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ARAVIND EYE CARE SYSTEMAravind Eye Hospital
& Postgraduate Institute of OphthalmologyMadurai, India
ARAVIND EYE CARE SYSTEMAravind Eye Hospital
& Postgraduate Institute of OphthalmologyMadurai, India
Dr. P. Namperumalsamy, MS, FAMS
Chairman Emeritus
1/54
World Co-Creation Day 2011
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Prof. C.K. Prahalad
Graduated from Loyola, Chennai 1960 and IIM – Ahmedabad 1966
DBA from Harvard – 1975 Award winning articles on Business Books : Bottom of the Pyramid : The Future
of Competition Member : Many distinguished societies Honours and Awards
2/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Named among Top Ten Management
Thinkers of the World in every major
survey for over 10 years
Introduced the concept of Co-Creation
Prof. C.K. Prahalad
3/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Experience Co-Creation (ECC)
Emerging Relationship between customers and Companies
Customers : More Demanding
More informed
More knowledgeable
Companies : Products and Services
Commoditization Erodes customer loyalty
4/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Four Principles of Co-Creation
1. Stakeholders won’t wholeheartedly participate in customer co-creation unless it produces value for them too
2. The best way to co-create value is to focus on the experiences of all stakeholders
3. Stakeholders must be able to interact directly with one another
4. Companies should provide platforms that allow stakeholders to interact and share their experiences
5/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Prof & Mrs. Prahalad – Discussion with the Team at Aravind
6/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Prof.C.K Prahalad
‘Aravind eye hospitals is a company doing 40% of all
cataract surgeries in the state of Tamil Nadu. This is the
largest in the world. They see 1.2 million out patients
and operate 150,000 cataracts a year. And it costs $10-
12 for a cataract in India while it costs $1600 for the
Medicare patients in USA’
7/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Aravind Model
“Inspiring Innovations / Expanding Horizons”
8/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
• Worldwide 45 million people are blind
• 12 million of them in India• One million of them are children• More people are blind in India
than any other country• Cost of Blindness in India: US $ 3
billion annually• 200 million need eye care in India• Less than 20% have been reached
Magnitude of Blindness
9/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Distribution of Ophthalmologists in India
Population OphthalmologistsOphthalmologists/
Population
In 56 Cities 10.9% 57% 21,000
Villages 89.1% 43% 2,19,000
Eye Care 11-12000 oph. surgeons for 1 Billion Available hospital facilities : Public & Private Inadequate care Quality of care Non-availability of care
10/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
The Fortune at the Bottom of the Pyramid
Reference : C.K Prahalad and Stuart Hart 2002
Tier 5
Tier 4
Tier 2-3
Tier 1
Purchasing Power
parity in U.S. dollarsPopulation in
Millions
> $ 20,000
$ 1,500 - $ 20.000
$ 1,500
< $ 1,500
75 - 100
1,500 - 1,750
4,000
Consider the global market as a
pyramid of consumers based on
economic strength
The new and emergenic
opportunity in countries such as
China, India and Brazil is in the
lower - income segment : Tiers
2,3 and 4
Serving these markets will
dramatically influence the
management process in transition
Create a “Consumer market out of poor” capture the “Poor Market” there is a big money in the poor
– by C.K. Prahalad
11/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Challenges to serve the Base of the Pyramid (Based on analysis by Prof. C K Prahalad)
Market Conditions Large unserved population
Resource scarcity (Capital
and Doctor)
Dispersed population
Low Affordability
Poor Logistics
Innovation Needs Scalable model required
Optimize Resource utilizations
Remote diagnostics and delivery
Dramatic reductions in Costs
Different models to increase access
12/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
If we STOP thinking of the poor as
victims or as a burden and START
recognizing them as resilent and creative
entrepreneurs and value conscious
customers, a whole new world of
opportunity open up.
- Prof. C.K. Prahalad
13/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Effective Health Care System
Reflects community’s needs
Understands community’s constraints
Provides easy access in terms of logistics, timings etc
Services are affordable and the charges reflect the paying capacity
Keeps abreast of relevant technological advances
Actively seeks the patients and educates the community
14/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Dr.V, feeling the urgent need, started an eye clinic with 11 beds, to create an alternate, sustainable eye care system to supplement the government’s efforts
In a developing country with competing demands on limited resources, government alone cannot meet health needs of all the poor.
Genesis
There is an urgent need to establish an alternate health care model that could strengthen and supplement the efforts of the Govt and also be self-supporting.
15/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Aravind in Retrospect....
