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Spillover Benefits of Marketing Exclusively to Free Patients at Aravind Eye Hospital
, Sachin Gupta, C Gnanasekaran, Thulasiraj Ravilla
Published in iimidr.ac.in
Pages: 1 - 42

An innovative business model for delivery of health services in low and middle income countries is based on cross-subsidizing across patients. Services are offered to poor patients for free, while other patients pay competitive market prices. Driven by their social mission, organizations often focus their marketing efforts only on poor patients via outreach and education. We analyze the outreach activities (camps) of Aravind Eye Hospital in India to learn whether these efforts produce additional spillover benefits of attracting paying patients to its hospitals. In particular, we estimate spatial and temporal (both short- and long-term) effects of camps on different types of paying patients. Based on nine years of historical data on the spatial origin of patient traffic and outreach camp locations, we find that camps have net positive effects on the number of paying patients. These effects are consistent with the camps acting as advertising for Aravind. We also find that the effects of camps are stronger for patients who pay a subsidized price than for those who pay full price, camps influence patients in a small geographic radius of six miles, and the effects persist for up to ten weeks after the camp. Camps also have long term positive effects beyond ten weeks on the number of new patients who pay full price. Further, effects become stronger with distance from the base hospital, a finding also consistent with camps acting as advertising. Our findings reinforce the viability of the cross-subsidization model since they identify a mechanism that creates synergy between the social mission and income generating sides of the organization.

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Concepts (6)
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    Spatial effects
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    Health care