The bottom of the pyramid is coming sharply into focus today, and the corporate world is beginning to sit up and take notice. According to C K Prahalad, ‘If we can start thinking commercially about the poor, and respect them as customers rather than as wards of the state, we have a fundamentally different way of thinking about product development, use of technology, scaling and price performance.’ Confirming this theory, a new business model is emerging in health care, exemplified by the Aravind Eye Care System, which reaches out to the masses and aims at being inclusive and affordable. A sense of compassion and commitment, and a strong leadership are key elements of the model. In terms of productivity, quality, scalability and transferability, the model is of interest to management professionals and academics worldwide. Professors Janat Shah and L S Murty of Indian Institute of Management, Bangalore, met with Dr. G Venkataswamy, Founder and Chairman of the Aravind Eye Hospitals, and R.D. Thulasiraj, Executive Director of Aravind, to try and understand the essentials of the Aravind Model. Janat Shah is Professor and Chairperson, Production and Operations Management, IIM Bangalore. L S Murty is Professor, Production and Operations Management, IIM Bangalore. Here are some excerpts from the interview.

Key Perspectives

Productivity; quality and culture; human resources; free versus paid patients; backward integration; innovation and sharing.

Productivity

JS: We would like to understand the important elements of the Aravind model. To start with, how have you achieved such high productivity?

GV: Normally, you ask a doctor and he will say I can do four cataracts a day. If you offer more money, he can do forty. But when there is a commitment to giving sight, a different push comes. From 6:00 a.m. to 6:00 p.m. we operate. And as in the case of any organisation that produces a lot more, whether it is computers or radios, the price comes down.

Modern technology has helped us increase the volume and at the same time improve the quality too.

LSM: You say your doctors are working long hours because they have a sense of purpose. But that in itself cannot determine productivity. Your numbers of 400 surgeries per doctor per month are mind boggling compared to the averages in other hospitals. What are the kinds of interventions or actions taken to improve the productivity?

RDT: If you take the high tech service segment, productivity is fundamentally related to demand. There has to be demand for you to produce more. We were convinced that the fundamental thing was to attract patients and so we pioneered the screening eye camp approach. Traditionally eye camps used to be at places where surgery was done in a makeshift theatre. People had to travel long distances to get there; many factors were sub-optimal, and therefore the over-all efficiency was not very good. But here we have streamlined the processes, the scheduling and so on. We studied the flow of patients, improved the internal systems, and planned it so that the waiting time or the unproductive time is reduced and the actual operating time is maximised. In order to ensure that the surgeons do not waste time between surgeries. We have done some resource planning. This planning ensures that the number of cases a surgeon gets depends on his efficiency, and that we never have to postpone a surgery because we have run out of supplies.

LSM: It is one thing to ensure that resources are available so that the doctor does not waste time, but how do you reduce the time spent by the doctor? While the Industry standard is 30 minutes, your doctors take only 10 minutes. How is that possible – still maintaining the quality, no complaints?

GV: At Aravind Eye Hospitals, each surgeon works on two operation tables alternately. We don’t need to do everything ourselves. There is a team of paramedics and junior doctors to wash the eye, put the suture, give the injection and so on. The surgeon does his part and moves on to the next table. This practice is followed the world over. In the Heart Centre in Houston, for instance, the chief cardio surgeon does only the critical aspects of the surgery, and in this way they do five or six heart surgeries a day or more.

Quality and Culture

JS: Talking of quality, how has Aravind improved quality, which figures show to be better than the world average, and maintained it in spite of such large numbers?

RDT: One of the factors in achieving high quality is through organisation design, appropriate staffing, training and good systems. You have to pay attention to all the aspects. We have a very close outcome monitoring system, especially for cataract surgery, where every case sheet on discharge is fed into the computer and then analysed. We have developed a scorecard for the doctors, and we openly discuss the issues in our monthly meetings and take a consensus on different procedures. This is a constant update process – measuring, reviewing and then changing. We put in a lot of effort to follow up on every camp patient, to get a very high coverage on our system. Around 90% of the patients come back for follow up. We discuss many things including the outcomes of cataract surgery, the number of people recovering normal vision, intermediate vision and so on. Until recently, we used to do this at each individual location, but now, with video conferencing available in the hospitals, we have started putting it all together. For this, we will need to drastically revise the format.

JS: And can you determine quality in that time frame?

RDT: By and large, yes. It is very rarely that you get late stage complications; usually anything beyond that will be patient induced injury or something that is outside the purview of that particular treatment. So if you find everything is fine at the end of six weeks, you can be fairly sure that there will be no surgery induced complications.

The most important element in our system is our culture, which I attribute to the leadership. I think we are still a learning organisation: we have an openness to change and we have been able to develop a kind of atmosphere where people can talk about quality without feeling under pressure. We always believe there is something more we can do. For example, we do a screening of school children. Then we found that in cases where we had prescribed glasses, they (children) were not wearing them.

