The Bottom of the Base

Of all of the poverty that I’ve seen over the past few years, nothing is as destitute or heart-breaking as the poverty of the street-dwelling migrant families in India. They’ve left their homes (“because there is nothing to eat,” as my colleague explained matter-of-factly) in search of labor – often in construction– and have essentially become homeless in the process. Living on concrete sidewalks, under bridges, in open fields, on dusty roadsides – any uninhabited space is turned into an open-air “home,” with the occasional blue tarp covering in the rain. Whatever meager income obtained, if any, is not enough to break out of this homeless, migrant trap.

The other day, while stopped in traffic in an auto, I saw one such family at an extreme. The mother, disheveled with messy hair and visibly soiled clothing, was tending to her baby, who sat bare-bottomed on the roadside, one foot away from traffic. Moving slowly and with a dejected air, she wet a rag to wipe the baby’s face then hung it on an adjacent road sign, as if it were a hook in a wall, and the open air was her home, and she and her family were not surrounded by Hyderabadi pollution, dust and traffic.

In much of the world, sparsely populated rural areas often lack adequate transport, health and sanitation infrastructure; increased urbanization has led to overcrowded slums and, at least in China, a “floating” migrant population of second-class citizens. Yet all of these groups have access to a basic human need that the street-dwellers in India lack - shelter: a roof, however rudimentary, above their heads and a space, however small, to call their own. These street-dwellers are truly at the bottom of the Base.

The Base of the Pyramid (BoP) is diverse group and measurable by different metrics – income, living conditions, affordability. Collectively, they comprise a significant portion of the world’s population; “1 billion living on $2/day” is a commonly cited figure.

The appeal of social ventures that serve the BoP in clean water, energy, microfinance, health is the increased sustainability and scalability of market-based mechanisms over traditional aid. Instead of giving away malaria nets, for example, they can be manufactured locally (creating jobs) and sold by micro-entrepreneurs (efficient distribution channel) at low prices. This socially-driven form of capitalism makes the nets more widely available and valued compared to grant-dependent distribution of free nets. However, in order for the system to work, the participants must have some level of affordability, even if it’s as little as $2/day.

What has struck me the most through my summer internship and musings with others in the BoP space is that the absolute poorest of the poor, the bottom of the base, are often still beyond reach. I highly doubt the homeless migrants in India, for example, of which the population size is probably unknown, could participant in BoP services. So the question remains: how do we even begin to improve the lives of those at the bottom of the Base? What would be the most effective mechanism?

random acts of kindness

on a rainy night after the day-long "india close" strike, where all public transport across the country protested rising oil prices, a few co-interns and i piled into one of the few auto rickshaws available to go home. with our numerous bags (including a suitcase), we barely fit. to save space, i put my laptop in the back. as we pulled up to the gate after a rainy, rickety ride, i hurried off with the suitcase in one hand and mango + purse in the other.

halfway down the slope to our compound, it suddenly hit me - where the f** is my laptop?? still in the auto!! i throw down the mangoes and run up the slope to chase the auto, but it's nowhere in sight. in strappy sandals, with a bag flapping at my side, and drenched by the rain, i turn and run down the pot-hole filled road. desperate thoughts fly through my mind: i backed everything up a few weeks ago...but i'll lose pictures from this summer....and the hours and hours of data cleaning/manipulation...and i wouldn't have a laptop to use for the internship...what a waste of a summer...!#F!#*$@!#$%^ [repeat expletives]...

at the deserted intersection, i whip my head in one direction then the other, straining to see if there are autos anywhere. suddenly, a man on a motorcycle approaches, also drenched, and asks what's wrong. "my laptop is lost in some auto!!" i wail. "come, i will help you," he says, beckoning me to hop on. without even thinking, i do, and we speed further towards the main road.

to put the situation in context, autos are a form of transport entirely in the informal sector. despite the fact that auto drivers' wives are our target customers at LifeSpring, some of my most frustrating experiences in india have been with autos - negotiating prices, getting lost in the defunct landmark-based navigation system, and fearing for my life as we swerve between cars, sometimes against traffic. recovering a lost laptop from one of the 1238904274e3819 untrackable autos in hyderabad would essentially be impossible.

a few hundred meters away, i see an auto parked in front of a small shop. i hop off the motorcycle and frantically question the auto driver, who looks at me confused. still getting rained on, i forego the conversation and look behind the seat. and there it was - my lone laptop in its case, a miracle to have in my hands again. i thank the random motorcycle driver and start to walk back, but he insists on driving me to the compound.

india is chaotic - true. the masses of people, the conglomeration of cars, autos, motorbikes, cows that form impenetrable traffic, the petty traders soliciting you to buy bangles, fruits, garlands (with a "foreigner's tax") as you squeeze by - it's easy to feel overwhelmed. and yet, a simple, random act of kindness by a complete stranger, who surely had better things to do than ride around in the rain with an absent-minded foreigner, reminded me of the order within the chaos.

