Humanizing Capitalism

1

• Humanizing Capitalism
• For Sustainable And Equitable Eye Care
• Governing Principles and the Process for
  Developing Sustainable Group Practices
• David Green

2
Creating a Different Economic Paradigm

• Reducing cost and price of technology
• Technology transfer Demystify costs, gain
  control of technology, means for production and
  pricing to make products affordable to poorer
  2/3s of humanity
• Sustainable health care
• Eye care delivery models with tiered pricing to
  provide affordable, high quality products and
  services where price and quality become driving
  forces to convert need into demand and where free
  is the lowest price earned income re-invested
  into social mission
• Financing capacity building
• Creating a social investing Eco-system where
  criteria by which funds are invested create both
  financial and social return
• Eye Fund as prototype to address gaps in creation
  of social capital markets

3
Themes

• Service delivery social enterprise that prices
  for affordability and accessibility
• Tiered pricing reaching all economic strata,
  where free is the lowest price
• Start with price point of what is affordable to
  lower income people (willingness and ability to
  pay) and work backwards to create cost model)
• Combine lower pricing of key medical goods
  with market driving service delivery model that
  converts need into demand (loose vertical
  integration)
• Training institutions that have holistic approach
  not just clinical/ surgical, but also
  managerial, outreach, business planning,
  pricing, organizational development

4
Main Points

• Good management and leadership
• Population density more important than paying
  capacity
• Combining public service with private practice
  under one roof
• Make ophthalmologist time fix cost rather than
  variable cost
• Community involvement and outreach to motivate
  patients
• Incentives for staff
• Pricing is marketing
• Control in hands those doing the work
• Integrate optical business with ophthalmology
  practice for staff incentives generate revenue
  for providing care to low income patients
• Sustainability in the government sector?
• Sustainability planning and training specific to
  Nigeria

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Aravind Eye Hospital

• 1976-2007 3M surgeries
• 2007 300,000 eye surgeries
• Able to be self sustaining and grow while staying
  true to social mission of serving poor
• Patient centered systems and care
• Sustainable model replicated in over 200
  locations throughout the world Nepal, India,
  Egypt, Malawi, Kenya, Guatemala, El Salvador,
  others

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Aravind Eye Hospitals (4000 Beds)
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Aravind - Service Model

• Able to be self sustaining and grow while staying
  true to social mission of serving poor
• Patient chooses where to get care.
• Care provided is same quality but the facilities
  provided are different based on the pricing
• High Volume High quality eye care

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Surgeries from 1976 to 2007
Total Surgeries till 2007 3,007,049
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Affordable Pricing
Covering the entire spectrum

• Consulting fee
• Poor Patients Rs. 0 (free)
• Paying patient Rs. 50 (valid for 3 months)
• Cataract Surgery with IOL (70 of all surgeries)
• Poor patients Rs. 0 (- Rs.250)
• Subsidized rate Rs. 500 12
• Regular rate Rs. 3,500 6,000 83-143
• Phaco Surgery Rs. 6,500 12,000
  155-286
• Affordable fees - Aimed at Middle Income group
• Expenses USD 10M
• Revenue USD 18M

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Aravind - Service Model

• Product and price differentiation
• Patient chooses where to get care.
• Care provided is same quality but the facilities
  provided are different based on the pricing
• High volume high quality eye care
• 81 ratio of paramedical staff to surgeon

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Surgery at Aravind
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Efficiency of Service Delivery

• An Aravind surgeon performs more than 2000
  cataract surgeries a year - 5 times the Indian
  average

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Tele-Ophthalmology in Vision Centres350 Patient
consultations a day (23 VCs)

• Covers a population of 50,000
• Staffed by Oph. Assistants
• Active case finding at community level
• Linked to Base Hospital

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Low Cost Wi-Fi 802.11b Connectivity (open
spectrum)
Collaboration with Univ. of Berkeley (PhD
students)

• Unidirectional antenna
• Line of Sight
• 4 MBPS Up to 75 KM

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Sharing makes you stronger Lions Aravind
Institute of community Ophthalmology
To contribute to the prevention and control of
global blindness through Teaching, Training,
Consultancy, Research, Publications Advocacy
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Location of Participating Hospitals
Other Countries Bangladesh Bulgaria Bolivia Botsw
ana Cambodia China Egypt Indonesia Kenya Malawi Ma
ldives Nepal Zambia Zimbabwe Guatemala El
Salvador Tanzania Tibet Nigeria Sri Lanka
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Impact of Capacity Building Cataract Surgery 40
Hospitals
WORKSHOP
91,445
76,995
52,506
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Worldwide Distribution of IOL/SICS/PHACO Trainees
No. of Trainees 1274 Countries - 30
from June 93 July 2006
Russia
North America
Europe
Africa
South America
Australia
Afghanistan - 1 Africa -
1 Armenia - 1 Austria - 1 Bangladesh
- 27 Belgium - 1 Bulgaria - 1 Cambodia - 2 Camero
on - 1 China - 6 East Africa -
2 Egypt - 5 Estonia - 1 Germany - 30
India - 1062 Indonesia - 44 Israel
- 2 Italy - 7 Latvia - 6 Libya - 1 Malaysia - 2 M
aldives - 1 Mongolia - 10 New
Zealand - 1 Nigeria -
19 Palestine - 2
Philippines - 4 Saudi Arabia - 2 Sierra
Leone - 1 Singapore - 1 Sudan - 1 Switzerland - 13
Turkey - 1 UAE - 2
Uganda - 2 U.K. - 3 USA - 4 Yemen - 2 Zambia - 1
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Lions Aravind Institute for Community
Ophthalmology (LAICO)