So we made efforts to make sure they got their glasses and used them. Now our school screening cycle has become quite complex: we train the teachers in the first screening. Then we go back after three months to check if the children are wearing the glasses, and if they are not, we try to find out if there is something we can do differently to improve compliance. So that is our mindset to keep on improving processes.

LSM: What are the other important elements of the culture at Aravind?

RDT: One aspect is transparency in terms of charges, and in terms of the surgical procedures.

GV: Whether the patient is from the village or a big man from a metro, we tell them honestly what their problem is, what can or cannot be done to treat it, and what the fixed rates are. Over the years we have built an image that we respect them and we don’t treat them badly because they are poor. Now, even when there is a choice of three or four camps, people prefer the Aravind camp, whether it is sponsors or patients.

RDT: There is also a sense of compassion. Sometimes we end up spending more than the fixed charge on some patients in the camp, but we don’t charge them for it. It could also be looked at as investment on image building. You do spend money but overall it pays back.

Human Resources

JS: Basically you are bringing from the same pool that will go to a government hospital or any other hospital. So how do you instill that sense of compassion in your doctors and paramedics?

RDT: The difference is mainly in the paramedics, because we have constant interaction with them. This begins right at the time of recruitment. In our selection process, we recruit young girls from the villages who have a certain amount of curiosity and a capacity for hard work. We interview the parents also, and look for commitment, so that we can be sure they will stay on. Most of them continue with us even after they get married because they are respected in the community.

In our meetings too, the discussion is often patient-centred. Senior staff members also attend eye camps frequently, so they keep in touch.

GV: In the case of paramedics, the retention rate is quite high because we do all the training: they don’t have certificates from the government which will help them find jobs elsewhere. In rare cases, some of the doctors who leave us and take away a few nurses to start an institution. But retaining doctors is more of a problem, because once they get experience and make a reputation, a lot of doctors move to places where they get better money. Recently we have had discussions with youngsters in an effort to understand how to make the jobs attractive to them, how to retain them, how to improve their careers, the financial aspect, and so on.

RDT: Retaining doctors is a constant struggle, but we are slowly increasing our numbers – every year we add five or ten doctors. So we are focusing on how to keep them a little longer. One of the strategies is monetary incentives. We are paying market rates and we have now identified some time periods when salaries are hiked up substantially. So they stay a little bit longer – on an average, about four years.

JS: What is Aravind doing to advance the professional development of its doctors?

GV: We are developing some centres of excellence. In Coimbatore we are trying to develop a cancer department. Cancer of the eye needs special treatment, and we sent our doctor to New York for three months training. In the same way Tirunelveli is a Centre of Excellence for Glaucoma and has special equipment and well-trained doctors for the treatment of glaucoma. Among our staff, people may choose to specialise in some aspect. The centre in Madurai is especially good for paediatrics – it has a senior doctor who has trained a lot of people.

RDT: Such expertise depends on the doctors’ own initiatives as well as the availability of infrastructure. For example Aravind-Coimbatore has developed into a good centre for handling premature babies with eye problems (ROP) since the city of Coimbatore has excellent facilities for the care of premature babies.

Free versus Paid Patients

LSM: Coming to pay and free patients, we are talking about volumes required. cost reduction, quality improvement, commitment etc. All these are going well with free patients. So where is the need for you to look at paying patients at all?

RDT: How else can you make it work? What about finances?

LSM: Your pricing for the paying segment is at most that of the free market. But here you have a low volume, lower than that of the free segment.

GV: But it is still much more than that of a private practitioner. For every thousand surgeries we do in a year, about 300 come under the pay segment. That is ten times what an average private practitioner may do.

RDT: Our cost is much lower than a private practitioner’s. To put it simplistically, we are to a large extent helped by the inefficiency of the private sector. For example, take an instrument that costs several lakhs. We would do 100 procedures a day on it, while a private practitioner would use it something like 5 to 10 times in a week. So we can recover the cost of the equipment much more quickly, and we can afford to buy the best technology.

So our cost of service for the one third paying segment is much smaller for us than for the private practitioner. If the private practitioner gets his volume, he makes very good margins, but we are helped by the fact that a normal patient would compare our price with that of the private practitioner.

LSM: Unless you’re offering a better proposition, they wouldn’t be coming in. But what intrigues me is that, inspite of the class distinctions in the country, people who can afford to pay come to a system that is known for delivering service to the poor. How would you explain that?

RDT: That I think is purely based on the quality. I have spoken to some of our patients and one of the solid factors is the transparency of our charges and the reputation we have built for not being money minded. We don’t do things just for the money; we constantly review our clinical protocol and cut off things that are not strictly necessary, even if they have been bringing in money.

