Palash Eye Hospital-Sustaining A Social Enterprise

ASIAN CASE RESEARCH JOURNAL, VOL.
19, ISSUE 2, 231–258 (2015)
ACRJ
by INDIAN INST OF MANAGEMENT KOZHIKODE on 07/25/19. Re-use and distribution is strictly not permitted, except for Open Access articles.
Sustaining a Social Enterprise:

This case was prepared by
Professor Debabrata Chatterjee Palash Eye Hospital
and Associate Professor
T.N. Krishnan of the Indian
Asian Case Res. J. 2015.19:231-258. Downloaded from www.worldscientific.com
Institute of Management Kartik and Raghav sat in their office, each lost in his own
Kozhikode, Kerala, India, thought. They had just finished a conference call with Mr
and Assistant Professor
Ankita Tandon of FLAME Kumar, the Chairperson of Palash Eye Hospital. A month
Universty, Pune, India,
as a basis for class discus-
back, Mr Kumar had approached them with a consulting
sion rather than to illustrate assignment.
either an effective or ineffec-
tive handling of an adminis- Palash Eye Hospital was established in 1999 under the
trative or business situation. leadership of Mr Kumar. From a small start with 2 doctors
Please send all correspon- and 20 beds, it had grown into a 250-bed speciality establish-
dence to Associate Professor ment with 18 doctors, and over 90 staff members. The hos-
(OB&HR Area) Krishnan
T.N., Indian Institute pital functioned on a cross-subsidy model where for-profit
of Management Kozhikode, and not-for-profit activities were undertaken simultaneously.
IIMK Campus P.O.,
Kunnamangalam - 673 570, Revenues from paid eye care services were utilised to provide
Kerala, India. E-mail: free cataract treatment to the underprivileged who did not
tn_krishnan@iimk.ac.in
have money for and access to medical facilities.
Recent events in the hospital and changes in the
external environment had been troubling Mr Kumar. The
medical workforce of the hospital was increasingly coming
in conflict with the administrative personnel due to differ-
ences in their views on managing the hospital. The admin-
istration of the hospital was in the hands of members of
not-for-profit organizations headed by Mr Kumar, which
did not include qualified members of the medical workforce.
This was resulting in deterioration of coordination between
the two arms. At the same time, the emergence of other
commercial speciality hospitals in the area was threatening
the retention of skilled workforce. Staff dissatisfaction and
demotivation was becoming apparent. Mr Kumar knew his
old age and poor health would not allow him to be actively
involved in managing the hospital for long. He could foresee
© 2015 by World Scientific Publishing Co. DOI: 10.1142/S0218927515500091
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232 ACRJ
a threat to the sustenance of his hospital if these issues were

not addressed in time. He had hired Kartik and Raghav’s ser-
vices to analyse the situation and give recommendations for
required changes which would ensure sustenance and growth
of the hospital.
Kartik and Raghav were two young and enthusiastic
management graduates from a top tier business school in
India. Over a short time span of six years into the consulting
business, they had earned repute for themselves. They had
also been featured in a national magazine’s most promising
entrepreneurs list in the year 2009. Their track record in
assisting organizations in crisis had been exceptional. It was

their first assignment with a social enterprise. They were
excited and anxious at the same time. However, the case had
proven to be more complicated than they had anticipated.
They had spent the last month collecting information through
hospital documents and conducting meetings and interviews
with Mr Kumar and other stakeholders of the hospital.
“This is leading us nowhere,” exclaimed Raghav, as
he got up from his chair and paced up and down the office
impatiently. “Let us look at the data once again and think
afresh,” said Kartik. They sat and discussed the data they had
gathered.
THE LARGER CONTEXT: BLINDNESS IN INDIA
Blindness afflicts approximately 15 million of the Indian

population. In 75% of the cases, blindness can be avoided
through treatment. However, the shortage of donated eyes,
inadequate medical services and scarcity of doctors poses a
major challenge for treatment. As against the need of approxi-
mately 0.25 million donated eyes, only 25,000 are collected in
the several eye banks across the country out of which 30%
are unusablea. The chief causes of blindness in India include:
Cataract (62.6%), Refractive Error (19.70%), Corneal Blindness
(0.90%), Glaucoma (5.80%), Surgical complication (1.20%),
Posterior Capsular Opacification (0.90%), Posterior/Segment
a As reported in the Times of India (a national daily newspaper), Oct. 11, 2007.
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SUSTAINING A SOCIAL ENTERPRISE: PALASH EYE HOSPITAL 233
Disorder (4.70%), and others (4.19%). Childhood blindness or

low vision afflicts 0.8 per thousand populationb. The problem
is aggravated in backward and rural areas where there is lack
of proper medical facilities resulting in blindness which can
be avoided by providing appropriate medical care on time.