• LAICO has trained 209 hospitals on the principles
  of the Aravind Model to build capacity and
  enhance delivery of eye care services.
• To date, the training has been extremely
  successful hospitals have significantly
  increased the numbers of outpatient visits and
  surgeries.
• 80 of these eye care programs have become
  profitable while serving the poor

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Managed Hospitals
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Dr. Venkataswamy
22
Everyone who wants
sight gets it!
Lumbini Eye Hospital, Nepal
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Lumbini Pricing
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Magrabi Eye Hospital Cairo (Charity Pays)
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Magrabi/Al Noor Statistics
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Vizualiza Set Up Public and Private
Waiting room private
Operating theatre
Waiting room Social
Patient home
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Public Private under 1 Roof
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Chitrakoot Cost Recovery
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Reverse Engineering to USASpecialty Care for
Uninsured

• Is it possible to make eye care available to all
  in a sustainable fashion, including the
  uninsured?
• Adapt sustainable models in eye care to U.S.
  economic, regulatory and market conditions, for
  15M, including uninsured, on a profitable basis.
• Challenge how to mix together differing goals
  and values of social and financial investors
• Right legal construct for Social Equity
  Investors willing to have their dividends
  recycled for uninsured care
• Solution is not government or strictly charitable
  or relying upon workplace insurance but on social
  purpose enterprise that utilizes core
  competencies and assets to serve social good

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Principles of Sustainability

• Start with price point understand local paying
  capacity
• Prices set according to average monthly income
• Per unit cost Average monthly income of bottom
  60
• 80/20 rule
• Multi-tiered pricing
• Differentiated products to differentiate pricing
• Improve productivity through utilization of
  ophthalmic technicians-- 61 ratio
• Lower cost of consumables to gt15
• Improve quality to create market demand
• Increase volume to lower unit costs and prices
• Nestle control in hands of those doing the work

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Service Delivery Model

• High volume low cost approach to eye care
  delivery
• Multi-tiered pricing with positive and negative
  margin
• Financially self sustaining yet remains oriented
  to the poor
• Community Outreach designed to reach and motivate
  the poor to come for eye care service

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Challenges

• Product differentiation
• Developing pricing that is affordable to all
• Balancing costs with revenue
• Developing mechanism for placing patients in the
  proper price category
• Working with community groups to develop
  screening and community outreach
• Incorporating sub specialty services into
  sustainability model

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Modeling for Cost Recovery

• Determine multi-tiered pricing system, based on
  paying capacity of population
• Define costs fixed, variable, depreciation
• Assessment of constraints to more productive
  service and removal of constraints
• Creation of different scenarios and choosing one
  that approximates reality
• Projection of costs and revenues into future

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Start with Pricing

• Understand the local paying capacity
• Prices set according to average monthly income
• Research on paying capacity per capita income,
  pre-existing data, perform your own survey
• Multi-tiered affordable pricing for all economic
  strata

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Paying Capacity Average Family Monthly Income

• People can afford to pay monthly family income
  for cataract surgery with IOL
• Unit Cost of Cataract Average family monthly
  income of bottom 60 of population

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Pricing Model
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Market Estimation Population Income

• Population of Nigeria 138 m
• Yearly Per Capita Income 1,200
• Highly skewed
• richest 20 earn 55.7 3,359
• poorest 20 earn 4.4. 265
• Likely even more concentrated, according to some
  statistics
• 70 live on less than 1/day.
• 90 live on less than 2/day.
• Income Total need HA1 1 months salary Market
  Size
• High 20 2.3 m 280 644m
• Middle 60 6.9 m 67 462m
• Low 20 2.3 m 22 51m
• Total Market Size 11.5m 100 1,157m
• Market Size if CS Nigeria achieves US penetration
  rate of 23.52 272m
• 1 8.2 of total- CBMI. Life expectancy 47
  years
• 2 23.5 Marketrak VII

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Formula 80/20 Rule

• 80 of blindness and visual disability is due to
  cataract
• 80 of program costs are for cataract surgery
• 80 of revenue comes from cataract surgery

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Per Unit Cost

• Per unit cost as tool for measuring of
  efficiency, productivity and quality
• Determine per unit cost by adding up operating
  expenses and dividing by number of major
  surgeries
• The per unit cost of cataract surgery can be used
  as a tool for measuring efficiency and for
  setting goals

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Trigger Points For Transforming Eye Care

• Increase quality and volume/surgeon
• Staff as fixed cost instead of variable cost
• 5 para-medicals to 1 ophthalmologist
• Patient volume per doctor is increased, reducing
  per capita cost
• Lower costs of consumables for surgery
• Add in community outreach
• Increase patients coming direct for service to
  hospital
• Improve management
• Cost based accounting

