Provision of Quality Health Care Through Marketing

S w W11212 ARAVIND EYE CARE SYSTEM: PROVIDING TOTAL EYE CARE TO THE RURAL POPULATION Sanal Kumar Velayudhan, Meenakshi Sundaram R. and Thulasiraj R. D. wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 2011, Richard Ivey School of Business Foundation Version: 2011-09-29 In 2010, Aravind Eye Care System was the world’s largest provider of eye care services. Each day, it handled an average of 6,000 outpatients, performed between 850 and 1,000 surgeries and conducted between four and five outreach camps that examined 1,500 patients and transported 300 patients for surgery. The growth of Aravind Eye Care System was phenomenal but the mission set by its founder — of eliminating needless blindness — was an enormous task. This task was now being expanded to provide total eye care, in response to the available evidence on the widespread prevalence in India’s rural areas of moderate visual impairment and other eye-related problems. The outreach eye camps reached only seven per cent of the people in remote villages who had eye problems. As a result, the top management at the Aravind eye hospital faced the need to reach out to and cure a much larger percentage of the affected people in the rural areas. FORMATION AND GROWTH Dr. Govindappa Venkataswamy started Aravind Eye Care System (Aravind), in Madurai city in the south Indian state of Tamil Nadu, as an eye clinic and an 11-bed hospital in 1976, with the idea of creating a sustainable eye care system. A year later, 23 more beds were added in another building referred to internally as the Annexe. At the same time, to address the firm’s mission to serve poor blind people, a lowcost facility with 100 beds was added exclusively for those who required free treatment, marking the beginning of the firm’s contribution to restoring eyesight to the millions of people with poor vision. Aravind Eye Care System included five hospitals, which, each year, collectively performed more than 275,000 surgeries and laser procedures. In addition to the hospitals in Tamil Nadu, Aravind Eye Care System helped the eye hospitals in Gujarat, Kolkata and Uttar Pradesh to develop management capabilities and then handed these hospitals over to the promoters (NGOs, societies, trusts and corporations). Aravind grew by increasing both its area of operation and the range of eye care services it offered. The eye care system included an eye bank, an ophthalmic equipment and supplies manufacturing plant; a medical research foundation; community outreach programs; community-based primary- and secondary-care eye This document is authorized for use only by Oluleke Akanji in MMHA-6800-3,Marketing Mgmt & Bus Comm.2019 Winter Qtr 11/25-02/16-PT27 at Laureate Education – Walden University, 2019. Page 2 9B11A028 clinics; and education, training and consultancy services. The single Aravind eye hospital had evolved into the Aravind Eye Care System that treated a few hundred thousand patients every year. From April 2009 to March 2010, more than 2.5 million persons had received outpatient care and more than 300,000 had undergone eye surgeries at the five Aravind eye hospitals in Madurai, Theni, Tirunelveli, Coimbatore and Puducherry. ARAVIND’S APPROACH Aravind’s approach was to provide quality eye care at prices that everyone could afford. A core principle of the Aravind Eye Care System was to provide services to the rich and poor alike and to continue to be financially self-supporting. It provided free eye care to two-thirds of its patients by using the revenue generated from the one-third of the patients who paid for the services. Aravind culture was such that the service personnel were disciplined, accountable and responsive to patients. Over the years, the respect and care shown to the patients irrespective of their ability to pay had helped to build Aravind’s image and its community trust. The Aravind approach sought to restore eyesight to the millions of people with poor vision, eliminate needless blindness and correct moderate visual impairment by providing high-quality, high-volume and compassionate eye care to all. SERVICES OFFERED The Aravind approach required generating volumes both to sustain and to grow the business. The growth was not only in numbers but also through expansion of the service mix, which had initially focused on cataract surgery but had widened to include multi-specialty eye care. Over time, Aravind had added to its service mix such specialities as treatment of retinal disorders, cornea disorders, glaucoma, pediatric ophthalmology, neuro-opthalmology, uvea disorders and low vision. The service was not limited to curable blindness. In the case of incurable blindness, Aravind provided rehabilitation services. In addition to the services delivered by the hospitals, Aravind offered an extensive community outreach program, which included the comprehensive eye-screening camp. Each month, four to five eye-screening camps were organized in each district (administrative subdivision in a state). Different types of camps were available for different patient groups and different types of eye problems. For example, the pediatric eye camp addressed congenital eye problems and eye problems of children, whereas eye camps for school children tended to focus on detecting and treating refractive errors and squint eye. Workplace screening camps were held mostly to treat refractive errors for the benefit of employees of any kind of industry and those who worked in corporate offices.

