A 2010 Forbes article reviewing Aravind Eye Care System’s profitability described it as “a performance worthy of any commercial venture”. In 1976, Govindappa Venkataswamy, better known as Dr V., set up Aravind as an 11-bed eye clinic at his family home in Madurai, Tamil Nadu. It had no outside investment, no safety net and no business plan. The mission was to wipe out curable blindness.
Over the years, Aravind Eye Care System has treated more than 32 million people and performed over four million surgeries—most of them for free. If you cannot pay for surgery, you don’t have to. If you cannot reach the clinic, the doctors come to you. Aravind Eye Care System, spread out in various locations in south India, is not only a story of the power of human will but also of a smart, cost-efficient and self-sustained business model.
In Infinite Vision, authors Pavithra K. Mehta and Suchitra Shenoy narrate the inspiring story of Dr V. and Aravind. Mehta is a writer and film-maker, who has made a documentary with the same name as the book, and Shenoy works with the Hyderabad-based Youth 4 Jobs Foundation, in the fields of education and healthcare.
Clear strategy: Aravind’s tiered pricing system helps it reach out to those who cannot afford treatment.
In the chapter titled The Power of Creative Constraints, the authors show how the pricing model of Aravind works—a tiered system that starts with paying nothing for a surgery, and goes up to paying the market price, a choice left to the patient. Edited excerpt:
In the field of international development, money can be a touchy subject. To carry out their core work, many non-profit organizations rely on external funding from individual donations or grants from foundations. An unspoken assumption that business and charity do not mix often gives rise to a tension between purse strings and heartstrings.
In this context, Aravind manages to hold two seemingly contradictory principles with ease: self-sustainability and universal access to its services. Dr V seeded these “constraints” in the organization without a preset plan. But the founding team, over time, evolved effective systems for working within them. “In our experience, self-sustainability is a dynamic process, not a static destination,” says Thulsi (Thulsi Ravilla is Dr. V’s nephew by marriage, and the executive director of the organization’s training and consulting division). “It emerges from a complex interaction of organizational, technical and human factors.” He maintains that Aravind’s own financial health and independence are by-products of careful attention to pricing structures, free and paying patient volumes, effective resource utilization, standardization, and an extremely cost-conscious leadership. In other words, at Aravind, self-reliance is more of an ethos than an end goal.
“Zero can be a legitimate price point,” declares Thulsi. This is his succinct response to the to-charge-or-not-to-charge dilemma. Aravind’s pricing strategy goes beyond the traditional notions of free care. It positions free service not as a charitable handout but as one of many options in a self-selecting fee system. Its price range—from zero to market rates—is built around a culture that respects every patient’s right to selection.
Infinite Vision—How Aravind Became the World’s Greatest Business Case for Compassion: By Pavithra K. Mehta and Suchitra Shenoy, Collins Business, 322 pages,Rs499.
“Choice is fundamentally important,” says Dr Aravind Srinivasan, the hospital’s administrator. “We all exercise it when we go to a supermarket and choose what we want from an array of options. Our choices are based on subjective combinations of aspiration and affordability. We believe in empowering our patients with that kind of choice.”
The organization also believes that a pricing model offering free service as one option within a broader range can serve more patients in need than a system that does only charity. Aravind’s consulting work with an eye hospital named Sadguru Netra Chikitsalaya, in the town of Chitrakoot in rural Madhya Pradesh, is a case in point. Until 2002, the Chitrakoot hospital relied heavily on donor funding and focused exclusively on the very poor. The hospital’s trustees believed that charging patients would corrupt the institute’s charitable focus. Most of its patients paid nothing, and the hospital ran at a loss. But when Dr B.K. Jain, the hospital’s director, visited Aravind, he experienced the power of a different approach.
With Aravind’s assistance, Jain persuaded the Chitrakoot trustees to adopt a tiered pricing system and broaden its patient base to include wealthier patients. They sought Aravind’s expertise to put together a detailed plan of action. Along with implementing the new fee structure, they developed the skills to do cataract surgery with intraocular lens implants and also began running free eye camps in the community. The ripple effect was dramatic. Five years later, for the first time in its existence, the Chitrakoot hospital wasn’t running at a loss. And it was actually making a surplus.
To Aravind’s leadership, financial automony is important not in and of itself, but precisely because it allows for this greater command over the many dimensions of quality.
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