Began here - as an 11 bedded clinic in 1976
Small team with a big mission
Money
16/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Tamil Nadu
Coimbatore (1997)
Amethi (UP) - 2005
Kolkata (WB) - 2001
Amreli (Gujarat) - 2007
Lucknow- 2008
Aravind Eye Care Network
Theni (1984)
Pondicherry (2003)
Tirunelveli (1988)
Madurai (1978)
Managed Eye Hospitals
Total – 47centres
TertiaryEye Care
Units
5
Community Eye
Centres
14
VisionCentres
36
Managed Eye Hospitals
2
City Center
1
17/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Total Surgeries & Lasers till March 2010 : 3,701,580
18/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Clinical Services Year 2009-10
Total Paying Free
Outpatients 2,539,615 1,341,582 387,582
Surgeries 302,180 141,030 161,150
“Aravind Hospitals perform 150,000 cataract operations in a year -
more than the whole NHS -UK” - Mark Tully (BBC) 2002
“Aravind Hospitals perform 150,000 cataract operations in a year -
more than the whole NHS -UK” - Mark Tully (BBC) 2002
19/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Volume Handled Per Day
6000 Outpatients in hospitals
850 surgeries
4-5 outreach screening eye camps
• Examining 1500 people
• Transporting 300 patients to the hospital for surgery
Classes for 100 Residents/Fellows & 300 technicians and
administrators
Making Aravind the largest provider of eye care services and trainer of ophthalmic personnel in the world
ProductivityProductivity
20/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Aravind Management Retreats
Strong influence of Management principles
Effective planning
Envisioning the futurefor reorganizing ourselves to become more effective and responsive to the opportunities
21/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Aravind Model......... Aravind work viewed from 4 dimensions
• Service model : Large volume, high quality affordable eye care, self supporting
• Business model - systems and procedures that make Aravind work
• Spiritual angle - the drive to reach greater heights, to do more, to do better
• Innovations
22/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Innovations Application of high standard clinical and management
principles Demand generation
Social marketing by the community and for the community Outreach services Speciality eye care and camps – innovative methods of
approach IT enabled vision centers Mobile vans with satellite connectivity
Development of human resources PG training Medical team – Recruitment and retention Mid level ophthalmic personnel
23/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Core Principles in Delivering Eye Care
Aravind Model
Community Based Eye Care
With Modern Technology and Quality
Affordable to All and Financially Viability
Under Efficient Management Systems
24/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Better approach to help the poor
Involve partnering with them to innovate
Achieve sustainable win-win scenarios
Poor actively engaged and companies providing
profitable products and services
Collaboration between poor, community service
organisations, Govt. local firms
Prof. C.K. Prahalad
25/54
Developing the Market Principles
Market driving (reaching the unreached)
Removing barriers Community participation
Impact Growing the market Creating access
Outreach in 2009 - 10No.of Screening Camps 2,148Patients examined 455,378Surgeries 76,081 26/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Impact – reaching the unreached
Increased awareness
Influencing health-seeking behaviour
Creating access
Community participation
Growing the market (reaching the unreached)
27/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M 28/68
Taking super-specialty care to villages
VSAT
28/55
Dedicated Medical Team Full time : from inception
Optimum remuneration comparable with any institution
Professional satisfaction
Academics and research
Surgical experience
Opportunities for international collaborations
Participation in management
Maximum retention
5% of Indian ophthalmic services we are able to do with 1%< of country’s ophthalmic power.
Maximum utilization of available resources with employee satisfaction
29/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Teaching & TrainingOphthalmologistsTechnicians Administrators
Affiliations: MCI, NBE, RCO-UK, JACHPO-USA, MGR Medical & MKU Universities
30/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Paramedics Training
Spirituality
Core area in Aravind
High school qualified girls
Rural background to match our clients
Culture and values
Value added training
Doctor : Paramedics = 1:4
Produce and viable
31/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Innovations Utilization of available resources to the maximum
“McDonald “way Assembly line effectiveness
Patient Satisfaction Quality assurance Affordable differential pricing of the ‘Product’ -
Vision Standard protocol – systems development ‘State of the art’ technology Deployment of IT in eye care
Contd
32/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Powerful marketing devices
are used to sell products
like Coca-Cola, Hamburger.
All I want to sell, to market,
if you will, is a good eye
sight and there are millions
of people who need it
Dr.G. Venkataswamy
Founder AECS
33/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
The delivery system
34/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Assembly Line … Efficiency
Surgical Productivity
35/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Cataract Surgery with IOL Implant
40% of all cataract surgeries in Tamil
Nadu are performed in Aravind Eye
Hospitals
A surgeon in Aravind performs more
than 2000 cataract surgeries a year
which is 5 times the number performed
by an average Indian ophthalmologist.
Key factor: Monitoring
ProductivityProductivity
EfficiencyEfficiency
Ophthalmologists Tables Scrub Nurses
Running Nurses
Instrument sets
Sur./hour
1 1 1 1 1 1-2
1 1 1 1 3 2
1 2 2 1 6 4-6
1-1 Resident 3 3 2 8 8
36/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Quality – always current
Early adoption of relevant technologies
Skills & Perspectives upgraded through international visits and exchanges
QualityQuality
Exchange of Residents with the leading US institutions
Continuous improvements based on patient & employee feedback
37/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Giving Value
Comprehensive Care
End to End Solutions
Patient Centred processes
Focus on outcomes
Compassionate Care
QualityQuality
38/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Aravind - Service Model
Fee for service: 35% of patient
care
Free/Subsidized service: 65%
of patient care
Separate facilities for the
paying and free patients
The patient chooses where to get his/her care. The care provided is of the same
quality but the facilities provided are different based on the pricing.
