By Jeroen Geelhoed, &samhoud consultancy
If you want to have inspiring ideas about life after retirement, listen to the story of Dr. V and the Aravind Eye Hospital. Aravind was founded by Govindappa Venkataswamy, a man known to most as Dr. V. He was 58 years old and retired when he decided to open the hospital in Madurai in 1976. Blindness was a major problem during the 1970s, and still is to this day. Around 35 million people worldwide suffer from this affliction. India alone has 12 million blind inhabitants. In other words, almost a third of all blind people worldwide live in India, which makes up roughly one-fifth of the global population with its 1.1 billion inhabitants.
Dr. V, the hospital’s founder, had a vision: eliminate needless blindness in India. After retiring, he established Aravind Eye Hospital, initially with eleven beds, but he wanted more. His aim was to give one million people their sight back by 2015. He wanted the best-quality eye care. He wanted to make this care accessible to everyone, including poor people who could not afford it. And…, he wanted to operate in financial independence and not have to rely on donations, subsidies, sponsors and the like. He succeeded! Aravind performs eye operations at 5% of the cost of similar operations in the West, with a higher success rate than elsewhere in the world. At the same time, the organisation is highly profitable with a profit margin of around 40% even though only 50% of customers are charged a normal fee. Millions of people can now see again. How did Aravind succeed? The key elements of the business model used by Aravind Eye Hospital are outlined below.
How much are you prepared to pay?
Aravind’s target group are needlessly blind people in India, rich or poor. Patients do not necessarily need to pay to have their eyesight restored. If they do decide to pay, they can choose from various packages ranging from 110 to 1000 dollars (which is lower than the price charged in the USA, namely 1,650 dollars). The extras patients receive are particularly in the services that are provided, such as a more luxurious and spacious room, a more comfortable bed, greater privacy and different food. But the ultimate value offered to all patients is: I can see again! This is accompanied by a feeling of assurance: Aravind makes you feel at ease. You are under the constant supervision of friendly Aravind staff who make you feel comfortable, show you the way and are there for you.
Efficiency from your heart
Aravind has also worked extremely hard on efficiency. Surgeons spend all their time performing operations and carrying out diagnoses. A surgeon can therefore carry out up to one hundred operations a day. All other work is done by friendly nurses who put patients at ease. They make patients feel safe by guiding them through all the medical steps of the process with compassion and attention. They help them navigate their way through the labyrinth of medical care. The nurses, who often come from villages themselves, are highly dedicated and provide patients with a source of support. Recruitment and selection is crucial in this case, which is why a match must exist between prospective staff and the Aravind culture. Every doctor and nurse has been meticulously selected for his or her role ever since the hospital opened. People applying for a nursing position do not necessarily require a diploma. Aravind organises its own training courses, which people from all around the world can participate in, incidentally. This is something people are happy to pay for as the education they receive is of a high level.
Some costs even 50 times lower
Another element is that Aravind looked closely at the greatest cost items and reduced these drastically. Consider, for example, the lenses implanted during cataract operations. Instead of importing these implant lenses at 150 dollars per lens, Aravind now manufactures them itself, which means they are 50 times cheaper. In addition to using these lenses in its own hospital, Aravind also sells them to other parties at a profit. And here too, the result is a win-win situation.
Patients can simply walk into an Aravind hospital. People queue in front of the hospital’s doors daily, but many others cannot get there as they live too far away and have no transport. Aravind therefore also visits villages to find patients. Five to six eye camps are organised every day in smaller, more remote villages, during which up to eight hundred patients are sometimes screened. This allows the organisation to reach people who live further away from the city and are too poor to travel to the hospital. At the eye camps patients are screened in the morning and immediately informed about the following steps. These may involve taking measurements for a pair of glasses or an operation in one of the hospitals. In the event of an operation, they are taken to a hospital by bus the very same day. After the operation and recovery period, which lasts around three days, they are returned to the eye camp and collected by their family. The eye camps are also routine. One to three weeks before the eye camp is held, public announcements are made in stores, newspapers and pamphlets within the village and a 20-km radius. Those in need of an operation are clustered per village and taken by bus to the hospital. This makes them feel safe and eliminates the need for someone to accompany them. A few days later they are returned to their village, with their sight restored. That is how Aravind does it. Brilliant, don’t you think?
Of course Aravind is located in India, and that is not comparable with our situation. A wonderful tale, but surely one which is of little use to us? That is unfair as we can most certainly learn lessons from Aravind. At any rate, there are three:
- Vision: It starts with a vision, based on a strong and deep conviction about how it really should be done differently. Dr. V wanted to help eliminate needless blindness in India. His aim was to remain independent, provide the highest level of quality and also help poor people unable to afford such care. That was his starting point and motive. He bound himself to that and had to be creative and businesslike. What is my vision? How do I wish to help resolve social issues? What impossible goals do I set in this regard? These are the questions you can ask yourself.
- Radical translation: Dr. V translated the vision into the Aravind business model with a radical, consistent and persistent approach. This did not entail a single golden touch, but rather the interplay of many different intervening elements. Examples include the admissions policy for people, the efficiency-focused approach, the attention to culture, the self-manufacture of implant lenses and the organisation of eye camps.All these elements can be traced back directly to the vision, and are self-reinforcing. You can ask yourself the following questions in this regard. Which employees do I really need to make the vision a reality? What do I really have to focus on now to achieve the vision? How can I earn money with my marketing strategy?
- Think in terms of value for all stakeholders: Dr. V did not only think about profits, nor was he an idealistic philanthropist who ‘wanted to do good things for people’. No, he thought in terms of value for all stakeholders. He sought opportunities that would help patients, make employees happy and generate money. A question you can ask yourself in relation to this is: how can I reduce my costs by 40% in a way that yields more for my customers and my staff? At first glance, this appears to be an impossible question, but what if it is indeed possible?
This is what makes entrepreneurship and leading a company truly interesting, creative and challenging.