(See Exhibit 1 for the anatomy of the eye and a discussion on
the common eye ailments.)
ORGANIZATIONAL BACKGROUND: THE CONCEPTION

AND GROWTH OF THE PALASH GROUP
The roots of the Palash group can be traced back to the Basel
Evangelic Mission that was established in 1815 in Basel,
Switzerland. The Mission extended its work to Indian colo-
nies and established centres in the three states of Karnataka,
Maharashtra and Kerala in southern India. The centre in the
district of Calicut in Kerala was established in 1842. Since
then the Mission has been involved in active social service in
this region. As a part of the activities of the Mission, Palash
Charitable Trustc was established in the 1970s. The Trust
consisted of the managing trustee and three other trustees
who came together with the idea of conducting charitable
activities.
During the 1990s, Calicut did not have a specialty eye
hospital. Identifying the need for a dedicated eye hospital to
serve the masses in Calicut and neighbouring areas, the idea
of starting an eye hospital in Calicut was conceived by the
Trust. The hospital became a reality in February 1999 due to
the efforts of Mr Kumar, the then secretary of the Trust who
also became the founder chairman of the hospital. Almost at
the same time, Mr Kumar also established Palash Eye Care
Society in December 1998 under the Societies Registration
b Source: Government of India’s National Programme for Control of Blindness

Statistics (http://mohfw.nic.in/Frequently%20Asked%20Questions_REVISED.htm).
c A Trust is a charitable, not-for-profit organization formed by at least 2 persons,
established under then relevant State Trust Acts in India or Bombay State Trust Act,
1950. The Trust is an irrevocable (generally) legal entity with the Trustees as decision
makers who hold office for a life time. The Trust holds property or assets which are
utilised for the cause of the Trust.
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234 ACRJ
Act, 1860 of Indiad. The Society had a President, a vice presi-

dent, a secretary, a treasurer and five executive committee
members. The Society was a democratic body with elected
members and included important dignitaries and well-known
personalities from local bodies. Through a memorandum of

understanding activities of the Trust and the Society with
respect to the hospital were established. While the Trust
would provide the premises, the infrastructure and the staff
for the hospital, the Society would conduct the outreach activ-
ities of the hospital. The memorandum of association of the
Society defined its objective as follows:
“to render assistance to the blind people such as detec-

tion of eye diseases, surgery, and supply of spectacles,
medicines, lenses etc. and to conduct eye camps for poor
patients, detection of diseases and give surgical assistance.”
Later, the Trust also established the Palash Academy of
Research and Training at Calicut to disseminate training and
certificate courses in ophthalmology and nursing (Exhibit 2).
With the growth in the hospital’s activities and plans
of expansion, it was felt that the Society’s actual responsi-
bilities were increasing beyond its initial objectives. Thus, the
purpose of the Society was broadened through an amend-
ment of its bylaws. The Society now took upon itself the role
of starting new eye hospitals in nearby towns in addition to
conducting outreach programmes. While the first hospital
(Palash Eye Hospital, Calicut) was being run by the Trust,
new hospitals established in the later years were established
and run by the Society. The new hospitals were:
a. Palash Eye Hospital, Thalassery (established in January
2006)
b. AV Palash Eye Hospital, Kanhangad (established in
February 2008)
c. Palash Vision Eye Hospital, Ottapalam (established in
March 2008)
d Under the purview of this Act, groups of 7 or more persons can register bodies or
organizations which, among other activities, can undertake charity related work. A
Society is a democratic entity with elected members and decisions are undertaken
through voting, and can be dissolved.
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The Palash Eye Hospital at Thalassery was established and

run completely by the Society, the hospitals at Kanhagad
and Ottapalam were established as joint ventures between
the Society and local Trusts operating in the districts. The
Society also managed the Palash Eye bank at Palash Eye Hos-
pital at Calicut as well as two sub centres in the districts of
Muttil and Waynad. Together, the Palash group of hospitals
served four districts of North Kerala — Palakkad, Calicut,
Kannur and Kasaragod. All the hospitals operated as inde-
pendent entities with the same operating philosophy of paid
treatments covering for the expenses of the free treatments.
Each hospital had an independent Hospital Management

Committee to look after the management of the hospital. The
Society handled the community outreach programmes for all
the hospitals. In collaboration with the hospitals, the Society
organized regular free eye camps where the poor were tested
for eye ailments and referred to the hospitals for further treat-
ment. With its aim to increase the reach of eye-care facilities,
the Society had been planning on setting up two more hos-
pitals in Waynad and Malappuram districts of Kerala. In the
year 2009, the group was the largest provider of eye care in
Kerala.
The hospitals were being run on a cross-subsidy model
where income generated through paid services was utilized
for: providing free eye treatment, supporting community out-
reach programmes of the Society and funding future expan-
sion plans of the hospital. Paid services (to patients who
could afford it) were provided at relatively affordable prices
when compared to other commercial eye care setups. The
core values of the organization were espoused as: excellence,
transparency, credibility and charitye.
Palash Eye Hospital, Calicut
Palash Eye Hospital, Calicut was set up with the following

mission:
e From the Hospital’s website.
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236 ACRJ
“to render Quality Eye Care to the common man —

