Spring 2019 Impact Assessment

The Wharton Global Healthcare Volunteers

The Wharton School of Business, University of Pennsylvania

The Makunda Model:

A Study of High-Quality, Accessible Healthcare in
Low-Resource Settings
Caleb Flint1, Kerianne Fernandez2, Alomi Parikh3,
Shannon Ridge4, Stephen Sammut5

ABSTRACT

Mission-focused hospitals in low-resource regions of the world face significant

challenges in providing high-quality, accessible care to patients. External funding is limited and
can fluctuate significantly from year to year. Additionally, attracting and retaining well-qualified
healthcare professionals for more than short stints can seem almost impossible.
Over a period of 25 years, the Makunda Christian Leprosy & General Hospital has
developed a unique model enabling it to provide quality care for over 100,000 outpatient visits,
10,000 hospital admissions, and 5,000 baby deliveries per year. Located in a remote region in
northeast India, Makunda Hospital operates with an annual budget of approximately $2M USD
and receives less than 2% of its funding from external sources. Yet, even competitive hospital
administrators admit that many of their patients travel hours to seek care at Makunda Hospital’s
doors because of its reputation for providing excellent maternal care.
To evaluate Makunda Hospital’s impact and understand how its model works, we
observed its facilities and operational practices; we conducted over 30 in-depth interviews with
patients and community members, Makunda Hospital employees, and competitor hospital
administrators; and we analyzed years of financial documents and hospital statistics.
We found that Makunda Hospital’s focus on (a) poor-centric strategies, (b) thoughtful
cost management, and (c) continuous improvement have enabled it to achieve the volumes
necessary to generate sufficient revenue and retain valuable healthcare professionals.
In Part I, we provide historical context on Makunda Hospital, including its 30-year
strategic plan and expansion into education and agriculture. In Part II, we describe our
methodology for collecting data, and in Part III we share the results of our impact assessment. In
Part IV we discuss key takeaways for other mission-focused hospitals in low-resource settings.
Part V concludes by suggesting broader implications for healthcare and areas of further study.

1
MBA Candidate at the Wharton School of Business & JD Candidate at the University of Pennsylvania Law School
(2020)
2
MBA Candidate at the Wharton School of Business (2019)
3
MBA Candidate at the Wharton School of Business & MD Candidate at the Perelman School of Medicine at the
University of Pennsylvania (2020)
4
MBA Candidate at the Wharton School of Business (2019)
5
Lecturer at the Wharton School of Business & Visiting Faculty at the Indian School of Business

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TABLE OF CONTENTS

PART I: INTRODUCTION

PART II: METHODOLOGY

1. In-depth Interviews
2. Facility Observations
3. Document Analysis

PART III: IMPACT ASSESSMENT

1. Volumes
2. Efficiency
3. Quality
4. Community Impact

PART IV: DISCUSSION

1. Poor-Centric Strategies
a. Ability-to-pay-based pricing approach
b. Equal services for all
c. Hyper-tailored charity
d. Addressing cultural barriers to usage
2. Thoughtful Cost Management
a. Revised gold standard
b. Recruitment and retention of efficient labor
3. Continuous Improvement

PART V: CONCLUSION

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PART I: INTRODUCTION

The Makunda Christian Leprosy & General Hospital,6 founded in 1950 by Christian
missionaries, is located in a remote region in northeast India at the border of three neighboring
states: Assam, Tripura, and Mizoram. Originally a leprosy colony on 1000 acres of land, the
hospital became a general hospital from the late 1950s until the early 1980s, when foreign
physicians running it were forced to leave India. Consequently, the hospital fell into a state of
disuse until 1992, when it became a member of the Emmanuel Health Association (EHA), an
association of 20 independent hospitals in India.7

Figure 1. Location of Makunda Hospital within Northeast India

https://www.researchgate.net/publication/319837781_Piecing_Together_from_Fragments_Re-
evaluating_the_%27Neolithic%27_Situation_in_Northeast_India/figures

Prior to reopening the hospital, EHA sought reassurance that the hospital would stay
open, so it asked two physicians, Dr. Vijay Anand Ismavel and Dr. Ann Miriam, if they would be
willing to stay long term. When Dr. Ismavel and Dr. Miriam asked what was meant by long
term, EHA specified that they should plan to stay until retirement.8 Driven by their commitment
to Christian values, the couple accepted the conditions and moved to the area in March 1993 to

6
See http://www.makunda.in/.
7
https://eha-health.org/eha-location-map/87-eha-locations-across-india/22-makunda-christian-hospital
8
Interview with Dr. Vijay Ismavel, December 2018. See also https://the-sparrowsnest.net/2018/05/12/early-days-at-
makunda/.

