Volume 16, Number 3 Article by Janat Shah & Murty LS September, 2004
Compassionate, High Quality Health Care at Low Cost: The Aravind Model - In Conversation with Dr G Venkataswamy and R D Thulasiraj :
The bottom of the pyramid is coming sharply into focus today, and the corporate world is beginning to sit up and take notice. According to C K Prahalad, 'If we can start thinking commercially about the poor, and respect them as customers rather than as wards of the state, we have a fundamentally different way of thinking about product development, use of technology, scaling and price performance.' Confirming this theory, a new business model is emerging in health care, exemplified by the Aravind Eye Care System, which reaches out to the masses and aims at being inclusive and affordable. In terms of productivity, quality, scalability and transferability, the model is of interest to management professionals and academics worldwide. Professors Janat Shah and L S Murty met with Dr G Venkataswamy, Founder and Chairman of the Aravind Hospitals, and R D Thulasiraj, Executive Director, to try and understand the essentials of the Aravind Model.
A sense of compassion and commitment, and strong leadership are key elements of the model. The central principle that productivity is fundamentally related to demand makes it a viable business proposition. Volume brings down the cost and ensures the viability of the enterprise. Volume in turn is ensured by the combination of low cost, high quality and efficient procedures, as well as the appropriate use of technology. Aravind Eye Hospitals try to maintain a ratio of 1:2 between paying and free patients, which keeps the enterprise financially viable. Integrating backward, a separate company has been set up to manufacture the intraocular lens, which helps provide quick and low cost cataract surgery. The model can be replicated, and some of its principles are universally applicable, such as the appropriate use of manpower, reducing the time and costs, and sharing innovative practices to improve quality. It is Dr Venkataswamy's firm belief that the focused efforts of top management experts could help usher in a health revolution in India.
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