CASE STUDY
Aravind Eye Hospitals: Process Innovation in Healthcare
Before reading this case, consider the following generic innovation management issues:
•	What advantages do developing countries have in innovation, particularly in processes and services?
•	What kinds of innovation most require inspiring (rather than effective) leadership?
•	While reading it, consider the following:
•	Why has an equivalent of Aravind not yet arisen in the West?
•	If one were to attempt to found an equivalent in your own country how would it be different?
•	What risks might lie ahead for Aravind as India’s economy develops?
Aravind Eye Care was founded in 1976 by Dr G. Venkataswami with the mission to eliminate needless blindness in India. ‘Dr V’ was inspired by two things. The first was the knowledge that 5-10 million people in India, and 45 million worldwide, suffer blindness, much of which is avoidable. The second, surprisingly, was the McDonalds Hamburger chain. In this, Dr V saw an example of how good science and disciplined processes could turn a variable, skill-based service into a product that could be delivered with high quality and low cost in any culture. Today, the Aravind Eye Care system is the largest eye care facility in the world with 5 hospitals treating 2.4 million outpatients and doing 285,000 operations a year (2008-9).The company runs at a profit, generating all the surplus funds it needs to finance expansion; and yet the price for an operation to fit an intraocular lens is as little as $300 (in 2005).The money received from each paying patient subsidizes two more who cannot afford to pay. The clinical results are at least as good as those achieved in the Western hospitals.55
To make all this possible Dr Venkataswami had to take a radically different approach to the eye care process. The success of Aravind is based on three principles: workflow management, good use of technology, and above all, a culture that emphasizes service, humility, kindness and equality. The underlying business model is one of the oldest: increase volume, build efficiencies and reduce costs. All employees know that every rupee saved helps in treating more patients.
Recognizing that the doctors’, and especially the surgeons’, time is the key constraint in a specialist hospital, Aravind sets out to maximize the efficiency with which it is used. As many as possible of the subsidiary tasks, such as refraction testing and counselling, are done by paramedical staff (there are six nurses to every doctor), leaving the doctors free for medical advising and operations. Recruiting and training the right calibre of paramedical staff is vital for Aravind. In the words of Dr Natchair, who is in charge of training paramedical staff, ‘We recruit girls from a rural background ...with the right attitudes. Knowledge and skills are important, but not so much as the right attitude. After recruitment we give them two years training. The training is excellent and is recognized in the USA, and the government of India is considering adopting our syllabus.'
Much of the initial diagnosis, scanning and counselling is done in camps in the countryside. Aravind is also pioneering the use of broadband radio and webcams in remote rural areas allowing doctors to assess and diagnose eye conditions remotely. Patients are bussed into hospital on the day of their appointment. On arrival it takes 2 minutes to book a patient in thanks to a very efficient IT system. They then see a doctor for a definitive diagnosis and a paramedical counsellor to help them decide what action is best for them. The outpatient department sees 1000 patients a day, 6 days a week. Those that need surgery usually have their operation on the same day, unless they prefer not to. Those that need spectacles can have them made and fitted on site within 4 hours.
The operating theatres have four tables on which two surgeons work, aided by a team of nurses. While the surgeon is operating on one patient, the next is being made ready by the theatre staff on an adjacent operating table. As soon as one operation is complete, the surgeon can move straight to the other table where he will find the patient fully prepared and sedated, the surgical instruments laid out and the magnifying microscope focused on the eye. The next patient, who has been waiting on a chair, then takes up the vacant table. In ordinary hospitals multiple use of an operating theatre would be considered hazardous because of cross-contamination but it is possible in the special circumstances of Aravind thanks to excellent procedures and because the patients are otherwise entirely healthy. Surgeons at Aravind conduct an average of over 2000 operations a year (ten times the national average), yet they operate only in the mornings, leaving the afternoons for outpatients and research. The high throughput of patients also means that doctors get more clinical experience in a month at Aravind than they would in a year elsewhere. As one said, ‘In Delhi, where I studied, we did not have so many cases of varied nature. There we did one or two cases of surgery a month; here we do some 30 cases a day!’
Follow-up counselling is provided by specially trained paramedical staff, keeping doctors free for medical work.
Although doctors and nurses are paid at about the national rates, the efficiency and very high throughput of patients keeps costs low. The large number of patients also gives doctors far more experience of diverse eye conditions than they would normally obtain as DrV says ‘Doctors are not paid more because they do more operations but ours is a teaching institution and the more patients we have the better the training can be.’
In the developing world up to 50 per cent of blindness comes from cataracts, which can be cured by replacing the affected lens with an artificial one. This procedure accounts for 70 per cent of all Aravind’s surgical work. In the 1980s the cost of these lenses was around $ 100 which made the cost of surgery quite high, so in 1991 Aravind set up a separate activity called Aurolab to make them at lower cost. This, too, was highly successful and today Aurolab manufactures a million intraocular lenses a year for $5-10 each. The surplus is sold internationally.
Prahalad, in his book ‘The fortune at the bottom of the Pyramid’ points out that in providing products and services for the very poor, companies have to reverse the usual operational logic. The usual approach is ‘Work out the cost, add the necessary margin and that determines the minimum price that must be charged. Now go and find somebody who will pay it.’ In these markets the opposite applies: ‘Work out the maximum that customers can afford to pay, subtract the necessary margin and that determines the maximum cost. Now go and find a way to do it.’ Aravind Eye Care is a dramatic and inspiring example of where this logic can lead.