Diabetic retinopathy camps were for the diabetic community to diagnose and prevent the loss of vision due to diabetic retinopathy. Comprehensive eye screening camps examined people for cataracts, glaucoma, retina problems and other related ailments. Surgeries were not done at the eye campsites; instead, patients requiring surgery were taken to the hospital. PRICING EYE CARE SERVICES The patients who came to Aravind’s “paying section” for eye care were charged at competitive rates. The charges were not more — and were often lower — than the costs for similar services available at other This document is authorized for use only by Oluleke Akanji in MMHA-6800-3,Marketing Mgmt & Bus Comm.2019 Winter Qtr 11/25-02/16-PT27 at Laureate Education – Walden University, 2019. Provision of Quality Health Care Through Marketing

Page 3 9B11A028 comparable hospitals in the same location. As of 2010, the consultation fee for a patient was INR501 and was valid for three months. The starting rate for cataract surgery was between INR4,100 and 6,000. Phaco surgery (surgery for removing cataract through a small opening and therefore not involving stitches) was priced between INR6,500 and 40,000, depending on the type of lens implanted and the scale of comfort. Poor patients who came to the “free section” were not charged any consultation fee and were not charged for many of the surgical procedures that did not involve expensive supplies. For cataract surgery, for example, patients were required to pay INR750, essentially to cover the costs of the lens, the consumables and a one-month’s supply of post-operative medications, which was given to patients at the time of discharge. For those who could not afford even this amount, all charges were waived by the doctor in charge at the out patients’ department. Patients who were advised they needed glasses had the option to buy from the spectacle shop located in the hospital. The prices of glasses and frames were usually less than the cost in an optical shop. The grinding of the glasses and their fitting were done in-house while the patients waited, thus saving the patients another trip to the hospital. The same arrangement applied to patients who were prescribed glasses in eye camps — they purchased the glasses, which were dispensed on the spot. Aravind, in recognition that predominantly the very poor attended the eye camps, provided all the services for free, including transportation to the base hospital, surgery, food, post-operative medications, transportation back home and follow-up a month later at the camp site. PROCESSES THAT REFLECT ARAVIND’S APPROACH The Aravind approach was supported by its efficient service operations. Its productivity levels were high because of volumes, technology and people. High-quality service in large volumes resulted in a low-cost, sustainable operation. The large volumes helped to recover the costs of equipment faster, compared with the longer payback times experienced by many small, private practitioners. This approach also helped Aravind to buy the most current technology and high-quality equipment. Provision of Quality Health Care Through Marketing

