Sam Lakha, Manager, Volans Outreach.
Blog Action Day:The Vision of Dr. V – Harbinger of a “New Economy” – Madurai, India
On the surface, India is quite frightening. It has a population of 1 billion and growing- most of them living in squalor. Raw sewage flows through many streets and traffic is so chaotic that getting into a car is a death defying act. Yet India is touted as the frontier of the new economy, and on this trip I understood again why this is so.
It is not because of its pioneering ICT service industry. Rather, India is home to some of the most innovative business models that showcase what our “new economy” should be based upon – a combination of markets and values where the latter take precedence. As we search our way out of the present global economic mess, we would do well to examine business models that seek to do more than pad the pockets of company managers and faceless shareholders.
Take the example of Aravind Eye Care Hospital where I just spent several days this week. Aravind’s efficiency and cost effectiveness astounded the investors with me on this trip, – who were amused to learn that its operational model is based on McDonalds. But Aravind isn’t about making hamburgers all over the world – it is about giving sight to the blind. Aravind’s productivity is staggering. On a daily basis, 6,000 outpatients come to its 5 hospitals and every day it performs 850 to 1,000 sight restoring surgeries. It reaches out to the reluctant vision impaired through its screening eye camps, examining 1,500 people a day and transporting 300 of them to the hospital for surgery. And it runs classes for 100 residents and fellow and 300 technicians and administrators. All in a day’s work.
But the most amazing aspect of Aravind is that 55% of its patients receive their eye care – including examinations, diagnosis, surgeries, hospitalization and follow up – for free. Another 22% receive these services at a highly subsidized rate. The remaining 30% pay about US$1 per consultation and have their choice of accommodations, much like what airlines do in offering first, business and economy class. First class rooms go for US$3 a day, the other two for $1.50 and $1 a day, respectively. Surgery for paying clients is between $110 and $240, depending on the nature of the surgery. To give a point of comparison, it costs Aravind about $10 to conduct a cataract operation. It costs hospitals in the US about $1,650 to do the same.
One of the reasons Aravind has managed to keep costs down is its creation in 1992 of Aurolab, a pioneering initiative that produces high quality, low costs intraocular lenses, sutures, surgical instruments and eye-care related pharmaceuticals. How affordable? Aurolab has reinvented pricing, bringing the cost of IOLs, for example, from US$ 150 to US$2, creating pressure on mainstream pharma to reduce its prices. Aurolab today has ISO 9001 certification, US FDA approval and CE Mark certification and exports to 120 countries.
Since its inception to 2007, Aravind has performed over 3 million vision restoring operations – and despite the fact that 70% pay nothing or next to nothing, the hospital has a gross margin of 40%, freeing it of donor dependency for expansion and R & D costs.
The above paragraphs describe Aravind’s astounding efficiency. Yet what makes it an illustration of what a “new” economy could look like is its humanity. Its founder, Dr. Venkataswamy (Dr. V), did not set out to run a profit-maximizing business. He set out to restore sight to the blind. A deeply spiritual man, his leadership began with the pursuit of self-knowledge and a vision bigger than what defines present day corporations. The question that propelled him was “How can my work make me a better human being and make a better world?” If only corporate leaders on Wall Street could ask the same question.
Dr. V died in 2006 at the age of 86. Aravind started as an eye care service with 11 beds. Today it has grown to a chain of hospitals in India. How does it maintain its quality and keep attracting paying patients who cross subsidize the poor? Aravind does not provide a “product”. It provides a caring and complete service to rich and poor alike. Its founder’s impact is evidenced through his colleagues – young and young at heart - whose deep commitment and humanity are underpinned by the belief that to those to whom much is given, much is expected.
The address for this blog entry is: http://www.volans.com/2008/10/the-vision-of-dr-v-harbinger-of-a-new-economy-madurai-india/.
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