go to Aravind are able to, the clinic provides buses that pick people up in the morning, and then drive them back to their communities after the day is over (Shah, 2009). Before the patients are brought to the hospital, they must go through an eye screening at their local community, using one of the internet kiosks as mentioned earlier. They are then evaluated, and transported to the hospital if it appears that surgery or a live consultation will be necessary. This process is promoted, organized, and financially backed by local business leaders. In keeping staffing cost low, Aravind recruits locally. The majority of the staff is from local villages. Being trained and having grown up in the same community as they will be working, they share the dream of the hospital. And since local wages expectations and cost of living are low, the hospital can pay these individuals less than individuals coming from out of the country. The medical staff is also trained, not only for a job, but a prestigious life long career. For each surgeon, the hospital has four highly trained paramedics for support. Aravind Eye Hospital's ophthalmologists are linked with video conferencing with their Vision Center's technicians for each patient.
Expanding their business model, Aravind ventured into lens production. They now have a factory that can produce parts at low-cost prices. Compared to the $200 for imported lenses, they produce these for about $5 at their home factory (Dan, 2008). Now, because of outside funding they export their products to over 80 countries. Their method to production lens was branched out to produce other products such as blades, instruments, sutures, and pharmaceuticals. They can produce these products for fractions of what the western world can, and make a handsome profit. This also cuts costs on buying them from somewhere else. The income gained from the paying patients contributes to approximately 20% of the budget. The other income comes from the production of manufactured products and the provision of training and consultations. In order to retain a sustainable operation Aravind is constantly looking to improve. Since they adopted many technologies earlier than other hospitals they are remaining high in breakthrough technology. They utilize their technology to communicate easier with fellow staff members, patients, partners, and other hospitals across the globe. Aravind has regular reviews of their system, and follows up on executive decisions to ensure they stick to their intended model. But they are always looking for new ways to better themselves, and to grow.
Scalability of the Aravind Model
The Aravind System has a great approach to overcoming obstacles in the cataract surgery industry. The main characteristic of the Aravind model is that they provide quality care at prices that everyone can afford. They are self sustaining, yet still able to provide their services to the poor and rich alike. Their business model stresses a maximum use of all resources. This is all achieved by their high volume quality, and a well structured system.
The Aravind model can be replicated in countries with inexpensive labor. For example, the model would work well in Asia or underprivileged areas in Africa. Their model will work well if you have a large population with a social need, and if you can find doctors who are willing to operate many times daily. Also, to be financially stable there must be enough revenue to cover the free services from the paying ones. The cost of the service cannot be too high. In order for the need-based service to work, there must be incentives to paying. The people at Aravind pay because they want to have a bed in a private room with air conditioning, or the other amenities that they offer. Aravind eliminated non-beneficial activities and wait time. By having standardized protocols of clinical procedures, activities, and administrative measures, it cuts down on the error count and makes procedures more efficient. The surgeons do not do tasks such as preparing patients, taking measurements, or diagnostics testing, this is all done by trained assistants. Letting the surgeons focus on just the surgical procedure itself. It cuts down on transition time between surgeries. The state of the art technology requires surgeons to exhibit less energy, and allows them to operate more times per day. Since surgeons average 1700 more surgeries than the national average, there are many benefits to being an Aravind surgeon. Surgeons here do not only want to make a difference in the lives of the people, but by performing many more surgeries than they would otherwise, they are also bettering themselves.
