His fearless goal was to eradicate needless blindness amongst the world’s poor. Just the thought of it, makes me realise how much bigger I need to dream. Dr Venkataswamy, (known affectionately as Dr V to many) set off to achieve it in the winter of his life, after retiring from his job as an ophthalmic surgeon in India. Such a lofty goal would require money, doctors, medical equipment and supplies, of which he had very little. With the support of his family, he remortgaged his house and set up a frugal business model to help him achieve his goal.
Aravind Eye Care, was set up as a charitable trust, but 90% of its budget is self generated, with the other 10% coming from organisations like the commonwealth society for the blind [UK]. It focuses on cataract treatment which is the predominant cause of blindness in India. Money from patients that can afford cataract surgery, subsidize the poor, who cannot. I know what you are thinking; the poor that are blind outnumber the patients who can pay, by millions, so how does the hospital keep afloat with its costs? The answer is simple, efficiency.
Inspired by the McDonalds production process, which standardises processes and procedures to ensure the same product is delivered, at low cost, regardless of location. Doctors, focus entirely on diagnosis and surgery, whilst all routine and diagnostic procedures are performed by highly trained support staff. Patient flow management resembles a production line. Whilst a surgeon is performing surgery on a patient, another patient is prepared for surgery on a parallel table. This makes it easy to move onto the next patient after the first procedure is complete, saving 45 minutes per procedure, compared to the normal process. Its stringent hygiene standards mean that despite this, infection rates are lower than the same procedure performed in the UK.
Aravind also set up Aurolab, to manufacture its own Intra Ocular lenses (IOL), which deliver better results for cataract patients. The lenses were traditionally imported from the USA and Western Europe for $150 apiece, which allowed only richer patients to consume them. Aurolab developed them for poorer consumers at a price of $4- $6, a colossal reduction. The product was also comparable in quality and has met EU consumer safety standards.
With just 20 beds in 1976, Aravind now has 3,500 beds in 5 hospitals across South India. Over the last 30 years, Aravind has screened 22.37 million patients and performed 2.8 million surgeries. The sheer numbers of surgeries performed have increased efficiency and expertise of the surgeons, who are amongst the best in their field. These huge numbers have been reached whilst driving down costs. Cataract surgery at Aravind costs 1/100th of the cost of the UK and USA. Even if you acknowledge the wage differentials between the countries, these figures are astounding. Aravind excels amongst other ophthalmic surgeons in India also. The average ophthalmic surgeon in India performs 400 cataract operations a year; a typical surgeon at Aravind performs 2,000. 5 years since his death in 2006, Dr V’s eye care centre is amongst the best in the world and still growing.
Although this business model was developed to serve a market of ‘non consumers’ at the ‘base of the economic pyramid’, it has astounded ophthalmologists globally and has leapfrogged into western markets. Dr Bradford Shingleton, an ophthalmic surgeon based in Boston, was a resident at Aravind in 1981. He uses many of the same techniques as Aravind in managing patient flow and increasing efficiency at his practice. He is now a renowned leader in cataract surgery and lecturer and clinical researcher in the field of ophthalmology, at Harvard. When asked about his experience at Aravind in a recent interview, he said, “I am amazed by Aravind’s ability to give high quality care, to a large number of patients, at a low cost. My experience there has definitely an impact on the development of the eye care system I use for my patients.” This is truly, a visionary example of a frugal business model, in practice.
Here are other great examples – http://www.kopernik.info/