Aravind Eye Hospital
* What is Aravind’s mission? How successful is Aravind at achieving its mission? The mission is to bring eyesight to the masses of poor people in India, Asia, Africa and all over the world. To provide quality care as a non-profit eye hospital. To spread the Aravind model and offer hope in all parts of the world. Aravind has grown from a 20-bed hospital in 1976 to 1224 beds in 1992 as one of the biggest hospitals of its kind in the world. The Aravind organization consisted of main hospitals that charged for fees, free hospitals, eye camps, IOL factories with sponsors and volunteer organizations from all over the world. What are the key factors that have led to Aravind’s success?
What has Dr. V’s role been in creating that success? What challenges does Aravind currently face? * Key factors: Dr. V was inspired by Mahatman Gandhi and philosopher Swami Aurobindo, dedication through professional lives to serve humanity and God * Dr. V’s spiritual belief and committed to the mission of the hospital * Dr. V inspired his family and professionals to push the mind and body to its highest effort levels, worked twice as hard for half of the salary. * Dr. V has been the driving force behind the hospital * 90% of annual budget is self-generated, 10% from sources around the world, such as Royal Commonwealth Society for the Blind (UK) and the SEVA Foundation (USA). * Expend all surplus on modernizing and updating equipment and facilities with the generosity support from local business community * Spiritual approach sustaining the mission at Aravind * Challenges: franchising the model and spreading it around the world. * What type of customers do the free and paying hospitals serve?
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What are the similarities and differences in the service and care provided at the free and paying hospitals? Free Hospitals: * Outpatient facilities were not as organized, crowded and cramped rooms * Poorer patients, more commotion, longer wait * ICCE type surgeries, not as well equipped * No beds to recuperate and recover, 6 x 3 bamboo/coir mat spread out on the floor as a bed and small sized pillow. 20-30 patients with self-contained bathroom facilities * Detailed records were kept of all post-operative complications, such as iritis Paying Hospitals: Patients paid for the services, Rs 500 to Rs 1000. With IOL implant total cost Rs 1500 to 2500 * Operation rooms were conducted in an efficient manner, well-paced, routine way The customers at the free hospitals are poorer compared to the paying hospital * What issues does Dr. V. face in achieving his goal of “mass-marketing” cataract surgery throughout India and to the other parts of the world? What recommendations would you make to Dr. V. to help him achieve his goal? * India has the second largest population after China, with 20 million blind eyes and another 2 million added annually.
With the per-capita income Rs 6800 who couldn’t afford private treatment, $200 million would be required to overcome the blindness problem just in the country. * Despite the effort in eye camps and surgery camps in remote areas, villagers are not responsive to treatment due to various reasons, such as fear of surgery, can’t afford food and transportation. Lack of organizational skills, creating propaganda, organizing logistics. Recommendations: * I would recommend that putting a protocol in place by establishing step by step procedures and instructions.
Assign a training sector for building eye camps, surgery camps, sponsors and volunteer groups. Regulations and rules must be applied to all areas in order to provide standards and consistencies in quality eye care. Well run group such as the Dindigul group can assist other camps and lead the initiative. To reach the general audience and promote the Aravind mission through public media, such as TV, internet and newspaper or publications in remote areas. * Establish brand recognition as a marketing tool for the Aravind group and present the mission with the brand signature.
As you prepare the case for discussion, please consider the following: Business Model and Financial Analysis: • How central is cataract surgery to Aravind’s “business”? What percent of all procedures at Aravind are for cataracts? (Exhibit 5) * 850 million population in 1991, second highest after China * 20 million blind eyes, another 2 million being added annually * Cataract was the main cause in 75-80% of the cases * Annual per-capita income was Rs 6800 ($275) over 70% below the Rs 2500 ($100) poverty line * 800 ophthalmologists performed nearly 1. million cataract operations/year * 42000 eye hospital beds, free eye care and cataract surgery to people who couldn’t afford private treatment * 30% of cataract surgeries were performed in government sector * 40% for a fee, 30% free of cost by volunteer groups and NGOs * Allocation of Rs. 60 million ($2 million) annually for blindness prevention programs * $200 million would be required to overcome country’s blindness problem * Cataract was the major cause of blindness in developing countries, 75% of all cases in Asia. 0% were age-related, over 45 years age group * By 1992, the hospital group had screened 3. 65 million patients and performed 335000 cataract operations, 70% free of cost * • What is Aravind’s gross margin? What does this mean? How much financial flexibility does this give them? (Exhibit 6)
* Net surplus $18319363, 52% * Cash flow and marginal issues, not financially sufficient at Tirunelveli • How does Aravind finance its operations? How sustainable is this financing model? * 90% of annual budget is self-generated, 10% from sources like Royal Commonwealth Society for the Blind in UK and SEVA Foundation in USA What are Aravind’s biggest expenses? How well does Aravind manage its costs? * The three highest expenses: Stipends and staff salaries, IOL and Camps. The total expenditures are 48% which is still profitable for the Aravind to maintain the mission. • Which of Aravind’s costs are variable and which are fixed? * fixed costs (for salaried labor, buildings, and equipment) * Variable costs (for medication and supplies)
Operations: • How efficient is Aravind (in % terms versus “industry standards”) at performing cataracts surgery? Hint: look for information that will tell you how fast Aravind performs procedures versus the standard, and/or how many operations per doctor, or operations per bed, they perform versus the national average. ) Aravind had performed around 335000 cataract surgeries, 150 operations performed in 6 hours at the eye camp. 70% were free of cost for the poorest of India’s blind population • What are the occupancy rates at the various facilities for free patients and paying patients? The occupancy rate for paying patients is 58% at the various facilities and for the free patients is 88%.