Free of charge to the poor and at affordable costs to the
others.”
In a time period of 10 years, the hospital had expanded to

include multiple speciality clinics and facilities apart from
treating general cases:
a. Cataract and comprehensive ophthalmology unit
b. Cornea clinic
c. Retina clinic
d. Glaucoma clinic
e. Paediatric Ophthalmology and Strabismus (Squint) clinic
f. Oculoplastic Surgery
g. Uveitis & Ocular inflammation
h. Contact Lens Clinic
i. Neuro-ophthalmology
The hospital had an eye bank duly approved by the Eye Bank
Association of India which provided round the clock facili-
ties for eye donation. The corneas collected in the bank were
used for free transplantation in needy patients. The hospital
had also developed its own laboratory for testing and housed
a medical store as well as an optical shop within its premises.
In the 10-year period, the hospital had treated a large
number of free as well as paid cases. From March 2000 up to
March 2009, the hospital had registered 357,928 new patients
for free services and 328,240 new patients for paid services. A
total of 58,195 cataract surgeries were undertaken in the same
period out of which 39,222 were provided free of cost and
18,973 were paid. The costs of free treatment bordered around
US$ 129395.71f per annum from the year 2004 to 2009. A total
of 999 eye camps were conducted in this period in which
255,763 patients were examined out of which 46,110 were
identified for cataract surgery and brought to the hospital,
and 24,286 cataract surgeries were accomplished (Exhibit 3).
In addition to medical services, the hospital also estab-
lished Palash Research and Training Centre which had been
running two diploma courses: Diplomate of National Board
f Exchange rate: 1$ = INR 45.35 as on 27th June, 2011. The Economic Times (a national
daily newspaper).
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(DNB) and Diploma in Ophthalmic Assistanceg. Doctors and

the nursing staff from the hospital were also involved in
training the students.
FUNCTIONING OF THE HOSPITAL
Free Eye Camps
As part of its community outreach programme, Palash Eye

Care Society conducted regular free eye camps in the interior
regions of North Kerala. The eye camps were conducted with

the help of local volunteer groups and non-governmental
organizations (NGOs) operating in the region. Camps were
organized on Sundays and other public holidays to ensure
maximum turnout. Poor patients who could not afford
medical facilities were brought to the camp with the help of
volunteers where a team of doctors and nurses would test
them for cataract and other ailments. Once the patient was
diagnosed for cataract, they were informed about the details
of treatment at the hospital. The Society arranged for trans-
portation, food and accommodation at the hospital for the
patients and a family member. After the surgery, the patients
were transported back to their villages. All services including
transportation, accommodation, treatment, medication etc
were provided free of charge to patients. The normal duration
of stay of a patient in the hospital was 2–3 days.
Patient Consultation Process at the Hospital
Patients came to the hospital through two modes: walk-ins

and eye camps. New patients were registered, and based on
their ages, underwent different steps of preliminary diagnosis
and vision testing, after which the doctors undertook detailed
g A diploma is a short term course which provides training for furthering skills
in a particular field. Diploma courses are offered after different levels of formal
degrees earned by students depending upon the intended level of proficiency to be
developed through the diploma course.
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238 ACRJ
check-ups. General vision cases were prescribed medicines

and/or spectacles. Patients diagnosed with cataract were
directed to surgeons who counselled the patients, explained
them the process of cataract surgery, and undertook surgery
after conducting scans and ECGs. Children were directed

to the paediatric department. Other specific ailments such
as retina problems and glaucoma were treated in separate
special departments. Post diagnosis, treatment was planned
for patients and post treatment review and follow-up was
done to ensure eye health (Exhibit 4).
Patients who were called for review post treatment
were registered separately as review patients. After prelimi-

nary vision testing, they were directed to different depart-
ments (general cases, surgery, paediatric department, retina
department, glaucoma departments) for further treatment.
The paramedical staff helped the doctors at every stage of the
consultation process. They organized patients for check-up,
undertook basic eye testing, explained medication and treat-
ment, counselled the patients for surgery, assisted doctors
during surgery and carried out post-surgery patient care.
ORGANIZATION STRUCTURE
So far, Mr Kumar had been running the hospital like a family

organization where he had control over all activities of the
hospital and was the chief decision maker. He involved
himself personally in the recruitment of members of the man-
agement. The members of the management largely consisted
of retired individuals who were motivated to perform social
service and had approached Mr Kumar. These individuals
were not looking for high compensation, and were willing
to work for less than the market price. Being a charitable
organization, the hospital was not able to provide market
level compensation to the employees, and therefore, retired
professionals with a motive to serve the community served
its purpose best. The hospital had been functioning on the
basis of interpersonal relationships between the members
of the management. Informal communication and agree-
ment between the Head of the Administrative Services (HAS)
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and Head of Medical Services (HMS) had enabled smooth

functioning of the hospital so far.
Since the beginning, hospital functions had been
broadly divided into administrative services and medical ser-
vices. The administrative services division was responsible

for all the operational issues of the hospital. The HAS was
a retired chief manager of a nationalized bank with more
than 25 years of work experience in administrative roles. He
had been with the hospital for the last 5 years and was also
a member of the Trust. The HAS looked after the general
administration of services at the hospital as well as activi-
ties in the outreach programme, in which he was helped