the next day, i was struck by another random act of kindness. after arriving at a store that took too much effort to get to, i stood staring at it from across the one-way street. pacing back and forth, i tried hard to figure out HOW the hell to get across. the traffic moved by fast enough that i was too timid to step out, but slow enough that it streamed by continuously with no breaks. my usual trick of crossing with other pedestrians would have failed - the slightest lag in timing or step makes all the difference.

after i stood foolishly for at least ten minutes, defeated and gaping at the traffic, a nearby auto driver jumped in front of me and motioned his hand towards me. i followed in his step as his outstretched hand momentarily slowed traffic, overcome with gratitude by his random act of kindness. as i watched him weave back through the traffic to his auto, i couldn't help but wonder where else in the world this would happen. that a man who makes 4000 Rs ($88) a month, instead of soliciting business and attending to his vehicle, would inconvenience himself to help a visibly incompetent (and likely rich) foreigner do something so simple as cross the street, and for no more remuneration than completing the act. he barely stood at the other side of the road long enough for me to thank him.

the entire night i thought about the dynamics of human behavior in overcrowded countries like china and india. when i experience an unruly situation, i often attribute it to the necessity to fend for oneself, citing that circumstances do not allow for much regard for others. these two recent incidents may be anomalies, or they may illustrate the pervasive human concern that contrasts with the chaos and crowdedness of everyday life. either way, they make me deeply appreciative of my experiences and interactions in india.

The Aravind Model - sustainable healthcare to the BoP

[...a long overdue post...apologies!]

Hardly two weeks after I started at LifeSpring and began to understand its model in maternity healthcare delivery to the poor, a few co-interns and I ventured to Madurai, at the southern-most tip of India, to understand Aravind Eye Care System's tried and tested model that has transformed eye care for the poor in India.

Prior to the visit, we read up on Aravind's history and model. One case study depicted its founder, Dr. V, as a visionary leader guided by religion-infused compassion and a mission to "eradicate needless blindness." Another objectively assessed the model of "demand generation, production efficiency and quality" in its provision of hundreds of thousands of free cataract surgeries for the poor every year.

Since its inception in the 70s, the Aravind System has served millions in eye care needs, cross-subsidizing its majority free/subsidized cataract surgeries for the poor with the minority paying patients, largely without grants or subsidies. Blindness leads to lower productivity and a loss of income, which is especially detrimental to the poor. Dr. V's lifelong commitment to eradicating blindness was incited by the staggeringly high prevalence of curable cataract-induced blindness in India. His significant achievements and establishment of an entire system - with manufacturing abilities (AuroLab), an internationally-attended training center (LAICO) and franchises all over India - are certainly worthy of reflection.

The pillars to Aravind's success emerged through our meetings and were brought to life in the hospital tours and field visits:

1) Operational efficiency and a process-driven approach that allows for the low cost.

Dr. V has been quoted comparing the Aravind eye care delivery approach to McDonalds: standardizing procedures to optimize performance. Indeed, Aravind breaks down their bread and butter service, cataract surgeries, to standardized steps where all but the most essential ones are performed by "sisters" (nurses), hand-picked girls from surrounding villages that are trained in-house. By also working up two patients simultaneously, side by side, the surgeon can literally perform one surgery then "swivel around" to perform the next. This allows the Aravind surgeon to be ten times as productive as her regular private sector counterpart. Since doctors are salaried and not paid per surgery, this high productivity dramatically reduces the unit cost per surgery (in fixed costs as well).

In addition, Aravind has a private company spin-off, Aurolab, that produces intraocular lenses used in the surgery for a fraction of the cost in Western countries. This also contributes to driving down the cost of surgery, and exporting the lenses to willing developing country buyers provides a robust revenue stream.

2) High quality control and reputation as a center of excellence.

When I learned of the mass production approach to surgery, I questioned the clinical quality - wouldn't the surgeons get tired quicker, at the least? Aravind's openly published data, however, demonstrates complication rates lower than those found in the UK and other Western countries. Being process-driven allows Aravind to closely track its performance in all arenas, including clinical quality. While visiting a paying hospital, we watched a sister, clad in a green-sari uniform, enter data to capture customers' wait times, flagging those of concern in real-time so a solution can be developed immediately.

In terms of equity between the different customer types, all first-time patients undergo the same seven screening steps, regardless of location: paying hospital, subsidized hospital, or screening health camp in villages. From the clinical perspective, doctors and medical staff are rotated between the paying and subsidized/free hospital to ensure comparable quality.

