​ ​AURO UNIVERSITY

(INDIA)

School of Business
Bachelor of Business Administration
(2017-2020)

Submitted To: Rohit Singh

Submitted By: Aayushi Agarwal
Semester- 6
Section - A

 
 
 
1) Analyse the case of arvind eye care and evaluate the business model they suggested. The
success of the business model was subject to fine integration between different process
Namely fees , operations and treating patients even outside the hospital.

INTRODUCTION

The Aravind Eye Hospital opened in 1976 and performed all types of eye surgery; its goal was to
offer quality eye care at reasonable cost, and to eliminate needless blindness in India. They strive
for 100% patient satisfaction, focusing on the most disadvantaged people in both rural and urban
India.

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.

Dr. Venkataswamy ,the ophthalmic surgeon who had founded the Aravind Eye Hospital started
it from 20 beds in 1976 to one of the biggest hospitals of its kind in the world in 1992, with
1,224 beds.

There were nearly 20 million blind eyes in India, with another two million being added annually,
only 12 million people were classified as blind because the rest had better than 20/200 or 6/60
vision in one eye. Cataract was the main cause in 75% to 80% of the cases.

BUSINESS MODEL

Aravind’s business model is the key element to their status as a social enterprise. Reflecting a
strong desire for global impact, it is what sets Aravind apart from other eye-care facilities
throughout India and the world. Dr. V structured his company with an emphasis on quality and
quantity.

Nearby 70% of eye surgeries are done for free or below cost, while 30% are performed for above
cost without compromising quality of care on any side of the price range.

The highly efficient operations along with this pricing structure helps the hospitals to maintain a
50% profit margin. Then the profits are reinvested into Aravind Hospital for growth and
expansion of the hospitals, as well as funding other ventures like the research foundation.
Approximately 90% of the annual budget is self-generated and 10% comes from charity, sources
around the world, such as the Royal Commonwealth Society for the Blind [U.K.] and the SEVA
Foundation [USA]. They expend all their surplus on modernizing and updating their equipment
and facilities. Also they thought that even if the business grows more successful and
globally-acknowledged in the future and generates more charity interest, they will not
compromise on the current model. They also make investments into educational and training
programs especially designed to teach people with a wide range of backgrounds.

Their goal is to spread the Aravind model to every nook and corner of India, Asia, and Africa,
wherever there is blindness. They also thought of an option of franchising just like Mcdonald’s
and Burger King have done in the U.S.

GROWTH

They started with one main hospital at Madurai which was set up at 20 bed capacity and later
grew to 600 beds hospital.

By 1988, in addition to the 600 beds at Madurai, a 400-bed hospital at Tirunelveli, a bustling
rural town 75 miles south of Madurai, and a 100-bed hospital at Theni, a small town 50 miles
west of Madurai, were also started. There were plans afoot to set up a 400-bed (Rs. 10 million)
hospital at Coimbatore, a city 125 miles north of Madurai.

By 1992, the Aravind group of hospitals had screened 3.65 million patients and performed some
335,000 cataract operations and nearly 70% of them were free of cost for the poorest of India’s
blind population. All this was achieved with very little outside aid or donations.

Further, IOL was an integral part of ECCE surgery which cost about Rs. 800 a piece to import
from the United States. At a cost of Rs. 8 million, Aravind had set up a modern IOL
manufacturing facility, known as Auro Lab, which could produce up to 60,000 IOLs a year. Dr.
V. stated that within a year or two when the factory yield will be improved, it would be possible
to bring down the manufacturing costs to approximately Rs 100.

They used to keep a margin of 50%, so basically they would charge people only who were
willing to pay and from those margins they would help people who could not afford the checkups
and treatments.The cost of a normal cataract surgery (ICCE), inclusive of three to four days
post-operative recovery, was about Rs. 500 to Rs. 1,000. If the patient required an IOL implant
(ECCE), the total cost of the surgery was Rs. 1,500 to Rs. 2,500. The hospital provided A, B, and
C class rooms, each with somewhat different levels of privacy and facilities and appropriately
different price levels.
 Further they would also conduct camps in rural areas, which were funded by sponsors. Like the
camp at Dindigul was sponsored by a local textile mill owner. There were three other
Aravind-associated camps in other parts of the Tamil-Nadu state that day. One was sponsored by
a religious charity (Sathya Sai Baba Devotee’s Association), one by a popular movie actor fan
club (Rajni Kanth Appreciation Club), and the third by the Lion’s Club.

Initially they used to conduct camp on their own cost but while growing they gained sponsors
who would fund these camps organised in rural areas.

There were Patients from surrounding villages who traveled by bus to the central (downtown)
bus stand, they were transported to the campsite by the sponsors. And few patients who were
from the local area came directly to the campsite.

Patients who came from nearby villages were taken to the central bus stand and were provided
with return tickets to their appropriate destinations.