by an executive assistant who was also the secretary to the
chairman. The administrative services were subdivided into
the following departments: outreach programme, admin-
istration, accounts, retail shops, customer relations, public
relations and systems. The medical services division was
responsible for effective discharge of duties by doctors and
paramedics. The HMS was a retired doctor from a govern-
ment medical college in Calicut with more than 20 years of
work experience. He had been working with the hospital for
the last 4 years but was not a member of the Trust. He was
responsible for the efficient functioning of the doctors and
the paramedics and had no role to play in hospital adminis-
tration. Both the HAS and the HMS reported to the chairman
(Exhibit 5).
The hospital had 3 permanent doctors who had been
working in the hospital for a period of 10 years. 8 doctors
worked on an annually renewable contract. In addition there
were 4 visiting doctors and 3 doctors with diplomas (general
health care) who were also associated with the hospital. The
nursing staff consisted of 31 nurses out of which 23 had been
serving in the hospital for at least 4 years and some of them
had been with the hospital since the time of its establishment.
8 nursing assistants had recently joined the hospital. The
paramedical staff of the hospital consisted of lab technicians
(2), refractionists (16) and people employed in the pharmacy
(2) and the optical shop (20). The 2 lab technicians had been
working with the hospital for approximately 5 and 10 years,
respectively. Most of the refractionists had been with the
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240 ACRJ
hospital for the period of 1–2 years. The chief refractionist

and the senior refractionist had been working in the hos-
pital for the last 5 and 3 years, respectively. Employees of the
optical shop as well as the pharmacy had an experience of
1 year to 10 years with the hospital while the pharmacist and

medical shop in-charge were serving the hospital for 10 and
5 years, respectively. 11 people employed in administration
had a work experience of 5 to 10 years with the hospital.
While gathering data for analysing the problems in the
hospital, Kartik and Raghav found that no formal job descrip-
tions existed in the hospital. They compiled the same by
conducting personal interviews across different levels in the

hospital (Exhibit 6). As they explored the roles of the para-
medical staff, the consultants became conscious of the critical
skills and training required for performing the roles. Refrac-
tionists were highly skilled individuals who carried out initial
evaluations of the eye such as testing for visual acuity and
refractive errors before the patient went to the doctor. The
nurses assisted doctors in carrying out operations, under-
took pre and post operative care and other kinds of clinical
support during testing and treatment. The lab technicians
carried out microbiological and biochemical tests required for
diagnosis such as blood group testing, urine sugar testing,
etc. These roles, especially the refractionists and the nurses,
required rigorous professional training and investment. It was
striking that over the last 10 years, the highest attrition was
observed among the refractionists. 7 refractionists had left the
hospital between August 2008 and May 2010. In addition, two
people had left the administrative division in 2009 and 2010,
and one nurse had left the hospital in 2009.
THE BREWING STORM THREATENING THE LONG

TERM SUSTAINABILITY OF THE HOSPITAL
External Competitive Environment
Over a span of ten years, the rapid expansion of the hos-

pital saw the addition of speciality clinics and recruitment of
more doctors and nursing staff. At the same time, the external
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environment became competitive as several commercial spe-

ciality eye hospitals were established in the region. 5 major
eye hospitals providing paid services to the community came
up after the year 2003:
a. AH foundation eye hospital — The hospital was estab-

lished in 2005 by a group of Non Resident Indians (NRIs)
from United Arab Emirates. The hospital was started with
a capacity of 300 beds. In addition to commercial activities,
the hospital also conducted eye camps for the community
to identify cases in need for treatment.
b. Sewa eye hospital — The hospital was established in 2004
by a group of NRIs from the Middle East with the aim of

providing excellent eye care to patients. The hospital was
also involved in charitable activities. It conducted free eye
camps in nearby areas and provides free treatment to the
needy.
c. Mani eye hospital — Established in 2005, the hospital had
been providing paid eye treatment services to the commu-
nity.
d. Shri Eye and ENT clinic — Shri Eye and ENT clinic was
started in 2003 with the dream of providing affordable and
modern treatment facilities to the people of the region.
e. Vishnu eye care hospital — Vishnu eye care hospital, a
part of the Vishnu Healthcare Private Ltd, was established
in the year 2005 in Calicut. The 60-year-old group had hos-
pitals spread across South India and was present in four
states — Andhra Pradesh, Karnataka, Kerala and Tamil
Nadu.
Most of these hospitals were for-profit establishments and
provided more attractive compensation and facilities to the
medical staff. This increased the threat of attrition of skilled
doctors and paramedics from Palash Eye Hospital. On the
face of it, Kartik and Raghav could not find any major prob-
lems in the functioning of the hospital. Their first guess was
that the changes in the external competitive environment
were threatening the hospital’s sustenance. However, digging
a little deeper, they started finding evidence for some major
issues within the hospital.
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242 ACRJ
Internal Conflicts, Discontent and Management Problems
Kartik and Raghav’s interaction with the HAS brought out

his discontent with the way the hospital was being run. He
described it as lack of “professionalism”. He stated that there

