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Cost Shifting Eye Care: Sustainable HealthCare Model?

   /   Feb 18th, 2013Business, Health, International, Interviews

Dr. Gullapalli Rao is an ophthalmologist and founder of the Hyderabad-based  L V Prasad Eye Institute (LVPEI). The Institute, which opened in 1986 and provides primary eye care to underserved populations using a cost-shifting model, one that’s become quite popular in public health in developing countries – take from those who can pay full price and help cover the costs of those who cannot pay.

What was your inspiration for founding LVPEI?

In 1974, I moved to the U.S. from India to train as an ophthalmologist, with the goal of returning to India to set up a center of excellence in ophthalmology along the lines of the best Academic centers in the U.S. While working as an academic ophthalmologist at the University of Rochester, N.Y., I began traveling back to India every few months to lay the groundwork and clear the bureaucratic hurdles for launching the Institute. To generate funding for the project, my friends and I formed the Indo-American Eye Care Society in 1984, which approached different groups in the U.S. for donations—my wife and I also donated all of our savings to this fund.

Then in 1986, we moved back to India, and our dream finally came true with the opening of LVPEI in the state of Andhra Pradesh. We understood that there were major barriers to care in Andhra Pradesh, particularly in the rural villages, such as high poverty levels and shortages of trained eye care professionals, which required a novel approach to the way eye care was delivered.

How is your model different?

Our solution was a community-based eye care model, which we coined the LVPEI Pyramid of Eye Care. This model addresses the shortage of primary eye care providers by recruiting and training local high school graduates to provide basic services, such as vision exams and diagnosis of eye conditions, at primary eye care centers that we developed near the villages.

For patients that need more advanced services, such as surgery, the primary eye care centers refer them to a secondary center, where they will be examined and treated by an ophthalmologist.

To fulfill our mission to provide care to everyone in need, regardless of their ability to pay, we also implemented a cross-subsidization business model, whereby revenue from paying patients covers deficits from nonpaying patients. As a result, more than half of the Institute’s 15 million patients have been treated for free.

How were you able to scale this model and were you concerned about sustainability?

Our business model is actually very sustainable. It centers around two core tenants that we’ve instilled throughout the Institute: a commitment to world-class eye care services and prudent fiscal management.

By focusing on high-quality clinical outcomes and patient satisfaction, we are able to continue attracting paying patients at a healthy rate.

With regards to fiscal prudence, our philosophy is fairly simple: ensure operating expenses are covered without depending on ‘soft funds’ like grants and donations; no loans or overdrafts; no pending payments; spend only what we earn.

Our employees understand that all of us have to take responsibility for managing resources efficiently, and they take that obligation very seriously.

Can you provide an overview on blindness and how your organization is working to address this issue on a global stage?

Ninety percent of the world’s blind live in developing nations.

This includes countries like India, with more than nine million blind people; China, with more than six million blind people; and other nations in Southeast Asia and Sub-Saharan Africa.

Historically, these countries have a higher prevalence of Vitamin A deficiency, River blindness and infections such as trachoma, the leading causes of preventable childhood blindness. In these countries, there is a cyclical relationship between blindness and poverty: the poor often cannot receive treatment for vision restoration, which restricts their employment opportunities and deepens their economic hardship.

In 1999, the World Health Organization and the International Agency for the Prevention of Blindness launched “Vision 2020,” an initiative focused on developing resources for vision care in developing nations.

As a member organization of Vision 2020, LVPEI has been helping eye hospitals in a number of countries to adopt its community-based eye care model.

We have introduced this model in more than 20 countries in the Western Pacific, South Asian and Sub Saharan African regions, providing training to specialists in all cadres, from ophthalmology and optometry to medical records and inventory management.

Do you feel that a community-based care model like the one at LVPEI could work in industrialized nations like the U.S.?

There is definitely an opportunity for this kind of model in industrialized nations. It’s important to note that in the U.S. there are underserved populations living in the vast rural regions, where access to ophthalmologists and optometrists is not proportionate with access in the cities.

The fact is that these professionals go through many years of formal education and often incur a lot of debt during the process. Thus, it shouldn’t be surprising that the annual net income for optometrists is above $130,000, according to the American Optometric Association.

But this level of compensation doesn’t fit the economic reality of many rural communities, where lower patient loads, coupled with higher poverty levels and lack of insurance, present significant barriers to fiscal sustainability for private optometry practices.

What is perhaps needed is a reorganization and segregation of services that matches needs with cost effective services.  This could be accomplished through some reorganization of eye care services at different levels, namely from primary to tertiary, and appropriately utilizing existing cadres of eye care professionals to match levels of care.


4 Responses

  1. Adiba Azad says:

    It was a pleasure reading this article, particularly because I keep looking for examples of sustainable projects to provide healthcare to the poor in developing countries which have been started by physicians. I am in my third year of medical school in St. Louis, Missouri and I have been thinking about ways to contribute to the underserved communities in Bangladesh, which is where I was born and raised.
    I did have one question about the healthcare delivery cost management: you mentioned that for for advanced procedures/surgeries patients are referred to other centers and I wanted to know how is that expense managed by the LVPEI if the patient was unable to pay? Is it paid from LVPEI or are there some affiliations between LVPEI and these centers that allow the underserved patients to receive free healthcare at these secondary centers as well?

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