Aravind Eye Hospital Madurai India: In Service for Sight Harvard Case Solution & Analysis

Mission

The mission of Aravind is to provide quality and appropriate service for eye care in order to eradicate the problem of needless blindness.

Dr. V.’s Motivational Strategy

Dr. V focused on empathy and understanding the needs of others after understanding and developing himself both mentally and physically as well as spiritually. His motivation was never the worldly desires and accolades, but to serve humanity and that’s what he followed and communicated to his team of Aravind.

Growth of Aravind

Dr. V after retiring started a non-profit organization, Govel Trust and started an 11 bed hospital in the house of his brother in order to serve the people suffering from needless blindness. Out of 11 beds, 5 were reserved for paid patients while 6 of them were dedicated to patients receiving free treatment. By the year 2003 the hospital saw enormous growth and the capacity increased from 11 beds to 1500 beds, serving around 95000 surgeries per annum. Dr. V through his consistent efforts and motivational strategy transformed Aravind from a hospital to Aravind Eye Care System performing various functions. The integrated operations of Aravind Eye Care System included manufacturing synthetic lenses, and limited eye pharmaceuticals. Besides that it went on to build a training institute as well as a research institute along with an international eye bank. Furthermore the system provided child and women's care facilities and established a postgraduate institute of ophthalmology and offered different programs through its community outreach center. The eye care system, then expanded to grow and established 4 new hospitals in the state of Tamil Nadu. This chain of hospitals is now serving at least 190,000 surgeries in a year and serving people suffering from needless blindness as stated in the mission of Dr. V.

Strengths & Weaknesses

The main strengths of Aravind included its business model which is highly sustainable due to the social benefits offered. Besides this the company’s sustainable growth is also highly regarded to its financial management system that kept the debt portion of accounts zero. On the other the well-articulated mission and vision of the organization that kept the partners aligned with the spiritual affinity of the cause that also adds to the strengths of the organization. Another major strength of the organization is its business model which aimed on serving or giving free treatments to the patients and the costs are supported by the sponsors.

On the other hand the hospital avoided competition by providing services in less developed areas. Other major factors were the role of Dr. V and the support staff that played vital roles towards the success and growth of the organization.

The main weaknesses of the organization were the increased numbers of free patients, which is contributing towards an increase in per patient cost. Therefore the number of free patients is increasing as compared to paid patients this is the reason why the issue of managing cost is increasing. Moreover the utilization and capacity problems are increasing at several hospitals in the chain which is creating high overhead per patient. 80% of the patients rely on two types of procedures that include ICCE and ECCE, out of various surgeries performed in the Aravind which is causing high overhead cost and low margins per patient.

Low conversation rates at Tirunelveli and Theni due to lower marketing efforts and lack of customers also contributes immensely in the weaknesses of the company. Furthermore the fixed costs are very high and demand is very uncertain, therefore the company’s revenue is expected to get impacted due to this uncertainty in demand and high fixed cost. On the other hand the market is very saturated and since consumers are selected through screening therefore patients can be acquired by other competitors in the undiscovered geographical locations and also in the boundaries of Aranvind that can create channel conflicts.

Expansion

The company is growing smoothly in India because of the presence of Dr. V as he monitors and controls everything from operations till distribution. Going for expansion in Asia and Africa will be a risky effort as it will require efforts for building effective coordination in these areas. Secondly, communicating the vision of Dr. V will be a challenging task as Dr. V will have to travel and address the process and procedures in every area the company will choose to expand in order.........................

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Beginning as a modest 20-bed hospital, Aravind has grown in 1400-bed hospital in 1992. He then screened 3.65 million patients and performed 335,000 cataract, nearly 70% of them are free for the poor blind population of India. Founder of Aravind, Dr. Venkataswamy, now 74, had a goal to extend Aravind model every corner of India, Asia and Africa. The case provides the basis for developing an action plan. "Hide
by V. Kasturi Rangan Source: HBS Premier Case Collection 20 pages. Publication Date: April 1, 1993. Prod. #: 593098-PDF-ENG

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