Owing to the high clinical quality and growth of an education and training arm, Aravind has attracted international attention in its high volume, high quality provision of eye care services. Residents and fully practicing doctors from around the world train at Aravind, and LAICO also offers a range of post-graduate courses in nursing, hospital administration etc. As a "center of excellence," customers feel more confident about the quality of Aravind services.

3) Strong differentiation between free versus paying services.

Operating under a "no patient turned away" mantra, Aravind does not assess each patient's availability to pay before allowing use of the free service. Instead, the services are differentiated [in aspects other than clinical quality] such that the patients separate themselves.

In the paying hospital, a range of services are available, and different lens types and surgical techniques can be used for cataract surgeries. The reception area is indoors, wait times are minimized and patients can elect to stay in private rooms.

In the subsidized hospital, patients pay a fraction of market price but only one lens type and surgery technique is offered. The reception is outdoors and wait times are not tracked; the recovery rooms are dormitory style and each patient is provided a cot.

In the free hospital, patients pay absolutely nothing and are even provided transport to/from their villages. In fact, patients are ONLY brought into the free hospital through free screening health camps in the villages. Like the subsidized hospital, only one lens type/surgery technique is offered; patients here, however, are given mats only (not cot) in the recovery rooms.

By differentiating the non-medical quality of service, patients who can afford the paying service elect to do so, maintaining a paying volume necessary to subsidize the free/subsidized services.

4) Innovative outreach methods to drive volume [free customers only].

In many articles on the Aravind model and even in their own rhetoric, "market creation” and “market driving" is frequently discussed. This refers not to the market of paying customers, but the free customers. Essentially, Aravind adopts a public health-esque outreach method by partnering with local community organizations to organize twice-yearly health camps, where villagers are screened for free for eye problems. If cataract surgery is indicated, they are bussed in that same afternoon, safe and willing in a cohort of peers to provide support.

We were lucky to have the opportunity to observe one such health camp, held two hours away from Madurai. In the raging Southern Indian heat on a Sunday morning, hundreds of villagers lined up for free eye care and diabetes and hypertension screening, moving through the seven clearly labeled stations as orderly as a mass of illiterate village elders could. Within a few hours, a number of surgery-eligibles had been identified. Several pairs of glasses had also been manufactured on-the-spot and sold far below market price.

The community partners cover costs of organizing the camp (space, marketing) and transport for those surgery-bound. This approach is directly responsible for the high volume of free customers by increasing awareness and access to eye care.

5) An inspirational and influential figurehead: Dr. V.

However, the question still remains of the paying customers – what work was done in creating *that* market? The Aravind administrator claimed that no marketing was done towards the paying customers – they just come. That’s difficult for me to comprehend, but truly wonderful for Aravind if absolutely no marketing is needed to maintain the paying customer base. Historically, he explained, there is an increase in the number of paying customers from a particular region after a free health camp is conducted. While the free camp may spur awareness of the Aravind health system at large in the community, I doubt the free and paying customers are from the same community; this indirect method can’t be the key driver in attracting paying customers.

One driver may be the superior clinical quality and international recognition, but those aspects developed later in Aravind’s trajectory. Dr. V’s personal reputation and visibility in the community, my co-interns and I concluded, must have played a large role, at least in establishing the initial customer base. He also had significant support from his family, who housed the first 11-bed hospital and later formed Aravind’s core team of physicians that shared his vision and accepted lower pay.

In a country where health institutions and related companies are often named after the founding physician (Dr. Reddy’s Pharmaceuticals, Dr. __’s Hospital), Dr. V’s reputation in the 70s as a passionate, committed army doctor who was forced to change his field of specialty due to near-disabling rheumatoid arthritis, who saw a great vision of bringing affordable eye care to all the forgotten corners of India, emulating the reach of MNCs like Coca-Cola, surely helped. At that time, simple eye care services, nevertheless sophisticated cataract surgeries, were in dire need. Dr. V was considered a leader in the field and also established key government partnerships for Aravind that persist to this day.

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The Aravind model represents one type of market-based solution to serve the poor (coined Base of the Pyramid) – where tiered-pricing and cross-subsidization allows provision of free services. In other models, the actual service to the poor (like glasses, for VisionSpring) is produced and distributed sustainably and no cross-subsidization is needed.

In any case, we all have a lot to learn from the Aravind’s approach in “mass producing” high quality, low-cost health services. Not all aspects are translatable though. In the case of LifeSpring, for example, you can’t bus pregnant women in on your schedule or shorten the time it takes for delivery.

Furthermore, Dr. V’s revolutionary leadership is not easily replicable. After growing Aravind to an internationally-renowned center of excellence, Dr. V passed away a few years ago. I heard his biography was published recently – would love to get my hands on a copy!

Comments on Aravind (paying customer base especially) or any other musings are more than welcome!