Aravind Eye Care Case Study Solution Format

Introduction

Go where the need is greatest, provide the necessary treatments for free, and reap the benefits. Sound strange or unconventional to you? Some would consider this business model unrealistic or boarder-line impossible, but Aravind Eye Care Systems is living proof that an organization run on selflessness and spiritual aspiration can be immensely successful. Dr. G. Venkataswamy founded Aravind in 1976 as an 11-bed clinic in Madurai, India with high ambitions and impeccable foresight. A sustainable, thriving social enterprise, Aravind is dedicated to curing individuals who are “needlessly blind” and providing affordable eye care to all. Though blindness is a seemingly small issue in comparison to the world’s major crises of food, clean water, sanitation, and education, Dr. V recognized eye sight as a critical problem because of its impact on overall loss of global productivity ($47 billion/year)1. He aimed to help as many afflicted individuals as possible, and this spirit of service and endless dedication to social impact translated into an unprecedented business structure and culture.

I. Motivated by Social Impact

Upon reviewing and analyzing this case in terms of the SEI Framework, motivation clearly presents itself as one of the most important and influential elements in Aravind’s success as a social enterprise. Dr. V’s attitude and spiritual inspiration formed a rare cultural ethos that is not easily replicated outside of the organization. Because of the close-knit internal structure of Aravind, it is obvious that Dr. V’s values would be instilled in family members and other employees. Dr. V sums up his belief in something greater than himself and its effect on the success of his organization: “When you begin doing the work you are meant to do, unexpected resources will find you.”2

Religion and spirituality are the cornerstones for Dr. V’s dedication to social change and selfless action. He was enamored with and inspired by Sri Aurobindo and the Mother, two Indian philosophers, and begun his days with readings of their work. Dr. V applied his spirituality to his enterprise in a way that was not overbearing, but still managed to deeply penetrate the core of Aravind’s work culture with its positive attitude. His vision for Aravind came from the principle of mindfulness: stepping back from conditioned reactions, biases, and the unwholesome internal movements of anger, jealousy, and impatience.3

Because many Americans do not possess the same values and religious fervor as Indian people do, it would be difficult to identically replicate the Aravind model in the United States. Though there are individuals who are willing to work for a lower wage with the knowledge that they are contributing to a worldly cause, several problems arise that would inhibit progress and sustainability. First, it would be challenging to find enough dedicated employees; there are not nearly enough Americans willing to sacrifice the hefty salaries they could earn elsewhere to work at a lower-paying social enterprise. In addition, if Aravind-US did find individuals worthy of staffing, managers would have difficulty implementing the unique culture that is so crucial to Aravind-India’s success. Americans do not have the religious motivation and mindset of Dr. V and the Indian people, and this will most definitely be a disadvantage. Though Aravind’s business model of affordable health care might be successful in the states, the culture of the organization could not be replicated.

II. Business Model

Aravind’s business model is the other key element to their status as a social enterprise. Reflecting a strong desire for global impact, it is what sets Aravind apart from other eye-care facilities throughout India and the world. Dr. V structured his company with an emphasis on quality and quantity. Though the two are often perceived as mutually exclusive, he proved that it is possible and beneficial to strive for both. Low-cost and high-volume, Aravind operates in a “hospital-as-a-factory” format. Dr. V is often quoted comparing his organization’s method of service to that of McDonald’s and constantly worked to increase Aravind’s number of patients and turnover rate. He claimed that this operating system was beneficial for several reasons: streamlined work-flow increased efficiency, which meant less waiting time for patients; task repetition created competence, which meant better clinical outcomes and less complications; employment of skilled paraprofessionals allowed doctors time to conduct more surgeries, which reduced prices and increased the number of surgeries performed.4

In addition to their efficient, factory-style operational methods, Aravind also boasts success in the financial aspect of their business model. Innovative, generous, and fair, Dr. V structured patient fees into four categories: free, minimal payment, regular, and premium. Individuals can choose between these and will receive the same quality care no matter which option they pick. This is an unconventional model, but it has proven successful in increasing the market of potential clients and therefore the organization’s total income. Aravind makes eye-surgery accessible to the masses– the people who desperately need attention but lack the money and transportation to obtain standard hospital care. Stellar eye-care provided at no cost aligns perfectly with Dr. V’s values and motivation for social impact. Also consistent with Aravind’s strict values and uncompromising selfless nature is their refusal to accept donations. All employee wages, facilities, equipment, etc. are funded entirely from within. This financial business model qualifies Aravind as a social enterprise, not a non-profit organization or philanthropic charity.

Aravind is able to earn patient trust and satisfaction through their efficiency, pricing options, and welcoming environment; because of this loyalty, previous patients often become Aravind’s best advertisers. These individuals are usually found through the Aravind community-outreach program. To ensure maximum impact, Aravind conducts outreach operations that dispatch teams of doctors and nurses to rural communities to screen patients. These are people who are too poor to afford to pay for the trip into the city to seek treatment at one of Aravind’s hospitals, or are unaware of the opportunities that exist for them there. The camps reduce the level of fear and uncertainty associated with hospitals, cities, and eye-surgery. These eye-camps are reaching individuals who may not have sought out eye-care, and this broadening the potential market for Aravind.

