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!