The Aravind Eye Hospital, Madurai, India- In service for sight

Submitted by: Group 6 Aditi Sharma Charu Sharma Aditi Tamby Anuj Pasricha Arnav Shankar

Introduction: Dr. Govindappa Venkataswamy(Dr. V.) founded the hospital in 1976 with 20 beds. It later developed into one of the biggest hospitals of its kind in the world in 1992, with 1224 beds. The hospital was named after an Indian philosopher and Swami Aurobindo from whom Dr. V learnt that anyone, through dedication in its professional lives, could serve humanity and God. Dr. Vs dream was to cure 20 million people from their blindness which was far from the 1 million cataract operation a year that the hospital was conducting. The Services of Aravind Eye Hospital can be classified as: Paid Free Camps By 1992, the Aravind group of hospitals had screened 3.65 million patients and performed 335,000 cataract operations. Nearly 70% of them were free of cost. Almost 90% of the annual budget was self generated and the rest 10% came from sources such as Royal commonwealth society for the blind (U.K.) and the SEVA Foundation (USA).

Marketing function
Aravind eye hospital does not advertise itself. It has sustained and achieved growth mainly by word-of-mouth. Promotion was done for free eye camps under sponsors name, with Aravind hospital only playing supporting role through public announcements in market places, newspaper advertisements, information pamphlets and other publicity material were prepared and distributed one to three weeks in advance of the camp. Price was kept at a minimum so that a larger numbers of people could be served.

Human Resource Function:

In 1992, there were around 240 people on Hospitals staff, including 30 doctors, 120 nurses, 60 administrative personnel and 30 housekeeping and maintenance staff. Among them thirteen Ophthalmologists were related to Dr. V. To ensure the same quality of services in both paid and non-paid hospitals, Doctors and Nurses were posted in rotation. Special care for the training of ophthalmic personnel and nurses were being provided at Aravind Hospitals. It had research and training collaborations with St. Vincets Hospital in New York and University of IllinoisEye and Ear Infirmary in Chicago. The salary structure was quite reasonable at Aravind. Ophthalmologists were earning Rs.80,000 annually as compared to Rs. 60,000 in government hospitals and Rs. 300,000 in private ones. Nurses received a salary of Rs. 12,000 since they were recruited and trained from scratch and this training would serve them for life. The expectations from the Doctors at Aravind were quite high, they were expected to devote 60 Hours a week. One of the biggest concerns was the occupancy rate in free hospitals. Usually on Monday, Tuesday and Wednesdays, maximum patients used to visit hospital but on Thursdays and Fridays, the patients visiting rate was very low. This sometimes de motivated the staff.

Service Sequence:

Preliminary Examination: Opthalmic assistants noted preliminary diagnosis on patients medical record Testing of Tension : Ocular tension is often referred to as intraocular pressure. It is the pressure of the gel-like fluids, such as the aqueous humor and the vitreous humor, against the tunics of the eye. Tear Duct Function: The purpose of the tear duct is to act as a kind of tiny drain for the eye. The tear ducts excrete excess fluid from the eye, sending the extra lubrication into the nasal cavity. Refraction Test: It measures a person's prescription for eyeglasses or contact lenses.

Features of Service Operations: Building volume through community outreach- Hence realizing economies of scale. Reaching out to the patients through camps, bringing them to hospital and making excessive use of their plant. Backward Integration: They started their own production of intraocular lenses in the aurolab which helped them in reducing the cost of a lens to 200 against Rs.800

Finance:
1. Cost Cutting free Intensive cost cutting was done to ensure low cost of the free hospitals. 2. Support from NGOs 90:10 self funded: outside Almost 90% of the annual budget is self generated and around 10% of the annual budget comes from sources around the world, such as the Royal Common Wealth Society for the blind (U.K.) and the SEVA Foundation (USA). 3. Family Members Most of the top management at Aravind Hospitals are family members, therefore are relatively cheaper. 4. Workhorse staff The doctors at Aravind Hospitals are made to work for 60 hours a week compared to 30 hours a week in government hospitals. 5. Densification To increase capacity, densification projects were initiated at the Madurai facility. Reorganisation is a short term approach to increase capacity without incurring heavy costs.

Recommendations:
1. The IOL factory seems to be a cash positive venture, the tables below provide projections of cash flow for the coming 5 years taking the following assumptions: a) Excess produce is sold in the outside market for 600 b) The utilisation grows at 10% per year c) The plant charges the hospitals 400 for each lens used in a paid surgery d) The plant is able to operate at 100% capacity after 2 years of operation after successful implementation of six sigma e) The cost of production reduces to 100 from 200 after 2 years of production

Surgeries Paying Free Total

Number 16447 23110 39557

Ratio 0.41577976 0.58422024

Year 0 1 2 3 4 5

Production

Utilisation

Cash Flow -8000000 3726099 2898708 19988579 18987437 17886181

30000 30000 60000 60000 60000

19078 20986 23084 25393 27932

Comments Sunk Cost Excess Cash Generated Excess Cash Generated Excess Cash Generated Excess Cash Generated Excess Cash Generated

The excess cash flow from the factory can be used to fund future strategies for the hospital chain. 2. To utilise the excess capacity at Tirunelveli and Theni 4 buses can be bought, assuming each bus has a capacity of 50 people and we have an excess capacity of 179 beds in total at both the locations. The buses by way of branding can also be used to promote the chain. 3. A Central Management Team should be set up that manages all the hospitals and helps to bring in economies of scale. 4. Leveraging the brand Aravind Hospitals have built over the years, a franchisee model can be adopted to cater to the world and the Central Management Team should instil the following checks to ensure that the brand is not spoilt: a) Engaging with only reputed NGOs b) Ensuring proper training of the staff at the franchises c) Imposing conditions, breach of which may lead to cancellation of the franchisee contract and forfeiting the security deposit collected at the initiation of the contract d) An upper limit to the number of franchises should be set to avoid mismanagement and ensuring that the right profile of NGO is involved. 5. Get donations from abroad by leveraging the brand built. Collaboration with more national and international NGOs and sponsors to increase awareness especially against fear of surgery and family opposition.

Promotion through social media for attracting sponsors for franchisee in other parts of the country. This would also attract doctors to take up the cause and they would be willing to work for Aravind hospital. Collaboration with other small hospitals which do not have enough capital and equipments to market the vision. Together they can organize more camps and spread the awareness. Such small hospitals can also be encouraged to accept franchisee with terms and conditions of Aravind hospital so as to maintain standardization and they could also be provided monetary and technical assistance. Promotion among young medical students through guest lectures by visiting various medical colleges and sending them invitations to attend eye camps. They can also be invited for internships. The aim is to encourage them to work for a social cause. As Dr. V said we all can serve humanity in our normal professional lives by being more generous and less selfish in what we do.