Aravind has reached over 200 hospitals through their consultancy process, and they hope to reach many more in the near future. The Aravind model makes scalability in developing nations limitless through their fee system, management techniques, high aspirations, and quality of care. From the David Bornstein's book example of 'blueprint copying', Aravind wants to be used as an example. They want their techniques, management protocols, and philosophies to be copied by others, as well as they have in making their hospitals across India. Just as the Grameen Bank's idea of Micro-credit has spread to numerous lending programs, Aravind's basic model, a 250-bed hospital was adopted in Mumbai, Kolkata and Nepal hospitals. Also, the Indian government is adopting Aravind's medical protocol doctrine for their training centers around the country. Aravind's goal is to be an example of efficient management and inexpensive care to patients, since any ophthalmologist can provide eye care, but can only sustain affordability to the masses as long as it is managed properly. This is their new focus called Managed Eye Hospitals. In the long term, according to their website, they want to affect a larger population, by exceeding 100 eye care hospitals spreading to other parts of the world. They want to be an example for other health care hospitals to become more efficient, and to grow and thrive. Aravind's ultimate goal is to join together with others to help eliminate treatable blindness entirely by the year 2020 (Aravind, 2009).
A Bittersweet Critique
It is hard to critique a social business, as we try to negate or justify the flaws in the system by contrasting it with the good it does for the public. However, a company, no matter how well intentioned, cannot grow to its full potential if not given the criticism necessary to improve their system. In this section, we will first explain the flaws we found within Aravind and how we believe they might negatively affect the company in the future. Then we will explain some of the great benefits or pros of Aravind, and how we believe they will perform in the future.
The business model of Aravind, although scalable, is very reliant upon having a strong client base. In particular, it needs a constant influx of paying customers to negate the costs incurred by offering their services for free or for extremely reduced prices. The location of new ventures is also a factor of success for the model to work, as their structure involves hiring local residents to work in the hospitals. If the quality of workers is diminished in the area attempted, then the Aravind system will not run as efficiently or effectively as intended. Also, it would cost them more to bring in employees from outside the area, which would raise the overall cost level, and reduce their ability to offer their services to the impoverished people of the area. Another flaw in the Aravind system is the high turnover rate they must deal with. Doctors come from all over the globe to train in these hospitals, as they perform more surgeries in a day than they would otherwise perform in a few months time. But since Aravind is trying to operate on as small a cost budget as possible, they cannot afford to pay their staff rates that are high enough to compete with private practice firms. One final flaw we saw when examining Aravind, was the fact that they make staff members work even when they are sick. Although this is done to keep production up, it also makes room for errors, and contagion. The dedication seen by the employees is admirable, but when sick, you should not be performing any service in the medical field.
Aravind has greatly enlarged the social impact they have on society by not only providing a necessary service to meet one of their healthcare needs, but also by creating jobs and hiring locally. This is seen both with Aravind hospitals and with their manufacturing plant, Aurolab. Aravind could easily outsource to get employees and resources, but instead they choose to continue helping the social sector in their respective areas. And even though Aravind Eye Hospitals treat more patients than any other eye care facility in the world, they continue to advertise their service across the country in order to find and serve more individuals. They are actively seeking out their target market instead of waiting for them to come to them. Eye camps, kiosks, and bus runs have been created by the Aravind system to get them closer to their market, and physically bring their clients in. Their use of technology allows them to consult and share their practices with hospitals worldwide, and increases productivity among staff members, and allows them to reach the population that cannot make it into the hospitals. Aravind Eye Hospitals have created an efficient and effective service that best serves the social sector, and provides much needed help to the economically disadvantaged and blind population. And because Aravind is renowned worldwide for its innovation in the field, technical excellence, and operational efficiency, it attracts new ophthalmologists to the system. Once these new surgeons get trained in the Aravind way, it betters the surgeon himself because of the massive amount of surgeries he will complete, and it also extends the Aravind practice into even more hospitals across the globe.
We believe that Aravind is doing an excellent job so far, and has a very sustainable model. They have been critical in their decision making thus far, and we feel confident that they will only become stronger as time goes by. This will hit a cap at some point though, as Aravind gets closer to reaching its vision of curing all the worlds' treatable blindness, their market will start to decline. Once demand sinks low enough, the current model used by Aravind will become useless, and they will need to undergo some major revisions to their model. Overall though, it really is an excellent business model, and is doing a great deal of good for the people of India.
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