Aravind’s motivated and loyal paramedics were recruited on the basis of their ability and attitude and, once they were successfully recruited, they were provided with very good training. The paramedics performed many of the routine clinical tasks, which increased the productivity of the doctors. Managing the process was very important to managing the costs of offering free service to two-thirds of the patients. Process innovations helped provide quality eye care at a very economical price. Surgeon productivity was six times greater than that of surgeons elsewhere. For example, at Aravind, an ophthalmologist performed between six and eight intraocular lens (IOL) surgeries per hour, whereas elsewhere only one or two surgeries were performed in the same amount of time. Aravind had perfected several surgical techniques, which were refinements of procedures, rather than inventions. For example, instead of the usual surgery performed using either sutures or expensive equipment and instrumentation, Aravind had developed and perfected its own version of manual sutureless cataract surgery, which speeded up the surgical procedure. The productivity of the doctors was also increased as each surgeon worked on two operation tables alternately. A team of paramedics and junior doctors were tasked with washing the eye, injecting medicines and so on. The surgeons did their part and moved on to the next table. 1 US$1 = INR 45.60 on average between June 7 and October 31, 2010. This document is authorized for use only by Oluleke Akanji in MMHA-6800-3,Marketing Mgmt & Bus Comm.2019 Winter Qtr 11/25-02/16-PT27 at Laureate Education – Walden University, 2019. Page 4 9B11A028 The effective utilization of doctors was not limited to the surgery. Trained paramedical staff performed preliminary tests, refraction assessments, scans and other routine tasks, rather than having the doctors perform them. The patients were examined by resident doctors who recorded the diagnosis and made recommendations, and a medical officer then examined the patient and reviewed the diagnosis and recommendations. Tests that could be done by paramedical staff were done by them, and trained counselors helped the patients to make informed decisions and responded to their questions relating to costs and treatments. The doctors were therefore not required to spend time on routine tests or in providing information to patients, which could be done equally well by others, allowing the doctors to devote their time to medical advising. Aravind Eye Care System had 150 counselors on staff and six nurses for every doctor. To guide outpatients, a patient information brochure was available, as was an outpatient coordinator who helped patients to negotiate through the hospital procedure smoothly and reduced their anxiety and their need to seek information from the hospital staff. Thus, having an outpatient coordinator contributed to both service efficiency and patient satisfaction. The staff alternated between working with the paying segment and the free segment every month or every other month to ensure responsive service was provided to all categories of patients. Provision of Quality Health Care Through Marketing

Planning for expected patient loads ensured the availability of resources. Planning was done on a yearly basis, on a monthly basis and on a daily basis to schedule patients, deploy staff and equipment and to arrange for supplies and spares. Resource planning ensured that surgery was not postponed for want of supplies or surgeons. Technology was also used to enhance performance. For example, communication technology helped to make information available to the right personnel, which reduced the throughput time. The response time to complaints was also sought to be reduced through use of technologies. Patient registration through the use of computers took approximately one minute for each patient. The computers were also used to generate the case sheets (individual patient’s medical record). The equipment used for eye care was of high quality but the rooms were utilitarian. Aurolab was established to produce quality products at affordable cost and was an integral part of Aravind Eye Care System. Aurolab was established in 1992 to produce IOLs to make quality cataract surgery affordable in developing countries. Aurolab was able to reduce production costs and thus was able to price the IOLs to less than 10 per cent of the price of imported lenses. Similarly, Aurolab started manufacturing sutures at one-fourth the price of imported sutures. These products were available worldwide to everyone and were not just limited to Aravind, keeping in line with Aravind’s broader vision. ORGANIZATION AND STAFFING Aravind had seven base hospitals (five tertiary-level and two secondary-level base hospitals), five community eye clinics and 36 vision centres. Each community eye clinic had five staff members: one ophthalmologist, one refractionist (technician), one medical record staff, one senior paramedic and one counselor. Each vision centre employed one refractionist, one counselor and one person for optical services. In addition to these fixed centres, Aravind had a community outreach program comprising six camp managers, 26 camp organizers and eight administrative assistants. The staffing pattern was different for different types of camps (see Exhibit 1). Camp organizers had targets on the number of camps to be organized and number of beneficiaries (see Exhibit 2). This document is authorized for use only by Oluleke Akanji in MMHA-6800-3,Marketing Mgmt & Bus Comm.2019 Winter Qtr 11/25-02/16-PT27 at Laureate Education – Walden University, 2019. Page 5 9B11A028 The strength of Aravind hospitals was its personnel. Doctors were an important resource, and retaining them was difficult because, once doctors gained experience and reputation, they typically accepted offers to receive higher salaries. The compensation was designed to retain key staff and was generally based on market rates. Paramedics were critical to the functioning of the Aravind system. The primary focus in the recruitment and selection of paramedics was on value-fit. The paramedics were young women who had passed their pre-degree program, and most had a rural background. Aravind recruited from the villages young women between the ages of 17 and 19, who had a certain amount of curiosity and a capacity for hard work. The organization preferred to hire young women from large families, farmers’ families and those with the right attitude. The young women’s parents were also interviewed to understand the family’s commitment levels. The advantage was that those young women who were committed were more willing to stay on for a few years with the organization. Most of young recruits continued to work with Aravind even after they married because they were respected in the community. The recruitment and selection process identified candidates who empathized with the patients they served. They were trained for two years, receiving a stipend of INR1,000 in the first year and INR1,200 in the second year. They received subsidized food and were provided residential accommodation, which was compulsory. Provision of Quality Health Care Through Marketing

