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HOW TO ESTABLISH A PRICING STRUCTURE? Financing eye care institutions in poor countries Sasipriya K M Lions Aravind Institute of Community Ophthalmology,

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Presentation on theme: "HOW TO ESTABLISH A PRICING STRUCTURE? Financing eye care institutions in poor countries Sasipriya K M Lions Aravind Institute of Community Ophthalmology,"— Presentation transcript:

1 HOW TO ESTABLISH A PRICING STRUCTURE? Financing eye care institutions in poor countries Sasipriya K M Lions Aravind Institute of Community Ophthalmology, Madurai, India

2 Pricing Structure: Underlying principle Organisations Mission Business model

3 Pricing Structure: Considerations Understanding the community Service volumes Encouraging greater footfalls in the hospital

4 Understanding the income levels The bird of gold: The rise of Indias consumer market – May 2007, McKinsey Global Institute, p.12 Above cost – market rates Pricing that would encourage patients to pay

5 Willingness to pay: Sample size: 1271 households (one person represented) 96% of the patients were willing to undergo cataract surgery 57% were willing to pay irrespective of availability of free surgeries 31% were willing to pay if free surgeries were not available Of these, 27.8% were willing to pay at Rs. 500 – 1000/- 45% were willing to pay between Rs. 300 – 450/- Unpublished report: Household Willingness to Pay for cataract surgery in Rural India - Muralikrishnan Radhakrishnan, Rengaraj Venkatesh, Vijayakumar Valaguru & Kevin Frick

6 Willingness to pay for phaco surgeries: an example from Aravind Theni Madurai9,082 Tiruvelveli9,224 Theni5,180 Coimbatore9,717 Pondicherry11,184 Revenue per Surgery

7 An example from hinterland Cataract surgeries: 2009 -102010 - 11 Paying3,3703,623 Subsidised529759 Outreach2,3312,648 Total6,2307,030 Surgical revenue (patient receipts) 23%35%

8 Consider 1,000 persons requiring cataract surgery in a community On the basis of the economic profile…

9 Profile Surgeries Pricing Very poor(30%)300Free Poor(20%)200Subsidized Low Middle(25%) 250Cost + Middle(20%)200Cost ++ High(5%)50Cost +++ Total (100%)1,000 Rate(Rs.)Revenue 00 750150,000 3,000750,000 5,0001,000,000 10,000500,000 2,400,000 Cost of 1,000 Surgeries (Rs.1,500/surgery): 1,500,000 Surplus: 900,000

10 Pricing strategy: is beyond hard money! Quality of the services Designing the services taking into account the other costs to the patients Transparency Standardisation Utilisation of the resources

11 Thank You Better pricing strategy = Service volumes + better quality + financial health!


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