Poor countries' lessons on healthcare to richer ones
Friday, 30 April 2010, 10:45 Hrs | 2 Comments
Of the facilities' 2.46 million outpatients during that time, 50 percent were treated for free, and the fee for most of the others was a nominal $0.50, writes Vijay Govindarajan, a Professor of International Business at the Tuck School of Business and S. Manikutty is a Professor at the Indian Institute of Mangement in Ahmedabad in their blog on Harvard Business Review. Aravind hospital takes no donations or charity and yet not only makes a profit but enough to fund a new hospital every three years.
All these new hospitals and expansions have been internally funded. Aravind has been doing this for more than two decades. So how do they do it? Simply by using the following methods in managing its operations.
Extraordinary productivity: Aravind doctors average about 25 cataract surgeries per day (actually, over six hours), whereas other eye-care hospitals do six to eight surgeries per doctor.
Exploiting economies of scale: This allows its in-house manufacturing facility, Aurolab, to produce intraocular lenses (IOLs) at $5; global prices are about $80.
Borrowing best practices from other sectors: Aravind has borrowed concepts like economies of scale and assembly lines from the industrial sector and applied them in health care to bring down costs without sacrificing quality.
Investing in critical activities but saving on frills: Aravind lowers its cost position by reducing bells and whistles without compromising on the quality of its equipment or medicines or the competence of doctors and nurses.
Aravind's ideological foundations: Its founder, the late Govindappa Venkataswamy, stated his mission simply as "eradication of needless blindness" when he founded the hospital in 1976. This mission has continued to this day.
Aravind is a perfect example of how astonishing the results can be when produced through a congruence of vision, values, purposeful implementation, and a high degree of efficiency. There is nothing in this model that cannot be replicated in any country - developing or developed.
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