On confirmation, these women were paid INR4,900. On average, they worked for five years. The drop-out rates among the paramedics was 50 per cent in a four-year time period. Their training focused on skill development to meet job requirements. All training was done internally; therefore, the women did not receive a certificate that they could use for finding jobs elsewhere, which increased the retention of paramedics. EYE CARE SERVICE – THE BIG PICTURE In India, the availability of eye care service was limited, with only approximately one eye doctor for every 100,000 people, even fewer eye doctors in rural areas. Some districts did not have an eye doctor at all. The National Programme for Control of Blindness (NPCB) was launched in 1976 as a Government of India scheme with the goal of reducing the prevalence of blindness from 1.4 per cent to 0.3 per cent. The NPCB implemented a plan for providing a grant-in-aid for conducting free cataract operations to motivate many nongovernmental organizations (NGOs) to assist in this endeavor. Monetary assistance was revised from time to time. All the camps, which were conducted by either the Indian government or NGOs, aimed to diagnose eye problems at the community level and to then refer those who needed secondary or tertiary care services. Surgeries could not be performed in the community clinics or camps, only in the base hospital. As a result, Aravind conducted eye diagnostic camps, and any cataract patients were transported to the base hospital on the camp day itself. According to a survey in 2001/02, the prevalence of blindness in India was estimated at 1.1 per cent. The target for the 10th five-year economic plan of Government of India was to reduce this prevalence to 0.8 per cent by 2007. A survey done in 2006/07 estimated the prevalence of blindness at 1 per cent.2 Another study suggested the prevalence of moderate visual impairment was 8.09 per cent. Most of the moderate visual impairment identified in the study was assessed to have been caused by refractive error (45.8 per cent), and by cataracts (at 39.9 per cent). Moderate visual impairment was more likely to be present in higher age groups, in females, in lower socioeconomic groups and in the rural population. Provision of Quality Health Care Through Marketing

The study suggested that by 2020, 139 million Indians would likely have moderate visual impairment.3 The number of blind people in 2 R. Jose, “Present Status of the National Programme for Control of Blindness in India,” Community Eye Health Journal, 21, (65), March 2008, pp. s103-s104. 3 R. Dandona et al., “Moderate Visual Impairment in India: The Andhra Pradesh Eye Disease Study,” British Journal of Opthalmology, 86, (4), 2002, pp. 373–377. This document is authorized for use only by Oluleke Akanji in MMHA-6800-3,Marketing Mgmt & Bus Comm.2019 Winter Qtr 11/25-02/16-PT27 at Laureate Education – Walden University, 2019. Page 6 9B11A028 India was estimated at 18.7 million in 2000 and was projected to reach 24.1 million in 2010 and 31.6 million in 2020.4 Cataract surgeries had steadily increased in India, from 3.9 million in 2002/03 to 5.9 million in 2008/09. The cataract surgical rate per million people in Tamil Nadu was 7,633, compared with the national average of 4,425. Gujarat had the largest number of eye camps, and even small hospitals hosted eye camps. The cataract surgical rate per million people in Gujarat was 10,015.5 In Tamil Nadu, Aravind was one of the … Provision of Quality Health Care Through Marketing