was a lack of systems, procedures and formal organization
structure. The growth of the hospital had not brought about
a corresponding formalization of procedures nor had a formal
growth plan been developed. The hospital had simply grown
as and when opportunities arose based on the vision and
decisions of the Chairperson and the Trust. In the words of
the HAS,
“… there are no career executives in this hospital, only
retired people, with no motive to excel. One reason for this
has been to save on expenses. The appointments have been
made for a variety of reasons, including cost savings, but
not for professional reasons. The chairman controls every-
thing, like a family management…even minor issues go to
the chairman. This was o.k. when the hospital was small,
but now it is on a growth path…”
Similar sentiments surfaced in their interactions with the
HMS, the doctors, the nursing staff and the administrative
staff. They all reported lack of formal guidelines for car-
rying out daily activities and the absence of any performance
parameters. All of them mentioned the nonexistence of stan-
dard operating procedures or official documents outlining
their roles and responsibilities which generally led to confu-
sions about certain tasks. The social service motive of the
hospital attracted retired doctors and staff who were willing
to work at less than the market price. Recruitment was
done based on the motivation of the incumbents for social
service. They would approach the director who would per-
sonally recruit them. With the scaling up of operations, this
was resulting in a gap between the organizational require-
ment and available skill sets. Several employees in key roles
had joined the hospital after their retirement. Often their job
responsibilities were not related to their skills and expertise.
For example, a manager referred to one of the tasks he did
as a “silly job” that should have been entrusted to a clerk. As
part of this job, he was required to collect coins from the two
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pay phones kept in the hospital’s lobby. In addition, due to

the lack of a formal structures and planning, there were no
opportunities for career advancement within the organization.
As per the HMS,
“… someone approaches management for a job. After

selection they look for a post…Staffing should be based on
a study, for example, how many nurses there should be
for doctors…There is no promotion, no avenues for career
advancement, people are demotivated.”
An undercurrent of discontent could also be detected in the
paramedical staff. In all the interviews, they also identified
the lack of formal procedures and standard parameters for

evaluating performance in the hospital. Even after working
for 10 years in the hospital they had not been rewarded with
career advancement and recognition. This was impacting the
morale of the workforce and with increasing external com-
petition, increased attrition was highly likely. This was quite
evident among the refractionists where the maximum attrition
was noted.
Dissatisfaction with the way the hospital was being
managed was also evident among the medical staff. The
doctors were not provided a role in the administrative
matters of the hospital. They wanted to contribute to the
growth of the hospital by involving themselves in managing
it. They contended that they were skilled and experienced
and had outstanding medical performance records. The
instances of medical negligence in the hospital were much
lesser than the other eye-care hospitals in the region. They
had been implicated in only four such cases so far. In spite
of their reputation and standing, they were not involved in
decision making related to several issues that affected perfor-
mance and efficiency of the hospital. For example, proposals
to offer new services or increase the working hours of the
hospital to match the other hospitals had been turned down
by the HAS. This was creating major discontent among the
doctors. Commenting on this, the HMS said:
“The post of HMS should have a key role. Now only the
nurses and the refractionists report to me [i.e. other than
the doctors]. There is no authority over other employees.
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244 ACRJ
They are not controllable. I feel the difference between the

paramedical staff and others. I can’t tell them anything
even when there are complaints. I think the main problem
here is this…management must recognize that doctors are
[the] key [to the proper functioning of the hospital].”

While the HAS acknowledged the competence of the doctors,
he was not willing to share administrative control with them.
He pointed out that all except three doctors were on an
annual contract and had refused to associate themselves with
the hospital. This indicated that they might not stay for long
periods of time with the hospital and giving them adminis-
trative control might destabilise the hospital’s functioning.

Two other members of the Trust also voiced similar con-
cerns regarding provision of more management control to the
doctors. They felt that it would compromise the fundamental
social character of the institution. As per the HAS,
“Doctors are not fully engaged [in the hospital]…Too much
power to them may compromise the long term prospects
of the hospital. They would start lobbying for themselves.
So the doctors have to be kept in check…the HAS is a
representative of the Trust in the hospital management,
while the HMS is not…This being a charitable hospital, we
can’t afford perks like private hospitals…We can depend
on doctors and paramedics who have retired from active
service and also on some who would like to stick with us
for personal reasons and don’t have high career aspira-
tions.”
Of late, the conflict between the medical and the administra-
tive divisions was becoming apparent even to the nursing
staff. The head nurse, who had been with the hospital for
several years after her retirement from government service
commented:
“The two [HAS & HMS] don’t see eye to eye on most
issues. It wasn’t like this before, in fact, till about two years
back also, they were on quite good working terms… not
sure why their relationship has deteriorated now.”
Mr Kumar was aware of the internal conflicts in the Hospital.
But his old age and health problems prevented him from
involving himself actively in hospital administration. He was
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therefore slowly reducing his involvement in the hospital

activities and was relying on the expertise of the consultants
to make suggestion to ensure future growth of the hospital.
A MULTI-LEVEL PROBLEM
Kartik and Raghav could sense the complexity of the situa-

tion. There were several macro and micro level issues, both
structural and behavioural, which they needed to be tackled.
They realised that in order for the hospital to transform into
a more professional and competitive setup, it was essential

