world co creation day-cbe

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

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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

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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

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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

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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

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Prof & Mrs. Prahalad – Discussion with the Team at Aravind

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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’

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Aravind Model

“Inspiring Innovations / Expanding Horizons”

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• 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

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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

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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

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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

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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

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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

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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.

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Aravind in Retrospect....

Began here - as an 11 bedded clinic in 1976

Small team with a big mission

Money

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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

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Total Surgeries & Lasers till March 2010 : 3,701,580

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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

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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

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Aravind Management Retreats

Strong influence of Management principles

Effective planning

Envisioning the futurefor reorganizing ourselves to become more effective and responsive to the opportunities

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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

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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

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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

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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

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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


Impact – reaching the unreached

Increased awareness

Influencing health-seeking behaviour

Creating access

Community participation

Growing the market (reaching the unreached)

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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

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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

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Teaching & TrainingOphthalmologistsTechnicians Administrators

Affiliations: MCI, NBE, RCO-UK, JACHPO-USA, MGR Medical & MKU Universities

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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

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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

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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

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The delivery system

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Assembly Line … Efficiency

Surgical Productivity

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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

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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

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Giving Value

Comprehensive Care

End to End Solutions

Patient Centred processes

Focus on outcomes

Compassionate Care

QualityQuality

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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

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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

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Innovations

Product development

Cost effective consumables

IOLs, pharma, instruments to ensure quality

Financial viability and self sustainability

Service cum business model

Contd

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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

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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.

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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

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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

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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

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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

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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

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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

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Champalimaud AwardService Awards

Gates Award

Hilton Humanitarian Award

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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


- 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”

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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

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He has shown the way to

do it,

We believe it and

we “can do” it …

Aim HighSet Goal ...

Set an Example54/54

world co creation day-cbe

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