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1.

Executive Summary
The present case concerns Aravind Eye hospital which is a privately owned hospital and
provides free services to the poor and needy people. Dr.Venkataswamy who is the founder of
the hospital wants to expand Aravind Eye hospital to all parts of India, Asia, Africa and rest
of the world so that quality and free eye services can be provided to the poor and needy
people who have curable blindness but cant afford to pay for their treatment. Dr. V is
interested in knowing how this expansion can be achieved through the franchisee model.The
case writer has been hired as a consultant to advice Dr. V as to how to realize his dream.
The statement Once Aravind, always Aravind, supported by the whole staff of AEH, reflects
this mission and partly validates the business model of Aravind Eye Care System. This model
aims to make eye care available to all, regardless of income. A sense of compassion and
commitment, dedication to quality and cost control and strong leadership are key elements in
the success of this innovative health care model.
After examining the case we can observes that there are various problems which need to be
looked at. These include ensuring that the model is self-sustainable and the franchisee is able
to recover his cost of capital, to ensure that the main purpose of the hospital of providing free
services to the poor and needy is not compromised, quality man power is available to ensure
smooth functioning of the franchises and to address the social cultural and legal issues while
expanding outside India.
The case study was a collaborative undertaking to examine quality issues. Its purpose was to
learn and to share the knowledge. It was a challenging journey for all concerned.

2. Introduction
Aravind Eye Hospital
As Dr. G. Venkataswamy, founder of Aravind Eye Hospitals, said in an interview in 2003 at
the age of 83: You dont feel that you are a superior being; you are an instrument in the
hands of a higher force and it is in that spirit that we meet our day-to-day struggles and
successes.
Dr. G. Venkataswamys goal was to eliminate needless blindness in India. He believed this
could be done by combining modern technology and management practices with a measure
of compassionate spirituality, an awareness beyond the matter-of-fact. In 1976 he established
the GOVEL trust to initiate eye-care work. This encompasses more than an eye-care hospital.

It is a social organization committed to the goal of elimination of needless blindness through


comprehensive eye-care services, and includes an international training centre for ophthalmic
professionals and trainees who come from within India and around the world to teach or to
learn, to offer their skills and to acquire new ones. It has an institute for research that
contributes to the development of eye care and an institute to train health-related and
managerial personnel in the development and implementation of efficient and sustainable eye
care programs. Separate, but under the management of AEH, it is a manufacturer of worldclass ophthalmic products available at affordable costs.
The basis of the Aravind eye clinics is standardisation and engineering cataract surgery for
high volume production. He opened his first hospital in 1977 with 30 beds and managed to
generate a surplus in the first year of work so that a second 70 bed hospital could be opened
catering exclusively to the poor and offering operations free of charge. In 1981 a fee-paying
hospital with 250 beds was opened and another free hospital with 350 beds followed in 1984;
by the turn of the century there were around 1500 beds (of which the majority were free) in
Madurai. The model spread out to other locations across Tamil Nadu so that by 2003 there
were five Aravind hospitals with a total of 3649 beds of which 2850 were free.
Most of the blindness in India is needless and curable. Aravind wants to increase the
awareness of the causes of blindness and the need for early treatment. They focus on
increasing the volume of patients, via a systematic approach involving techniques and
training which enables doctors to be at their productive best. The organization is financially
self-supporting in its hospital services, its research activities, and its technology innovations.
As Dr.Venkataswamy once said: we feel it is important to preserve our financial selfsufficiency. Also there is a limit to the rate at which we can grow actively without
compromising on the basic values of the organization.
Initiatives like Aravind Center for Women Children and Community Health (ACMCCH),
started in 1984, were aimed at reducing nutrition-related blindness in children through
programs of preventive health care. The Rotary Aravind International Eye Bank (RAIEB) is a
community organization dedicated to restoring vision to those blinded by corneal diseases.
Community Outreach Programs (Eye Camps)
An integral part of Aravind is its community outreach - programs like eye camps, school eye
health programs, and village volunteer programs. These are all different tactics for taking eye
care services to the community. They provide curative, preventive and rehabilitative care to
the community along with IEC (Information, Education and Communication). Around 2,000