that the doctors were provided more power and control over
activities directly related with the customers. In their view,
specific customer facing functions and staff should be under
the administrative control of the HMS. This would ensure
better control and coordination of customer facing activities
as well as greater involvement of the doctors in the hospital
providing them motivation to stay as well as attract qualified
doctors with career aspirations. On the other hand they knew
that the Trust and Society members were against providing
administrative control to the medical division and would
oppose any such move. They also pondered upon the role of
the Chairman in the changed scenario. His contribution to the
growth and development of the hospital could not be under-
mined. His deteriorating health implied that he could not be
very actively involved in the hospital but he could also not be
simply separated from the hospital that he had created and
developed. Any change in the structure and process would
have to be considered keeping in mind the Chairman and his
future role in the hospital. Another set of stakeholders which
was critical to the hospital was the Society. They were aware
of the inherent importance of the community outreach pro-
grammes run by the Society. So far, it was the Chairman who
was coordinating the activities of the Society, the Trust and
the hospital. However, with expansion and emerging con-
flicts, a mechanism to ensure a representation of the Society
was important. In the absence of this, the very objective of
the hospital could be sabotaged. At a micro level, the con-
sultants were conscious of the dissatisfaction among the staff
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246 ACRJ
due to lack of formal procedures, promotional avenues and

reward and recognition systems. In the wake of the increasing
competition for skilled resources, developing ways to boost
employee morale was critical for employee retention.
Thus, Kartik and Raghav realised that the problem

needed to be addressed at multiple levels in the organization,
and a multi-pronged strategy was required to deal with it.
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Exhibit 1
Understanding the Eye and Common Eye Ailments
Anatomy of the eye

In order to appreciate the critical role of an eye hospital and

understand how eye ailments affect people, it is essential to know the
basic structure and functioning of the eye. The eye has a lens which
is held in position by a group of muscles called the ciliary muscles.
The curvature of the lens changes for focusing on far off and nearby
objects. The lens divides the eye into two parts. The outermost layer
of the anterior part is called the cornea. The iris is a ring of muscles
which is present in front of the lens. It is the coloured part of the eye
appearing as a ring. The iris expands and contracts to control the

amount of light entering the eye and protects the eye from excess
light which might harm the retina. This is similar to the aperture
of a camera which prevents the film from over-exposure. As the
iris contracts or expands, the size of the hole in the centre (through
which light enters the eye) changes. This hole is known as the pupil.
The space between the cornea and the lens is filled with a fluid called
aqueous humor which lubricates the lens and provides oxygen and
nutrients to the cornea and the lens. The chamber behind the lens is
filled with a gel like liquid called vitreous humor. At the back of the
eye is the retina, which is a layer that receives light rays and converts
them into neural signals to be carried to the brain through the optic
nerve. These signals get interpreted in the brain resulting in vision
(Figure 1).
Fig. 1. The Human Eye*.a
*Source: http://www.nei.nih.gov/health/eyediagram/eyeimages1.asp.
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248 ACRJ
Common eye ailments
Refractive errors
Refractive errors occur when light entering the eye does not get
focussed on the retina. Instead it either gets focussed in front of

or behind the retina due to several changes in the curvature of the
lens or size of the eyeballs resulting in blurred vision. Two common
refractive errors are myopia (short sightedness) and hyperopia (far
sightedness). These errors can be corrected through prescribing
spectacles or contact lenses.
Cataract
One of the most common ailments of the eye is cataract. Cataract is a

non-contagious disease in which the lens gets clouded and becomes
opaque due to change in its chemical composition. This inhibits light
rays to enter the eye resulting in blurred vision and partial blindness.
In most of the cases, cataract occurs due to the normal aging process.
Other cases may be due to eye injuries, side effects of drugs,
hereditary in case of children or due to other diseases like glaucoma,
eye tumours, diabetes, etc.
Different methods of treatment exist for cataract. The basic
procedure involves removal of the affected lens of the eye and its
replacement with an artificial lens through surgery.
Glaucoma
Glaucoma occurs when the fluid pressure in the eye increases beyond
normal level result in damage to the optic nerve. This results in loss
of vision which cannot be recovered. Glaucoma generally affects
people over 40 years of age. However, it may occur in people of all
ages. Individuals with myopia, diabetes, hypertension or having
a family history of glaucoma have an increased risk of glaucoma.
Although vision loss in glaucoma is irreversible, the remaining
vision can be preserved and fluid pressure can be reduced through
medication, surgery or laser treatment.
S0218927515500091.indd 248 2/2/2016 11:41:39 AM

S0218927515500091.indd 249
Exhibit 2
Management Structure of the Palash Group of Hospitals

2/2/2016 11:41:40 AM
250 ACRJ
S0218927515500091.indd 250
Source: Company literature.
Exhibit 3
Hospital Performance Statistics
2/2/2016 11:41:41 AM
S0218927515500091.indd 251
Exhibit 3 (Continued)
2/2/2016 11:41:41 AM
252 ACRJ
Exhibit 3 (Continued)
(Exchange rate: 1$ = INR 45.35 as on 27 June, 2011. The Economic Times

(a national daily newspaper))
Eye camp details
No. of patients No. of

No. of No. of patients selected patients
Period examined in the
camps for cataract surgery operated
camps
Up to March 2000 31 13732 1422 866