III. Innovation

The business model that Aravind has set in place places a high value on innovation, especially in the areas of fee structure and factory-like operations. Dr. V’s organization promotes innovative exploration to advance the eye-care field, exemplified in the creation of the Dr. G. Venkataswamy Eye Research Institute. Aravind is also responsible for making IOLs (intraocular lenses) available to the masses– lenses that were initially believed to be too expensive to incorporate in Indian eye-surgery. Through innovative and forward thinking, Dr. V sought out a solution to this problem. Importing lenses was far too expensive, so he decided that Aravind would manufacture their own. Thus Aurolab was created– a manufacturer of high-quality ophthalmic products at affordable prices. By introducing high quality IOLs for the low end of the market, Aurolab increased the market size and mainstreamed IOL surgery.5 Aurolab later entered the field of ophthalmic pharmaceuticals and become India’s first nonprofit drug company.6

In addition to eye-surgery related innovations, Aravind founded an international training and consulting institute called LAICO (Lions Aravind Institute of Community Ophthalmology).

LAICO has consulted for 60 hospitals in 29 countries and 213 hospitals in India.7 Aravind also has a school to train paraprofessionals, some of whom later become part of the Aravind team, as well as postgraduate programs. Auro iTech was set in place in recent years to provide information technology services and help keep Aravind paced with the global, technological world.

IV. Sustainability

Aravind’s continued innovation and improvement protect the organization from the dangers of stagnation, ensuring financial sustainability. The genius of their fee structure and constant expansion guarantees continued financial growth; thus far Aravind has quadrupled its growth every decade.8

Dr. V was insistent on development– increasing the number of hospitals, community out-reach programs, employees, and patients– and through this operational method Aravind will remain financially stable for years to come.

Aravind has proved to be operationally sustainable as well as financially, as demonstrated by their successful navigation through generational leadership transitions and the continued relevance of their service.

V. Measure and Evaluation of Impact

Transparency is very important at Aravind; in fact, doctors and department heads in particular are motivated by the numbers and actively seek out statistics detailing the success of their efforts. Aravind now sees more than 2.5 million patients per year and performs more than 300,000 surgeries.9 It is important to note that the emphasis is not placed on the financial statistics, only the number of people cured and lives positively impacted.

If one does analyze Aravind’s financial statistics, they would see that the company continues to increase their yearly profit and patient inflow. The fee structure that Aravind has in place is working quite well: 47% of patients choose to pay regular or premium prices, while 26% opt for minimal and 27% for free treatment for cataract surgery.10 These numbers reflect that the majority of patients are willing to pay for surgery, balancing out the cost of the free services Aravind provides.

VI. Replication and Scale

In its 36 years of existence, Aravind has grown to include several eye hospitals, community outreach clinics, local eye-care centers, an IOL and ophthalmic pharmaceutical manufacturing plant, educational and training programs, and a research foundation. It is clear that the Aravind model is replicable and scalable because Dr. V successfully formed five additional hospitals, modeled after his original start-up in Madurai. The LAICO consulting group has taught Aravind’s techniques to other businesses around the globe as well. Though Aravind’s business model has been implemented in other locations– including a U.S. version in California– I don’t believe that their approach to healthcare would be as effective in America. Our selfish and greedy tendencies would result in the majority opting for free healthcare even if they could afford to pay the regular or premium price. However, a U.S.-Aravind would drastically increase the number of people served and provide accessible healthcare to those who currently have unreasonably high copays.

Conclusion and Recommendations

In numerous business case studies done on this social enterprise, Aravind’s business model is typically sighted and praised as the key to their success. Though I do agree that Aravind’s innovative business model played a major role in shaping the operations and financials of the organization, I feel that the model itself is driven by motivation for social change. This element is essential to creating a unique and non-replicable culture but is rarely referenced or given sufficient credit. It is the combination of Aravind’s business model and motivation for social impact that make this organization a high-performance social enterprise.

Note: Though I credit Aravind’s business model for a large portion of their success, this model was not formally designed or written down as a business plan upon the foundation of the organization. So it is in fact the model or design, not the plan, that I am referring to.

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Case | HBS Case Collection | April 1993 (Revised May 2009)

Aravind Eye Hospital, Madurai, India: In Service for Sight, The

by V. Kasturi Rangan

Abstract

Starting as a modest 20-bed hospital, Aravind had grown into a 1,400-bed hospital complex by 1992. It had by then screened 3.65 million patients and performed 335,000 cataract surgeries, nearly 70% of them free of cost for the poorest of India's blind population. Aravind's founder, Dr. Venkataswamy, now 74 years old, had a goal to spread the Aravind model to every nook and corner of India, Asia, and Africa. The case sets the stage for developing such a plan of action.

Keywords: Developing Countries and Economies; Social Marketing; Service Delivery; Service Operations; Welfare or Wellbeing; Expansion; Health Industry; India;

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