Making Healthcare Affordable for All: A Proposed Model for Transferring Technology Innovations Case Discussion: Aurolab

Abstract

vision of its founder Dr. V, and its committed and talented senior management. A significant reason for its success is its large captive customer, the Aravind Eye Care System, which give it the scale needed to commercialize its innovations. With such a ready-made market, Aurolab’s entrepreneurial managers were able to re-engineer technologies available in the West to suit local conditions, and design manufacturing systems that allowed it to provide inexpensive lenses for Aravind’s low cost cataract surgery. Almost 60 percent of the nearly 200,000 surgeries that Aravind performs annually are highly subsidized—most patients pay a basic fee (about half the US$18 cost of surgery), and the other 40 percent, who are provided with additional service features (such as a private room or a hot meal), pay a market price of nearly US$50. The surplus margins gained from this 40 percent of the market provide the fuel for the scale and reach for Aravind’s charitable mission-to-provide eyesight for those in need, regardless of their ability to pay. The average income of an Indian citizen is US$600 and Aravind was able to provide cataract surgery for US$18(cost), or 3 percent of the average income. In the United States, where the average income is US$32,000, the cost of the surgery is US$1,800, or 6 percent. So Aravind’s system innovation is all the more impressive, the surgery is twice as affordable (using a cost benchmark) for the average Indian citizen than his or her U.S. counterpart. At 6 percent of annual income, an Indian surgery at about US$36 or so would still be affordable to the Indian poor. Even so, the price of the lens could not exceed about US$10 to be within the 40 percent cost of supplies for a cataract surgery in India, as shown in Figure 2 of the