Essay – Discussion on Aravind Eye Hospital
In order to understand Aravind, it must be examined in the context of a social enterprise. The given definition of a social enterprise is that it is mission-driven and strives to make a positive impact. They are financially sustainable, innovative, and efficient with resources. A social enterprise treats all individuals, regardless or status or background with empathy and dignity. And, they attempt to do so with moral decision making and transparency. With this definition in mind, it is clear that Aravind follows this basic model of a global social enterprise.
Aravind’s mission is to provide eye care to everyone and end preventable blindness, especially through treatment of cataracts. Many in rural India suffer from unnecessary blindness, but the current healthcare infrastructure, cultural barriers, and lack of financial resources often deter those in medical need from seeking treatment. Aravind’s main purpose is to overcome these obstacles to provide upstanding eye care to everyone. Because the organization’s actions and decisions revolve around this principal idea of accessible eye care, it exemplifies the core value of a social enterprise: giving everyone a dignified life.
Blindness is debilitating. It shortens a person’s lifespan, they become dependent on others, they often lose their jobs, and they lose their livelihood. Many of the blind in India have unnecessary blindness, exacerbated by inaccessibility to healthcare. To have a dignified life, a person needs access to work, access to healthcare, and have a livelihood. Aravind is giving those who did not previously have a dignified life the ability to live one with their eye care hospital. Their free or ultra-subsidized care is an option for everyone who needs it. And even if someone does have money for treatment, they are cared for just as well as those with nothing. For social enterprises, ensuring a person’s dignity is essential for their efforts.
Ararvind’s use of innovation from both a health technology and business standpoint are crucial for their success. Adopting cheaper aphakic surgery technique was their first way to cut costs, but they were unwilling to sacrifice quality. Thus, Aravind looked towards an IOC procedure. When they were told that a developing country like India could not perform these types of surgeries, they used innovation to their advantage. Those at Aravind helped set up the first IOC factory in India, increasing their accessibility and decreasing overall cost for the hospital. From a business perspective, Aravind was uncannily savvy. They used a sliding-scale pricing model to help sustain their free surgeries. They also had camps around rural India to provide service to those who could not come to the hospital. Not only does this increase their ability to reach those in need, but it helps their total patient count in turn generating more revenue. The use of patient-count metrics is innovative as well. Most hospitals do take measures to prevent the ebbs and flows of patient intake. Aravind does their best to make sure the valleys are raised to the peaks. When there is an influx of patients, Aravind made sure that their low-patient days were increased. The doctors also see an astounding number of patients per day. But, the doctors are not paid by the number of patients they attend to, they are paid a salary. By doing so, the doctors are able to teach their juniors, and they are motivated not by wealth, but simply by compassion. All the staff are held accountable for the number of patients served in a day, and administration carefully watches those numbers. This hawk-eyed numbers strategy has proven more successful than the slow, traditional hospital approach. These high-volume numbers are supported by their innovative assembly line method. Each doctor or nurse has a highly specialized task, so they are able to move patients through the line quickly. The specialization also allows the staff member to become extremely effective at their role, thus increasing quality while reducing wasted time.
All the novel systems that Aravind created themselves make their business highly disruptive in the medical field. In standard practice, hospitals are antiquated in their administrative operations. Doctors are not met with the same metrics for quality and patient quantity. Aravind’s IGAs are not typical for a hospital. Neither is using a sliding scale model. Their product innovation and hospital services are an extension of the business disruption. They do eye care faster, cheaper, and better than the rest of the world. Their innovation and efficiency span far beyond the scope of most medical facilities and to help others gain some headway in efficiency, Aravind established LAICO. LAICO is a learning center where doctors, nurses, and administrators can come and learn better methods to apply to their own hospitals. Their innovative efficiency makes them an outstanding new model for all businesses.
