ARAVIND EYE HOSPITAL

1. Introduction

Go where the need is greatest, provide the necessary treatments for free, and reap the
benefits. Sound strange or unconventional to you? Some would consider this business model
unrealistic or boarder-line impossible, but Aravind Eye Care Systems is living proof that an
organization run on selflessness and spiritual aspiration can be immensely successful. Dr. G.
Venkataswamy founded Aravind in 1976 as an 11-bed clinic in Madurai, India with high
ambitions and impeccable foresight. A sustainable, thriving social enterprise, Aravind is
dedicated to curing individuals who are “needlessly blind” and providing affordable eye care to
all. Though blindness is a seemingly small issue in comparison to the world’s major crises of
food, clean water, sanitation, and education, Dr. V recognized eye sight as a critical problem
because of its impact on overall loss of global productivity ($47 billion/year). He aimed to help
as many afflicted individuals as possible, and this spirit of service and endless dedication to
social impact translated into an unprecedented business structure and culture.

Aravind Eye Hospital, in India, provides 75% of its surgeries for free, but still manages to
run at profit. How is this possible? It is a reality because Aravind is one of the most innovative
social entrepreneurship companies operating today. Aravind is innovative in its mission of
eliminating blindness by providing high quality eye care for all. The hospital also innovates in
staffing, training, financing and distribution. Many outpatients, as many as 65%, receive free
consultancy. This is on top of the free surgeries the hospitals provide. In 2015-2016, Aravind
treated 4.7 million outpatients and performed over 408,220 surgeries.

2. A Rich History

The hospital started in 1976, with 11 beds in Madurai, India. Today, Aravind provides
3500 beds at its facilities in 12 Indian cities. Each hospital also houses specialty clinics.
Specialty clinics treat cataracts, low vision, cornea injuries, glaucoma and other common eye
ailments. The specialty clinics are able to supplement and expand the work of the hospitals. This
furthers Aravind’s mission and purpose, helping make it a standout in the ranks of social
entrepreneurship companies.

Aravind, like many social entrepreneurship companies, believes in the power of outreach.
The hospital holds outreach programs to provide eye care service in its communities. These are
usually eye care camps, where patients are screened and those who need surgery are scheduled
for it. The camps also provide education on eye care for the participants. The camps include
diagnostic eye camps, workplace eye screening camps, and camps for school age and younger
children. There are also camps to screen for eye conditions brought on by diabetes.
3. Motivated by Social Impact

Upon reviewing and analyzing this case in terms of the SEI Framework, motivation
clearly presents itself as one of the most important and influential elements in Aravind’s success
as a social enterprise. Dr. V’s attitude and spiritual inspiration formed a rare cultural ethos that is
not easily replicated outside of the organization. Because of the close-knit internal structure of
Aravind, it is obvious that Dr. V’s values would be instilled in family members and other
employees. Dr. V sums up his belief in something greater than himself and its effect on the
success of his organization: “When you begin doing the work you are meant to do, unexpected
resources will find you.”

Religion and spirituality are the cornerstones for Dr. V’s dedication to social change and
selfless action. He was enamored with and inspired by Sri Aurobindo and the Mother, two Indian
philosophers, and begun his days with readings of their work. Dr. V applied his spirituality to his
enterprise in a way that was not overbearing, but still managed to deeply penetrate the core of
Aravind’s work culture with its positive attitude. His vision for Aravind came from the principle
of mindfulness: stepping back from conditioned reactions, biases, and the unwholesome internal
movements of anger, jealousy, and impatience.

Because many Americans do not possess the same values and religious fervor as Indian
people do, it would be difficult to identically replicate the Aravind model in the United States.
Though there are individuals who are willing to work for a lower wage with the knowledge that
they are contributing to a worldly cause, several problems arise that would inhibit progress and
sustainability. First, it would be challenging to find enough dedicated employees; there are not
nearly enough Americans willing to sacrifice the hefty salaries they could earn elsewhere to
work at a lower-paying social enterprise. In addition, if Aravind-US did find individuals worthy
of staffing, managers would have difficulty implementing the unique culture that is so crucial to
Aravind-India’s success. Americans do not have the religious motivation and mindset of Dr. V
and the Indian people, and this will most definitely be a disadvantage. Though Aravind’s
business model of affordable health care might be successful in the states, the culture of the
organization could not be replicated.

4. Business Model

Aravind’s business model is the other key element to their status as a social enterprise.
Reflecting a strong desire for global impact, it is what sets Aravind apart from other eye-care
facilities throughout India and the world. Dr. V structured his company with an emphasis on
quality and quantity. Though the two are often perceived as mutually exclusive, he proved that it
is possible and beneficial to strive for both. Low-cost and high-volume, Aravind operates in a
“hospital-as-a-factory” format. Dr. V is often quoted comparing his organization’s method of
service to that of McDonald’s and constantly worked to increase Aravind’s number of patients
and turnover rate. He claimed that this operating system was beneficial for several reasons:
streamlined work-flow increased efficiency, which meant less waiting time for patients; task
repetition created competence, which meant better clinical outcomes and less complications;
employment of skilled paraprofessionals allowed doctors time to conduct more surgeries, which
reduced prices and increased the number of surgeries performed.