How important is Aravind in terms of the number of cataract surgeries it performs each year? (in relation to the total number of cataract surgeries performed in India each year? i. e. what is Aravind’s “market share”? (exhibit 5 and page 3) 41013 cataract surgeries were performed vs. total 1. 2 million cataract operations performed in India. 40% were performed in the private sector for a fee, 30% in the government sector free cost to the patients, and remaining 30% were performed free of cost by volunteer groups and NGOs. Aravind in the 30% of the market share. How are its satellite hospitals at Tirunelveli and Theni doing? How are its eye camps performing? What problems, if any, exist, and why? The satellite hospitals are managed by Dr V’s sister, brother and close families. Some fundamental management problems exist due to cash flow issues. At Tirunelveli, they were unable to re-pay the cost-of-capital. The physical design are improved and the free section’s exam rooms are more spacious than at Madurai. Operating room capacity is better utilized with a central surgical facility, yet Tirunelveli is still not financially self-sufficient.
Attracting quality people may become an issue due to the fast expansion. Training is provided on site and recruited by the hospital. Common challenges for eye camps: organizational skills, creating propagandas, organizing the logistics. Lack of consistency on principles and procedures. The Dindigul camp was well run and organized with trained teachers and involved sponsors. Marketing: • Aravind divides its customers into paying and nonpaying. What does it promise to each? Quality eye care is delivered to both sections.
At the non paying section, the outpatient facilities are not as organized, more crowded and cramped. Longer wait due to the number of patients. No beds to recuperate and recover, but a 6’ x 3’ bamboo mat in a large room and self-contained bathroom facilities. At the paying section, the operation rooms are conducted in an efficient and well paced, routine manner. Detailed record are kept on all patients in both areas. IOL implants are offered for paying patients due to cost. • How does Aravind differentiate its marketing plan to its different types of customers?
For each, consider: communications, pricing, type of service and delivery of service. Transportation and food are provided for poor patients in the eye camp, with free counsel offered to the patients. Eye camps are sponsored by local business enterprise or social service organization. Public announcement, pamphlets and advertisement were distributed 1-3 weeks in advance. • What proportion of Aravind’s patients are paying versus non-paying? (Exhibit 5)? What is the trend in terms of the proportion of free vs. paid?
Are free patients an increasing or decreasing percentage of total patients? (Hint – use #’s from exhibits 4 and 5) 38% of the surgeries are performed for the paying patients vs. 62% for free patients. There is a 1% increase in 1991 for paying patients, and a slight decrease of 0. 5% in non paying patients. Free patients are a decreasing trend comparing 1991 to 1990 but overall trending is still on the rise throughout the years. 40% of the patients are paying vs. 60% are non-paying. Organizational Behavior: • How has Dr.
V’s leadership style contributed to his success? Dr. V attracted his family and professionals to his Aravind group with his philosophy. To serve humanity and God through your dedication in the profession. • What is Aravind’s corporate culture? What practices and/or policies have created this culture and contribute to its sustainability? Aravind provides continuous training to its ophthalmic personnel, research and training collaborations with St Vincent’s hospital in NYC and University of Illinois’ Eye and Ear Infirmary in Chicago.
Ophthalmologists are sent to those institutions to do their residency. Through the unfailing support of his family members, the Aravind has a strong alliance built on devotion and dedication. • How does Dr. V. attract and motivate the best eye doctors in the world to work with him? Dedication and devotion to the practice. All doctors in residence were gradually conditioned physically for long hours of concentrated work. The doctors at Aravind are trained to work double than the government hospitals. They dedicate themselves for helping people through a spiritual experience.
Doctors were encouraged to attend conferences, publish papers, buy books, and are encouraged to do anything to advance their professional standing in the field. Despite the fact that their salaries are consistent with their reputation in the field, the doctors work twice as hard for half the salary. • How essential is Dr. V. to Aravind? What will happen to the company after he is gone? Dr. V has established the structure for Aravind. His philosophy has embedded in the mind of his staff . His legacy will be carried on through dedication to the mission of the hospital.
As they implement structure to the organization through policies and procedures, improvements will be made through eye camps and surgery camps continuously. As the mission spread around the world through marketing the Aravind model, Dr. V’s philosophy will be remembered and celebrated. The mission is to bring eyesight to the masses of poor people in India, Asia, Africa and all over the world. To provide quality care as a non-profit eye hospital. To spread the Aravind model and offer hope in all parts of the world. Succession plans are in place for Tirunelveli Hospital and Coimbatore Hospital.