The patient chooses where to get his/her care. The care provided is of the same
quality but the facilities provided are different based on the pricing.
AffordabilityAffordability
High QualityHigh Quality
High VolumeHigh Volume
39/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Aravind Model - Pricing
Different pricing for poor,
middle and upper class of the
community
Transparency in patient
charges
Services that match patient
expectations
Pricing the services to match
the paying capacity of the
community.
Category %
Can pay any amount
Can pay reasonable charges
Can pay subsidized rate
Can’t pay any amount
5
40
35
20
Paying Capacity of the Population
40/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Innovations
Product development
Cost effective consumables
IOLs, pharma, instruments to ensure quality
Financial viability and self sustainability
Service cum business model
Contd
41/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Turning apparent disadvantages into realized opportunities
Mission & Objectives Produce quality products : ISO Mark
Provide at affordable cost : $2
Support avoidable blindness effort
Self sustain and grow:
Export to 120 countries
42/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Intraocular Lens Division
Pharmaceutical Division
Suture Division Blades Division
InstrumentsDivision
- Aurolab was established in 1992 to produce intraocular lenses (IOLs) to make quality cataract surgery affordable in developing countries.
43/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Making Eye Care Affordable
Used in 120 countries
Price of IOL came down from $ 100 to $ 2 – making cataract surgery affordable
10 million people see the world through Aurolab’s lenses
7% of global market
44/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Prof C.K.Prahalad---
I looked at Aravind as business. Their income is
about 230 million, expenditure is 12 and the
profit of 11. If I add to the lens manufacturing
arm it is 200% return on capital employed. But
60% of them are non-paying patients. This is
what this business is about
45/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Financial Results
Free (Camp) 33%Paying 45%
Free (Direct) 22%
Surgery mix in 2008 -09Year: 2008-09
Income: US$ 22 Million
Expenses & Depreciation: US$ 13 Million
EBITA: 39%
Through a unique fee system & effective management, Aravind provides free eye care to 60% of its patients
46/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Lions Aravind Institute of Community Ophthalmology
To contribute to the prevention and control of global blindness through
Teaching, Training, Consultancy, Research,
Publications & Advocacy
Spirit of Sharing
47/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Case Studies of Aravind
1. The Aravind Eye Hospital, Madurai, India: In Service for Sight - Harvard
Business School, March, 1993
2. From Market Driven to Market Driving - Nirmalaya Kumar, European
Management Journal VOL: 18 (2) APRIL 2000
3. Aravind Eye Care System: Giving them the most precious gift. -
Profs. S. Manikutty & Neharika Vohra of the Indian Institute of
Management, Ahmedabad, 2003.
4. Making Sight Affordable (Part I) Aurolab Pioneers Production of Low-Cost
Technology for Cataract Surgery - Mahad Ibrahim, Aman Bhandari;
Jaspal S. Sandhu; and P. Balakrishnan - Innovations VOL: 1 (1) SUMMER
2006 P.25-41
48/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
Aravind Case Study The Lofty Missions – Down to Earth Plans
Harvard Business Review, March 2004
Fast Company, a popular magazine in US declares Aravind as one of the 50 most innovative companies of the worldhttp://www.fastcompany.com/fast50_09/list-all Check out No. 47
http://www.fastcompany.com/fast50_09/lists/the-most-innovative-companies-in-India.html
The Fortune at the Bottom of the PyramidC.K. Prahalad, Wharton Publishing, 2006
Compassionate, High Quality Health Care at Low Cost. The Aravind Model. In conversation with Dr. G. Venkataswamy and R.D.ThulasirajIIMB – Management Review, September 2004
49/54
Champalimaud AwardService Awards
Gates Award
Hilton Humanitarian Award
50/54
Spiritual BasisThe hospital is named after Sri. Aurobindo Ghosh and his teachings form
the basis for the work
POWER
FAITH
If work is approached from a spiritual perspective, then it becomes
divine work. If in your actions, you allow the divine force to flow
through you, you will accomplish things far greater than you might
have imagined.”
- Sri Aurobindo Sri Aurobindo Aravind Eye Care SystemAravind Eye Care System 51/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
- Sri Aurobindo
“Faith, more faith
Faith in your possibilities
Faith in the power that is at work behind the vein,
Faith in the work that is to be done
and
The offered Guidance”
52/54
A R A V I N D E Y E C A R E S Y S T E MA R A V I N D E Y E C A R E S Y S T E M
BOP Market Get products and services at affordable price Get recognition : Respect and fair treatment Building self-esteem Decision makers hear the voices of the poor High volume : Quality High Return on capital Self sustainability
ARAVIND MODEL
- Prof. C.K. Prahalad
53/54
He has shown the way to
do it,
We believe it and
we “can do” it …
Aim HighSet Goal ...
Set an Example54/54