Our staff and patients are all aware of this, and so they trust us more than they trust private doctors, many of whom will scare their patients just so they can charge them more. So we even have patients coming from Calcutta for a cataract operation. And then also right from the beginning, we have been projecting ourselves as a community hospital, not as a charity hospital. Service has always been our aim.

Backward Integration

JS: We see that you have started manufacturing the intraocular lens. Manufacturing is a completely different field, in which you don’t really have any expertise. How did you take that decision?

RDT: One of the things we used to say was that the quality of care was the same for the free and the paying patients. But after the introduction of IOL surgery, which was proven to be superior and was affordable only by the paying patient because of the high cost – initially we had to import the lens – that equity was lost. Even then we used to do the surgery for free patients if they were willing to pay for the lens. The main cost of the lens was the import price, and it came down over a few years from Rs 1800 to Rs 1000, but even then it was beyond the reach of the poor patients.

We strongly felt that the IOL was even more relevant to a poor man than a rich man because his living environment is less predictable, and the thick ‘soda bottle’ glasses that are prescribed after traditional surgery really restrict your vision. So from the functional point of view the poor would benefit more by the new technique, and we had to make it affordable for them.

At that time, the only bargain we could get was to buy non-moving stock of inventory at a lower price from the US multinationals. We were really pushed so we decided to examine this option. We looked at the technology and visited many of the factories, and found that the high cost of production was because of trying to develop a niche market and it had to do with the shape or colour rather than the functionality of the lens. That is what really prompted us to get into manufacturing.

Going by Aravind’s earlier experience, we felt it was better to make it a separate entity as a non-profit manufacturing unit. Many people came forward to support that venture. We found a technology partner who provided the technology, the equipment, the training and the initial supply of raw materials. About 20% of the total cost was to be paid back as finished goods, which helped us both because he could sell the finished product at a higher price than what we owed him. This also ensured that quality was maintained. Setting it up as a separate trust with separate staff, and focusing on the outside market were some of the factors that made it a sustainable venture. I believe many other hospitals that went into similar manufacturing did not succeed because they were doing it as a part of the hospital’s activities.

GV: At one time, world experts, including those at WHO said IOL surgery couldn’t be done. In a developing country it was too costly, and it would be difficult for doctors to learn the new techniques and do such large volumes. The government was also against it and felt that Aravind was derailing the eye care programme by working at a tangent. It was difficult for us to argue with them. So we just quietly went ahead and did it. This was a similar kind of challenge.

Innovation and Sharing

LSM: Has Aravind developed any indigenous technologies by way of equipment, by way of treatment models to improve productivity?

RDT: We have perfected some surgical techniques. These are refinements of the procedures, rather than inventions. For instance, we have developed a manual sutureless cataract surgery instead of the usual suture done with instrumentation, with a certain kind of wound construction, you don’t have to put in any stitches, it will close on its own. With such refinements, some of the faster surgeons can do as many as 10 to 12 surgeries per hour.

GV: There is a lot of interest in these methods. We conduct instruction courses and training courses all over the world as well as in India. Recently we conducted an instruction course in San Diego on specific techniques, and a training course in Indonesia.

JS: Do you have a specific research wing or a person who spends time looking at new ideas, championing them and so on?

RDT: It’s not specifically looked at as research. There is a certain amount of room to experiment, so people will report back on the benefits of new ways they have tried out. Then we study it before we make it part of the system.

JS: Is there a system of rewards, financial or otherwise, so that people are encouraged to experiment?

GV: All over the world, there is constant improvement in new techniques and new methods of using equipment. And we are part of this process, and the sharing process that follows. For instance, if a doctor in Boston or Germany discovers a new technique, people go there to learn it: or the expert comes here to teach us. Our doctors also specialise in different areas. For instance we have a doctor in Madurai who is an expert at squint surgery. Madurai is now the Orbis centre for training in children’s eye surgery, where groups of doctors, anaesthetists and technicians are sent for training. Doctors have the opportunity to make a name for themselves in specialised areas, and people come from all over the country to consult them.

RDT: I think sharing itself can influence quality. Once you share, your quality goes up.

GV: I guess it’s like IT or any other field where development is taking place. When somebody is developing something we would like to know about it and see how we can use it. The Aravind model – cost effective, high volume, high quality surgery – has caught the interest of other countries. We are trying to work with institutions in various countries and it is a constant challenge for us to improve ourselves so that we can be better trainers. For instance, we are trying to train African hospitals to have a sustained management capacity and we are working with the Rotary Hospitals, the Lions hospitals, the mission hospitals; and wherever there was a strong leadership It is working well. Today there are 40 to 50 hospitals which have exceeded 5000 surgeries; some of them have done even 10,000 surgeries and they are able to retain their doctors. We want these to develop into institutions of excellence in each area, which in turn can train people, not only in the technical aspects, but also the management aspects.

In Conversation with Dr. G. Venkataswamy and R.D. Thulasiraj