Also, even though surgery was free, the patients had to come to Aravind at their own expense
only. And that is why the response rate was also less than 15% which made a concern and so a
research team from Aravind conducted in-depth home interviews randomly in which they
selected a group of 65 patients for whom surgery was recommended but they didn’t respond for
over six months.

The study revealed that some people are not able to afford food and transportation costs, some
can not leave their family, some have fear of surgery and many others.

Considering the situation, they requested the camp sponsors to bear the costs of food,
transportation and, in many cases, the cost of aphakic glasses to be worn by the patient after
surgery, which was also agreed by sponsors. In order to reduce the fear of surgery, as well as to
encourage a support group, patients were transported to Madurai as a group by buses. Patients
were asked to bring a small travel bag in case it was necessary to go to Madurai.

The hospital had a lot of experienced and qualified doctors. Many of them had left their
government jobs to be a part of this social cause, they would work twice the hours and half the
salary and could complete critical operations in just 15-20 minutes. They used to work in long
shifts because the hospital was always crowded.
2) Is Aravind eye care a business venture or a social enterprise. You can compare and
enumerate the relation between their business growth and social value.

The business venture is a new business that is formed with a plan and expectation that financial
gain will follow. The main purpose here to earn profit out of capital invested.

Whereas, Social entrepreneurship is doing business for a social cause. Social entrepreneurs
combine commerce and social issues in a way that improves the lives of people connected to the
cause. They don’t measure their success in terms of profit alone, success to social entrepreneurs
means that they have improved the world.

Considering the motives of business ventures and social entrepreneurship , Aravind eye care
hospital is not focused on making profits, rather they are providing free services to people who
can not afford and are in need and are conducting free social camps which clearly suggests that
Aravind eye care is a social enterprise.

Their vision is to eliminate blindness in the world. Worldwide 45 million people are blind and 12
million of those live in India. But the worst part is 80% of this blindness is preventable but
people are unaware of the facts and also some can not afford the treatments.

Dr. Venkataswamy, the founder of Aravind eye care hospital mortgaged his house to raise
money to give his plan a start, and after sometime they were able to plan the ground floor of the
Main Hospital. The revenue which was generated from the operations at the main hospital,
helped them to build the next floor and likewise they got till five floors. Further, the money
which was generated from here, they built a free Hospital. Almost 90% of the annual budget was
self- generated only and the rest 10% came from charity.

Just like many social entrepreneurship companies, Aravind also believes in the power of
outreach. The hospital holds outreach programs to provide eye care service in its communities.
These are usually eye care camps, where patients are screened and those who need surgery are
scheduled for it. These screening camps were almost always conducted with the help of local
community support, with either a local business enterprise or a social service organization taking
the lead role in organizing them.
The camps also provide education on eye care for the participants. The camps include diagnostic
eye camps, workplace eye screening camps, and camps for school age and younger children.
There are also camps to screen for eye conditions brought on by diabetes.
Dr. Venkataswamy had asked his sister Dr. Natchiar and her husband Dr. Nam to shift from a
government job to here so that people can be served. Where their salaries were half of the
previous job with double the workload. But for this noble cause, they had given up on financial
need and chose to help people in need.

Aravind also provided a salary which was reasonable in comparison to private sectors. Though
they were not at that level. An ophthalmologist in Aravind makes on average Rs. 80,000
annually. Which is good enough for a government sector of salaries about Rs. 60,000. No doubt
that in the private sector any ophthalmologist can make Rs. 300,000 but not everyone has that
courage to leave up to this and do this social practice to serve people. For the well being of
others, the compromise which they made is a huge cause. Their nurses are also paid Rs. 12000 a
year on average and which is enough as they did not come from any nursing school but were
given training there which definitely costs a lot.

Aravind Eye hospital works tirelessly and enthusiastically to drive its mission and purpose. The
hospitals provide value, improving the lives of people who could not otherwise afford eye care.
Patients then are able to perform better at their jobs and in their daily lives also. All the patients
are asked to pay according to what they can pay or if not then the service is free. All social
entrepreneurship companies achieve great heights but Aravind goes one step ahead with its life
changing services and resources.

This is an unconventional model, but it has proven successful in increasing the market of
potential clients and therefore the organization’s total income. Aravind makes eye-surgery
accessible to many people, the people who desperately need treatment but do not have enough
money and transportation to utilise this hospital care.
Also consistent with Aravind’s strict values and uncompromising selfless nature is their refusal
to accept donations. All employee wages, facilities, equipment, etc. are funded entirely from
within. This financial business model qualifies Aravind as a social enterprise, not a non-profit
organization or philanthropic charity.
 REFERENCES

- https://bmtoolbox.net/stories/aravind/

- https://aravind.org/wp-content/uploads/2019/04/OnceAravindAlwaysAravind.pdf

- https://www.shopify.com/encyclopedia/social-entrepreneurship

- https://www.upcounsel.com/business-venture-definition

- http://602communications.com/aravind-eye-hospitals-social-entrepreneurship-comp
anies/