Apr 2000–Mar 2001 53 16149 2339 1294
Apr 2001–Mar 2002 77 23084 4953 2724
Apr 2002–Mar 2003 74 22165 4934 2582
Apr 2003–Mar 2004 91 25825 4982 2785
Apr 2004–Mar 2005 125 29538 4591 2626
Apr 2005–Mar 2006 125 28286 4836 2581
Apr 2006–Mar 2007 139 29536 5564 2980
Apr 2007–Mar 2008 154 30359 5814 2890
Apr 2008–Mar 2009 130 37089 6675 2958
Total 999 255763 46110 24286
S0218927515500091.indd 252 2/2/2016 11:41:41 AM

S0218927515500091.indd 253
Procedure for new patients
Exhibit 4
The Patient Consultation Process

2/2/2016 11:41:42 AM
Exhibit 5
254 ACRJ
S0218927515500091.indd 254
Organization Structure
Source: Provided by the organization.
2/2/2016 11:41:44 AM
Exhibit 6
Roles and Responsibilities of Key Organizational Members as

Described by Them
Head of Administrative Services (HAS)
a. Policy decisions
i. Reporting major developments to board of trustees, hospital
management committee, and the chairman.
ii. Implementing all policy decisions.
iii. Reviewing progress of activities and ensuring timely com-
pletion of activities.
b. Financial management
i. Managing bank accounts and ensuring financial viability of

the hospital
i. Conducting financial audits.
ii. Controlling and supervising purchases, material manage-
ment, expenditures.
c. Personnel and Human Resource Management
i. Recruitments and promotions as per policy, transfers,
placements, postings of administrative staff.
ii. Disbursement of salary and benefits.
iii. Periodic review of performance (informal).
iv. Ensuring attendance and punctuality, making leave rules.
v. Ensuring compliance to leave and service regulations.
vi. Handling trade union matters.
d. Taking care of hospital premises and equipments.
e. Hospital supplies and material management.
f. Supervision of quality of services and patient care.
g. Planning further development of the hospital.
General Manager — Outreach Programme
a. Organizing eye camps at the hospital as well as rural and sub-

urban areas
i. Posting personnel for the eye camps in consultation with the
HMS.
ii. Interacting with NGOs and government bodies for the con-
duction of the eye camp.
b. Keeping track of eye camps organized by other hospitals.
Manager — Customer Relations
a. Maintaining relationships with and ensuring support of

government departments (such as revenue), advocates, architects,
insurance agents, etc.
b. Liaison with different agents for building maintenance and
construction.
S0218927515500091.indd 255 2/2/2016 11:41:44 AM

256 ACRJ
c. Supervision and random checks of the cleanliness of the hospital.

d. Taking care of complaints of the patients such as process delays,
dissatisfaction with services, inadequate facilities etc.
e. Allotting man power for better customer service.
Manager — Administration
a. Collecting cash from different counters, maintaining cash books

and ensuring remittance to the bank.
b. Maintaining attendance and leave registers, granting leave to staff.
Verification of leaves of employees of associated hospitals.
c. Ensuring upkeep of hospital vehicles.
d. Ensuring supplies of oxygen and nitrogen cylinders.
Administrative Officer
a. Monthly renewal of agreement papers and professional protection

schemes for contractual doctors.
b. Biomedical waste management.
c. Managing purchase and suppliers of medicines and equipments.
d. Maintaining information regarding cost, quality and source of
supply of medicines, equipments etc.
e. Managing records of doctors’ leaves.
f. Preparation of monthly reports of doctors.
Manager — Accounts
a. Responsible for salary, allowances and professional fees (for

doctors).
b. Maintaining profit/loss accounts, balance sheets and stock reports.
c Undertaking bank transactions, and preparing reports for the
same.
Manager — Retail Shops
a. Verification of daily report of the optical shop.

b. Supervision of transactions with the customers.
c. Verification of pharmacy bills and ensuring medicine stock in the
pharmacy.
Administrative Officer — Systems (IT)
a. Managing hardware and software problems.

b. Data base management, taking backups and resolving errors.
c. Maintaining network infrastructure.
d. Controlling user rights.
e. Ensuring system security.
f. Supervision of associated hospital IT systems.
g. Conducting and assisting in new software training.
S0218927515500091.indd 256 2/2/2016 11:41:44 AM

h. Suggestions for purchase of new hardware/software.

i. Managing the website.
j. Preparing reports of other departments in specified format.
Patient Counsellor (Reports to Manager — Customer Relations)
a. Counselling patients about surgery procedures, medication

details, post operative care and cost of surgery, clarifying doubts
of patients.
b. Acting as a mediator between patients and doctors.
c. Placing order for lenses with the administration office for
surgeries.
Public Relations Officer (Reports to General Manager —

Outreach Programme)
a. Conducting eye camps

i. Identifying camp organizers in different areas.
ii. Identifying areas for organizing the camps.
iii. Allocating staff and doctors for duty in eye camps.
iv. Organizing major camps four times a year.
v. Supervising camp expenses.
vi. Supervising welfare of patients from eye camps.
b. Managing eye bank activities
i. Arranging for round the clock availability of staff.
ii. Scheduling duties of doctors for eye calls.
iii. Managing medicine stock in eye bank.
iv. Maintaining registers, taking care of communication to
patients and donors.
c. Media relations
i. Managing hospital related communications with the media.
ii. Managing communications to the public regarding hospital
activities.
iii. Managing internal communication – preparing reports for the
hospital magazine.
d. Managing eye screening programmes in schools
i. Supervising the conduction of the programme.
ii. Supervising detailed examination of the students at the
hospital.
e. Visiting other associated hospitals of the group for supervising
public relations related activities.
f. Supervising outreach programmes of all hospitals.
Head of Medical Services (HMS)
a. Professional work (attending patients).

