Aravind Eye Care System
Social Enterprise: Aravind Eye Care System
Social Entrepreneur(s): Thulasiraj Ravilla
Start by acknowledging that ‘zero’ is a legitimate price point to allow universal access; achieve maximum efficiencies to drive down operational costs; and offer tiered pricing so patients who can afford treatment subsidize those who cannot.
The Innovation Explained
Aravind Eye Care System is the largest eye care centre in the world, treating over 2.8 million patients a year in India, and globally renown for providing world-class treatment to the rural poor. Aravind comprises several hospitals, dozens of eye clinics, a research foundation, a manufacturing centre for ophthalmic products, an eye bank and a resource training centre to spread its model. As one of the most scaled social enterprises in operation, the Aravind model has been the subject of many studies for nearly 40 years. Its innovations are too numerous to elaborate; however for Executive Director Thulasiraj Ravilla, two in particular stand out.
The first is its “assembly line” approach to operational efficiency, targeted with moving patients from check-in to post-operative care within two hours. Early on, Aravind realized that surgeons were the resource that limited the number of patients per day, so they trained less expensive staff to specialize in administration and patient counselling, thus allowing doctors to spend time exclusively on surgeries. Today, Aravind employs information technology systems to monitor patient flow and review processes to ensure that no facility, staff or medical equipment is left idle; this drives down costs for the customer. Such process efficiencies allow Aravind to charge less than US$ 1.00 for a diagnostic consultation.
The second innovation lies in product differentiation. “We can’t compromise on the core service, but paying customers need to feel there’s a difference,” explains Ravilla. “It’s like business class and economy class on an airplane.” All patients receive the same excellent surgical care regardless of ability to pay; but paying patients can choose private rooms, air-conditioning and other technology options, whereas non-paying patients recover in large dormitory-style wards. “What’s important is to be very transparent about the pricing. We have a detailed chart outlining the cost of various treatments and post-operative care options so patients can pick and choose.” Thanks to this cross-subsidization model, Aravind treats over half of its patients virtually for free, while paying customers more than cover those costs and ensure financial sustainability.
Why This Matters
Strategically and persistently, Aravind has focused on proactively reaching out to “non-customers”, poor people who are overlooked and not participating in the market. Through decades of innovation and expansion, the core value of the business model remains universal access. According to Ravilla, “Whether you are talking about cardiac care or education, the fundamental question is: How do you provide it for everyone?” Today, 60% of Aravind’s nearly 3 million patients are treated free of cost or at highly subsidized rates.
The Aravind model has successfully turned non-customers into clients by introducing efficiencies to drive down costs, without sacrificing quality. As Ravilla explains, “Patients who can afford to pay the full cost of care come to us because our service is still better and less expensive than what is offered in the market.”
Design a model for sustainability within your operating constraints. “Some customers can afford a price point of zero, the majority can afford a little bit, and a small portion has enough disposable income to pay full price,” says Ravilla. “These are the boundaries that will define how much revenue you can generate. If your goal is to provide a service at terms your customers can afford, you have to figure out how to offer your services at price points such that your aggregated costs are lower than your aggregated revenues.”
Work backwards. “When advising others,” explains Ravilla, “I say [you must] first define the problem. What’s the size? What intervention is required to solve it? Then do a mapping analysis to understand what exists currently. Is there easy access? What are the entry points? Where are the current gaps in infrastructure, technology or human capital? From there, you can work backwards to determine how best to fill in the holes, which ultimately becomes your plan for intervention.”