camps are conducted per year. A lot of effort goes into follow-up of camp patients (around
90%).
Fellowship Programs in Eye Hospital Management
Another important element in the system approach is the attention given to training to ensure
an adequate supply of key skills. 900 ophthalmic assistants are taken on and trained each year
to support the specialist doctors, whilst other skills such as counselling and education are also
developed via dedicated training courses. Significantly recruitment andmotivation are still
strongly linked to the core values of Dr V there is a strong social welfarecommitment which
means that staff often work for less than they could earn in other parts ofIndias health
system.
Aravind has been successful by systematizing the activities in management as well as clinical
areas. In fact, it is this system that enables the individuals to work so efficiently through the
optimum utilization of the available resources. The system continues to work efficiently
because of the vision and determination of the people in top management positions. AEH has
a Fellowship Program as well. Fellows are those who already have a degree but who want to
specialize in a particular branch. Fellowships usually last 18 months. On completion of the
training, Fellows are employed as Managers.
Quality and culture of AEH
The key factors in achieving high quality are organization design, appropriate staffing,
training, and good systems. Aravind pays close attention to all these aspects by means of a
scorecard for doctors; a very specific outcome-monitoring system, especially for cataract
surgery where, on discharge, every case sheet is fed into the computer and then analyzed; and
a constant open discussion of issues in weekly and monthly meetings. Measuring, reviewing
and changing if necessary are Aravinds management philosophy. Aravinds cost is much
lower than a private practitioners, and is much more efficient compared to the private sector.
Aravind Business Model Health Care Services
The Aravind model cost-effective, high-volume, high-quality surgery has caught the
interest of other countries. Aravind works with institutions in various countries and it is a
constant challenge to be better trainers. Aravind leadership is responsible for making the
system work in the way it should. Aravinds goal to eliminate needless blindness is supported
by the use of information technology to achieve its goals: the barriers between the rich and
poor will go, and then in ten years time we can raise the level of health to that of the
developed countries

3. Case Analysis
Problems
1. Risk of franchisees not treating the poor people for free: Even if Aravind Eye
Hospital grants franchise to open up branches of Aravind eye hospital in other parts of
India and abroad, the risk is that the franchisee would not offer quality service to the
poor people and would only try to make profit
2. Not able to provide enough manpower for the new branches: It would be difficult
for Aravind Hospital to find so many qualified ophthalmologists for their new centres.
The private sector pays much more than what Aravind Hospital offers to their doctors.
Thus it will be difficult to find qualified and good doctors who would be ready to
work at the salaries given by Aravind eye hospital.
3. Building a sustainable model: A sustainable business model must be envisaged
before going for the expansion plans. This should be a lesson learn from what
happened with the hospital at Tirunelveli. Though the cash flows and margins are
acceptable, it is becoming difficult to repay the cost of Capital.
4. Social, cultural and legal issues while expanding outside India: While expanding
outside India, the Aravind Eye Hospital would have to deal with various social,
cultural and legal issues. If the workforce is hired from India and sent to the foreign
countries, then it would be a challenge to get Visa for so many doctors, supporting
staff and Nurses. Furthermore, there will be issues as the staff would need to be taught
the language of the country and made familiar with the cultural differences there.
There might be legal issues if Aravind Eye Hospital themselves try to open the
facilities outside India.
Critical Success Factors
1. Quality of Health Services provided to free patients: The hospital cannot
compromise on the quality of health services [provided to the patients being served
for free.
2. Repaying Cost-of-Capital: Repaying cost of capital is critical to ensure that the
model is sustainable and can be replicated to other parts of the world.
3. Charitable Services: The hospital should not fail in its mission of providing
charitable services - the goal for which it was formed.
4. Revenues: Being a charitable hospital, having a constant stream of revenues and
maintaining a good profit margin is critical to the success of the hospital. By using the
surplus the hospital can become self-sufficient and keep on improving the
infrastructure.

4. Action Plan
1

Franchisee Approach: The Aravind eye hospital should go for a franchise


approach .It should be in a phased manner and the roadmap should be for 3 years for
expanding in India and 6 years for expanding abroad. While expanding in India they
should first concentrate on the 3 southern states of Karnataka, Andhra Pradesh and
Kerala and invite bids for franchisees from there. Then they should start expanding
towards the northern parts of India and target the states of Uttar Pradesh, Madhya
Pradesh, Bihar, West Bengal and Maharashtra first. This should take 3 years to

achieve.
Seek out other sources for revenue: Aravind eye hospital should seek other sources
of revenue. Since most of their patients are from villages, Aravind eye can partner
with some FMCG company. The FMCG Company can advertise their products to the
rural patients coming to Aravind Eye and through the camps organized by Aravind
Eye. Aravind eye would be paid fees by the FMCG companies. They can use this
money for their expansion plans.

5. Conclusion
Blending traditional hospitality with state-of-the-art ophthalmic care, Aravind offers
comprehensive eye care in the most systematic way, attracting patients from all around the
world. At the same time, they remain eager to learn how to improve their quality.AEH
recruits nurses from rural areas in Southern India, selects them on their potential,competency
and attitude and trains them with the focus on learning by doing for two years.Commitment,
faith and trust as key elements. It is clear that one has to fit in Aravinds systemand
philosophy.

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