b. Strategic and operational responsibilities
i. Attending hospital management committee meetings to
represent interests of the medical staff in policy decisions.
S0218927515500091.indd 257 2/2/2016 11:41:44 AM

258 ACRJ
ii. Providing inputs to hospital management committee for

managing hospital programmes and services such as
policies, services, quality assurance, education, performance
monitoring etc.
iii. Taking up operational issues with the HAS such as patient

flow quality, system quality, scheduling issues and patient
doctor relationships etc.
c. Leadership and staff development role
i. Supervising performance of medical and paramedical staff.
ii. Enabling professional development of the medical and
paramedical staff.
iii. Supporting development of medical staff and students by
providing exemplary leadership and sharing knowledge.
iv. Representing the hospital at community functions, meetings

and forums.
d. Administration support
i. Providing opinion in recruitments, staff placements, and
performance reviews of doctors and other medical staff
reporting to the HMS.
ii. Ensuring resolution of compliance related concerns regarding
the medical staff coming from patients, administration or
other staff.
iii. Coordinating with customer relations manager to ensure
patient care.
Nursing Superintendent (reports to HMS)
a. Maintaining attendance and leave related data for nursing and

cleaning staff.
b. Preparing the duty roster and assigning duties to the staff.
c. Supervising cleaning staff.
d. Collecting cash from coin boxes and handing it over to accounts
department.
S0218927515500091.indd 258 2/2/2016 11:41:44 AM

Palash Eye Hospital-Sustaining A Social Enterprise

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Palash Eye Hospital-Sustaining A Social Enterprise

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ASIAN CASE RESEARCH JOURNAL, VOL.

19, ISSUE 2, 231–258 (2015)

Sustaining a Social Enterprise:

© 2015 by World Scientific Publishing Co. DOI: 10.1142/S0218927515500091

S0218927515500091.indd 231 2/2/2016 11:41:38 AM

a threat to the sustenance of his hospital if these issues were

assisting organizations in crisis had been exceptional. It was

THE LARGER CONTEXT: BLINDNESS IN INDIA

Blindness afflicts approximately 15 million of the Indian

S0218927515500091.indd 232 2/2/2016 11:41:38 AM

Disorder (4.70%), and others (4.19%). Childhood blindness or

be avoided by providing appropriate medical care on time.

ORGANIZATIONAL BACKGROUND: THE CONCEPTION

b Source: Government of India’s National Programme for Control of Blindness

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Act, 1860 of Indiad. The Society had a President, a vice presi-

personalities from local bodies. Through a memorandum of

“to render assistance to the blind people such as detec-

S0218927515500091.indd 234 2/2/2016 11:41:38 AM

The Palash Eye Hospital at Thalassery was established and

Each hospital had an independent Hospital Management

Palash Eye Hospital, Calicut

Palash Eye Hospital, Calicut was set up with the following

e From the Hospital’s website.

S0218927515500091.indd 235 2/2/2016 11:41:38 AM

“to render Quality Eye Care to the common man —

In a time period of 10 years, the hospital had expanded to

S0218927515500091.indd 236 2/2/2016 11:41:38 AM

(DNB) and Diploma in Ophthalmic Assistanceg. Doctors and

FUNCTIONING OF THE HOSPITAL

Free Eye Camps

As part of its community outreach programme, Palash Eye

regions of North Kerala. The eye camps were conducted with

Patient Consultation Process at the Hospital

Patients came to the hospital through two modes: walk-ins

S0218927515500091.indd 237 2/2/2016 11:41:38 AM

check-ups. General vision cases were prescribed medicines

after conducting scans and ECGs. Children were directed

were registered separately as review patients. After prelimi-

So far, Mr Kumar had been running the hospital like a family

S0218927515500091.indd 238 2/2/2016 11:41:38 AM

and Head of Medical Services (HMS) had enabled smooth

vices. The administrative services division was responsible

ties in the outreach programme, in which he was helped

S0218927515500091.indd 239 2/2/2016 11:41:38 AM

hospital for the period of 1–2 years. The chief refractionist

1 year to 10 years with the hospital while the pharmacist and

conducting personal interviews across different levels in the

THE BREWING STORM THREATENING THE LONG

External Competitive Environment

Over a span of ten years, the rapid expansion of the hos-

S0218927515500091.indd 240 2/2/2016 11:41:38 AM

environment became competitive as several commercial spe-

a. AH foundation eye hospital — The hospital was estab-

by a group of NRIs from the Middle East with the aim of

S0218927515500091.indd 241 2/2/2016 11:41:38 AM

Internal Conflicts, Discontent and Management Problems

Kartik and Raghav’s interaction with the HAS brought out

described it as lack of “professionalism”. He stated that there

S0218927515500091.indd 242 2/2/2016 11:41:38 AM

pay phones kept in the hospital’s lobby. In addition, due to

“… someone approaches management for a job. After

the lack of formal procedures and standard parameters for