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Efficiency

• Improve efficiency to decrease costs
• Improve productivity through utilization of
  ophthalmic technicians-- 61 ratio
• Lower cost of consumables to gt15
• 4 surgeries/ophthalmologist/hour
• Team approach
• Increase volume to lower unit costs and prices
• Role of free surgery to increase margin

42
Efficiency - IOL Surgeriesper hour per
Ophthalmologist
As a result the Cataract surgery with an
Intraocular Lens costs as low as US 15
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Outreach System

• Converting need into demand
• Utilizing strength and reach of community groups
  to reduce marketing costs
• Create buzz in the market place
• Charity pays

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Reduce costs via Surgical Technique

• ICCE
• Manual ECCE
• Sutureless ECCE
• Phaco

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Market Demand Through Quality

• Creating market demand for services through
  quality
• Satisfying customers and being accountable to the
  client
• Consumers become program planners
• Convert need into demand via quality, pricing and
  accessibility

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Information Management

• Surgical volume
• Outpatient volume
• Specialty services
• Sources of Revenue
• Cost based accounting
• Follow up and recording of visual acuity and
  complications

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Program Assessment

• Staff skill training requirements
• Leadership
• Past user patterns and epidemiological data
• Outreach and equipment needs
• Physical plant and interaction with community
• Supply
• Financial controls and management expertise
• Pricing

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Organizational Development

• Clarify for Staff
• Role
• Responsibility
• Decision making authority
• Accountability
• Communication
• Create reporting systems where decision making
  authority is defined

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Control

• Ability to generate revenue
• Decisions about how to spend earnings
• Hiring and firing of staff
• Competitive compensation levels
• Purchasing
• Competence to manage
• Set pricing for affordability and sustainability
• Control into honest hands of those doing work

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This Gap Keeps People Blind

• SUSTAINABILITY
• 2,000 surgeries per ophthalmologist
• Teams with paramedicals
• Systems to serve community
• Quality outcome systems
• Constant focus on increasing patients
• Cost consciousness
• Ownership through financial sustainability

• CHARITY
• 200 surgeries
• No support staff / team
• No community links
• Vision results not recorded
• Passive services
• Little awareness of costs
• Reliance on external donors priorities and

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Reasons for Success

• Committed Leadership
• Population Density
• Dedicated and Trained Staff
• Quality of Medical / Surgical Care
• Full-time Ophthalmologists
• Organized Outreach Programs
• Focus on Screening Camps
• Community Involvement
• Effective Patient Counseling
• Committed Leadership

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Reasons for Failure

• Frequent change in Leadership
• Part-time Ophthalmologists and high turnover
  rateo
• Lack of Population Density
• Turnover of Ophthalmologists
• Inferior Quality of Medical / Surgical Care
• No Outreach Programs
• No Counseling
• No Service Differentiation
• Lack of Emotional Investment
• Limited Surgery Days and OPD Timings
• Lack of Professional Administration

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Changing the Competitive Landscape

• Become market driving with quality and pricing to
  create market demand
• Change consumer expectation about pricing,
  availability and quality
• Change how other providers organize their eye
  care services to address needs of lower income
  people with best quality, combined with
  affordability

54
Need for Sustainability Planning

• Sustainability planning and training oriented to
  African situation
• Less expensive than flying to India to Aravind
• Need for living laboratories to demonstrate and
  teach high volume, high quality, financially
  sustainable eye care programs oriented to serving
  all economic strata including the very poor

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Sustainability Training

• Clinical
• Surgical
• Managerial
• Equipment maintenance
• Ophthalmic technician/nurse
• Pricing/ sustainability/business planning
• Leadership/organizational development
• Legal structuring
• Financing

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Eye Fund

• Partnership of Deutsche Bank, the International
  Agency for Prevention of Blindness (IAPB) and
  Ashoka
• Social venture fund combining innovative
  financing with sustainability planning to address
  two major constraints financing and capacity
  building
• Will deliver financial and social returns where
  social objective is to reduce blindness and
  ameliorate visual disability in equitable fashion

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Rational for Eye Fund Initiative

• Proven methodology planning approach for
  creating sustainable eye care programs in
  variety of countries
• Approximately 250 program are self financing
  while delivering a high of services to lower
  economic strata
• Sustainable eye care with positive cash flow can
  service debt financing utilized to scale
  operations
• Grant capital, while important, is not sufficient
  to scale eye care delivery
• Debt opens new channels for funding through large
  financial institutions related to socially
  motivated investors
• Create a synapse to connect the social and
  financial sectors to increase abundance and
  accelerate flows of finance to social sector
• Increased freedom and financial flexibility to
  plan growth

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Humanizing Capitalism

• Choice to use profit and production capacity to
  serve humanity
• Pricing for affordability to lower economic
  strata generating sufficient revenue to grow
  and flourish
• Profit is a means to an end and not just the end
  itself
• Use assets and core competencies to be socially
  transforming
• Use market forces (affordability, access,
  quality) to change competitive landscape in favor
  of lower income people
• Convert need into demand