In a previously discussed case, PlayPump, the flaws of the design ultimately rendered the endeavor a futile waste of money. PlayPump was not sustainable in any regard. First, it was a charity. There were no IGAs to keep the business afloat. The pump itself was designed for children’s use, so when the kids got bored of it, it was degrading for women to use. The infrastructure for the PlayPump was lacking. There were no people to maintain or service the pumps, many were placed in inconvenient locations that did not have sufficient water, and they did not use local labor or knowledge. In the end, PlayPump was a rich man’s selfish desire to make himself feel good. Aravind took a completely different approach in their do-good efforts. They source their labor from local markets and train the local women to be nurses and staff members. They use a sliding scale pricing model as an IGA. There is also a large market they are addressing and Aravind is actually solving a problem, giving people dignity. They work to serve others with spirituality and compassion, much unlike PlayPump.
Dr. V, the founder of Aravind, is a humble soul. He does everything for the greater good and casts his ego aside. Oprah Winfrey is a notable figure who has devoted her time, money, and resources into bettering the lives of others. One of her projects is the South African Leadership Academy for Girls. This $40 million high school is an extravagant learning facility for poor girls in South Africa. While these two leaders have both tried to make an impact on the community, their motivations drastically differed. Dr. V, perhaps portrayed as the best example for human empathy, is motivated by helping others. Nothing he does is for himself. All the resources, time and energy put into Aravind is done so in a completely unselfish way. Aravind is not overly lavish or gauche, but it is efficient. It has been designed to provide the best care, without being overindulgent. Meanwhile Oprah’s South African Leadership Academy for Girls is selfish. She designed it to be her dream school. She did not take into account what the local people wanted or needed. She did not tailor the school to be the optimal resource for these South African girls. For instance, the school uses a European curriculum, which is not suited for their culture. The school also boasts Italian marble and a grand theatre, both a waste of money. The school should have only cost $2 million to make, not $40 million. Dr. V does not spend money to indulge his personal preferences, rather, he does only what is best for the community.
Aravind’s business model is based on a sliding scale pricing model where the patient pays what they can depending on their income. For some, treatment is free, for others it may cost market price. They use revenue generated by those who pay to sustain business activities. They do not typically take money from other organizations, and even in situations like their relations with Seva, it’s a partnership, not a charity. The greater number of patients served by Aravind, the more revenue they generate. Aravind is dependent on scale, so they try to maximize the number of people served. This is primarily through their camps to rural communities and in the hospital, their super time-efficient doctors and nurses. For instance, a doctor at Aravind could perform 2000 surgeries a year, an outstanding number. The American Red Cross is another organization who uses IGAs to become profitable. Once a person donates blood, that blood is stored until a hospital purchases it. The revenue generated from that sale helps keeps the Red Cross afloat. They also take charitable donations, though the donations are not always allocated to the effort that the donator thought they were contributing to. In this sense, the American Red Cross and Aravind have very different business models, even though they both utilize IGAs.
Financial stability at Aravind may be perplexing without an understanding of the core efficiencies of Aravind. However, the pay-what-you-can pricing model is a major contributor to their success. Those with more resources pay more and the extra revenue generated will later cover the costs of the free or ultra-subsidized treatments. Because everyone at Aravind gets the same level of regardless of payment ability, it is not a charity funded by the ones who can pay. Aravind has also exerted great efforts into lowering their fixed cost. This not only makes the hospital more efficient, but when a patient pays the market cost for a procedure, it is far more financially beneficial than it would be at another hospital. Further, Aravind uses a high-value business model where the company has financial benefit from serving a greater number of customers. They do so through customer outreach programs in addition to their main hospitals. They have also started building satellite locations to serve more communities. And finally, those who work at Aravind are motivated by compassion. Every output of this hospital is done with a singular goal – to help cure preventable blindness. This spirituality that Dr. V brings has enveloped the hospital and brings and aura of benevolence that is not found elsewhere.
Without Dr. V’s spiritual conviction, without the brains and vision behind the hospital, it would not be as successful as it is. Aravind has turned into a social enterprise that the rest of the world wants to replicate. Through tangible and intangible qualities, Aravind has become a model for compassion and empathy.
1. “Aravind Eye-Care System – McDonaldization of Eye-Care”
Harvard Business School Article
This article was used to help analyze the business strategy for Aravind and how they came to be so efficient and successful.
2. “How the American Red Cross Works”
How Stuff Works Article
This article was used in the analysis of the American Red Cross business model and how it varied from the Aravind model.