In addition to their efficient, factory-style operational methods, Aravind also boasts

success in the financial aspect of their business model. Innovative, generous, and fair, Dr. V
structured patient fees into four categories: free, minimal payment, regular, and premium.
Individuals can choose between these and will receive the same quality care no matter which
option they pick. This is an unconventional model, but it has proven successful in increasing the
market of potential clients and therefore the organization’s total income. Aravind makes eye-
surgery accessible to the masses– the people who desperately need attention but lack the money
and transportation to obtain standard hospital care. Stellar eye-care provided at no cost aligns
perfectly with Dr. V’s values and motivation for social impact. Also consistent with Aravind’s
strict values and uncompromising selfless nature is their refusal to accept donations. All
employee wages, facilities, equipment, etc. are funded entirely from within. This financial
business model qualifies Aravind as a social enterprise, not a non-profit organization or
philanthropic charity.

Aravind is able to earn patient trust and satisfaction through their efficiency, pricing
options, and welcoming environment; because of this loyalty, previous patients often become
Aravind’s best advertisers. These individuals are usually found through the Aravind community-
outreach program. To ensure maximum impact, Aravind conducts outreach operations that
dispatch teams of doctors and nurses to rural communities to screen patients. These are people
who are too poor to afford to pay for the trip into the city to seek treatment at one of Aravind’s
hospitals, or are unaware of the opportunities that exist for them there. The camps reduce the
level of fear and uncertainty associated with hospitals, cities, and eye-surgery. These eye-camps
are reaching individuals who may not have sought out eye-care, and this broadening the
potential market for Aravind.

5. Innovation

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 business model that Aravind has set in place places a high value on innovation,
especially in the areas of fee structure and factory-like operations. Dr. V’s organization
promotes innovative exploration to advance the eye-care field, exemplified in the creation of the
Dr. G. Venkataswamy Eye Research Institute. Aravind is also responsible for making IOLs
(intraocular lenses) available to the masses– lenses that were initially believed to be too
expensive to incorporate in Indian eye-surgery. Through innovative and forward thinking, Dr. V
sought out a solution to this problem. Importing lenses was far too expensive, so he decided that
Aravind would manufacture their own. Thus Aurolab was created– a manufacturer of high-
quality ophthalmic products at affordable prices. By introducing high quality IOLs for the low
end of the market, Aurolab increased the market size and mainstreamed IOL surgery. Aurolab
later entered the field of ophthalmic pharmaceuticals and become India’s first nonprofit drug
company.

In addition to eye-surgery related innovations, Aravind founded an international training

and consulting institute called LAICO (Lions Aravind Institute of Community Ophthalmology).

LAICO has consulted for 60 hospitals in 29 countries and 213 hospitals in India.7
Aravind also has a school to train paraprofessionals, some of whom later become part of the
Aravind team, as well as postgraduate programs. Auro iTech was set in place in recent years to
provide information technology services and help keep Aravind paced with the global,
technological world.

a) 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.

b) 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.”

c) Practical Advice

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.”

6. Sustainability

Aravind’s continued innovation and improvement protect the organization from the
dangers of stagnation, ensuring financial sustainability. The genius of their fee structure and
constant expansion guarantees continued financial growth; thus far Aravind has quadrupled its
growth every decade.8

Dr. V was insistent on development– increasing the number of hospitals, community out-
reach programs, employees, and patients– and through this operational method Aravind will
remain financially stable for years to come.

Aravind has proved to be operationally sustainable as well as financially, as demonstrated

by their successful navigation through generational leadership transitions and the continued
relevance of their service.

7. Driving Success

Aravind Eye hospital works tirelessly to drive its mission and purpose. The hospitals
provide value, improving the lives of people who could not otherwise afford eye care. Patients
are able to perform better at their jobs and in their day to day lives. Patients are asked to pay
according to what they can give, with many receiving free services. All social entrepreneurship
companies accomplish great things, but Aravind goes one step beyond with its life changing
services and resources.

8. Measure and Evaluation of Impact

Transparency is very important at Aravind; in fact, doctors and department heads in

particular are motivated by the numbers and actively seek out statistics detailing the success of
their efforts. Aravind now sees more than 2.5 million patients per year and performs more than
300,000 surgeries.9 It is important to note that the emphasis is not placed
onhe financial statistics, only the number of people cured and lives positively impacted.
If one does analyze Aravind’s financial statistics, they would see that the company
continues to increase their yearly profit and patient inflow. The fee structure that Aravind has in
place is working quite well: 47% of patients choose to pay regular or premium prices, while 26%
opt for minimal and 27% for free treatment for cataract surgery.10 These numbers reflect that the
majority of patients are willing to pay for surgery, balancing out the cost of the free services
Aravind provides.

9. Replication and Scale

In its 36 years of existence, Aravind has grown to include several eye hospitals,
community outreach clinics, local eye-care centers, an IOL and ophthalmic pharmaceutical
manufacturing plant, educational and training programs, and a research foundation. It is clear
that the Aravind model is replicable and scalable because Dr. V successfully formed five
additional hospitals, modeled after his original start-up in Madurai. The LAICO consulting group
has taught Aravind’s techniques to other businesses around the globe as well. Though Aravind’s
business model has been implemented in other locations– including a U.S. version in California–
I don’t believe that their approach to healthcare would be as effective in America. Our selfish
and greedy tendencies would result in the majority opting for free healthcare even if they could
afford to pay the regular or premium price. However, a U.S.-Aravind would drastically increase
the number of people served and provide accessible healthcare to those who currently have
unreasonably high copays.

10. Conclusion and Recommendations

In numerous business case studies done on this social enterprise, Aravind’s business
model is typically sighted and praised as the key to their success. Though I do agree that
Aravind’s innovative business model played a major role in shaping the operations and
financials of the organization, I feel that the model itself is driven by motivation for social
change. This element is essential to creating a unique and non-replicable culture but is rarely
referenced or given sufficient credit. It is the combination of Aravind’s business model and
motivation for social impact that make this organization a high-performance social enterprise.