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reopen the hospital despite a lack of funding, running water, or electricity for the facilities.9
Shortly after arriving, they realized that there was strong opposition to reopening the hospital
from some community members who had already made plans to divide up the land amongst
themselves.
To cover the full time period that they planned to stay at Makunda Hospital, Dr. Vijay
and Dr. Ann developed a 30-year strategic plan with three key phases. Phase I was aimed at
stability: resolving tensions with local community members and generating enough revenue to
cover costs. Phase II focused on local expansion, including building a secondary school, nursing
school, and branch hospital to serve the community. Finally, Phase III centered on distant
impact, including developing and sharing best practices with organizations in other low-resource
settings. This period also included a new community college, a nature club, and a larger
emphasis on agriculture.
Today, 25 years into its strategic plan, Makunda Hospital has completed two phases and
is well into its third. In the 2018-2019 fiscal year, the hospital provided care for 109,509
outpatients, had 14,350 inpatient admissions, performed 3,058 major surgeries, and conducted
5,889 deliveries. It has also opened another branch in Tripura that served 7,838 of these patients
in 2018-19. Makunda Hospital provides its services at very low prices per inpatient visit and
provides charity to a large proportion of its patients.
Furthermore, Makunda Hospital has created various educational and agricultural
businesses. It runs a K-12 school system with over 1000 students, a nursing college with 61
students, and a nurse assistant training program with 43 students. Most of the nursing college and
nurse assistant program students stay in dormitories provided by Makunda Hospital. On the
agricultural side, Makunda owns a farm that generates food for its primary and secondary school
children for most of the year, and it owns several fisheries and a piggery. Finally, Makunda
Hospital recently designated a wildlife area within its boundaries and created “Makunda Nature
Club” to document and publish biodiversity records.10

PART II: METHODOLOGY

We primarily conducted our research through three methods: (1) in-depth interviews, (2)
facility observations, and (3) document analysis.

1. In-depth Interviews
First, we conducted over 30 interviews with Makunda Hospital employees, hospital
patients and community members, and competitor hospital administrators. Interviews focused on
the strengths, weaknesses, changes, differentiators, and impact of Makunda Hospital. Deeper

9
CMC Vellore “Paul Harrison Award 2016,” https://www.vellorecmc.org/wp-content/uploads/2016/12/Paul-
Harrison-Citation-2016.pdf
10
https://www.youtube.com/watch?v=oRBRAsdYuTY

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dives discussed poor-centric strategies, thoughtful cost management, and continuous

improvement.
Interviews with the Makunda Hospital employees included Dr. Vijay Anand Ismavel
(Senior Administrative Officer, Pediatric Surgeon), Dr. Ann Miriam (Correspondent training,
Anesthesiologist), Dr. Roshine Mary Koshy (Medical Superintendent, Physician), James
(Hospital Manager), Dr. Shajin T. (Deputy Medical Superintendent, Pediatrician), Dr.
Gunaseelan P. (Psychiatrist), Dr. Jan-Henk Dubbink (Resident Physician in Global Health and
Tropical Medicine from Royal Dutch Tropical Institute), Ms. Melody Lalsangpuii (Vice
Principal of nursing school), Ms. Jasmine Susan Koshy (Deputy Nursing Superintendent,
Principal Nurse Assistant Program), Ms. Kenningpeule D. Haikube (Nursing Superintendent),
Ms. Sasomchun Halam (Nursing School Tutor), Mr. Daniel Hmar (Principal of Higher
Secondary School), Daniel Anandaraj and Dani Paul (school teachers), Immanuel Manickaraj
(civil engineer, construction manager) and Rejoice Gassah (Makunda High School graduate,
biodiversity project employee).
In addition, we visited the following five local communities, which represent a broad
cross-section of the hospital’s patients, to understand how patients and their families view
Makunda Hospital:
1. Tea Garden Community: Tea garden laborers are among the poorest people in Indian
society, usually living in crowded primitive huts owned by the owners of the tea
gardens and earning around 100 Rs. ($1.42 USD) per day. We interviewed a family
with four children who had each been treated at Makunda Hospital, including one
who nearly died after not being able to pass urine. The family received full charity
and did not pay anything for the medical services they received.
2. Brahmin Community: Members of the Brahmin community tend to occupy leadership
positions and fall among the wealthier in society, living in larger homes with
electricity. We interviewed the family of a mother who delivered twins at Makunda
Hospital and then was treated there for subsequent heart failure and peripheral artery
embolism. The family paid around 5,000 Rs. ($71 USD) for the birth and 40,000-
50,000 Rs. ($570-710 USD) for subsequent treatment including 2.5 months of
inpatient hospital stay.
3. Vaishya Community: Members of the Vaishya community include skilled laborers
who live in humble homes on their own land. We interviewed two families, including
a man who broke his leg while working and an elderly couple who had been treated
for various ailments. The families paid very little for the services received.
4. Tribal Community: Members of the tribal community often cultivate rice for work
and live in more isolated communities with homes made of tin roofs and bamboo
walls. We interviewed two families, one of which included a woman who had been
unconscious for three days after contracting malaria before being treated at Makunda,
and another who had hand surgery after an accident. These families paid nearly
nothing for the services they received.
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5. Muslim Community: Muslim families make up about a third of Makunda Hospital’s

patients. We visited a family in a relatively large home who had used Makunda
Hospital for the births of their children and their children’s high school education.
Finally, we interviewed hospital administrators from three competitive hospitals in
northeast India, including two government hospitals and another mission hospital owned by
EHA. Questions focused on the services and value proposition of those hospitals versus
Makunda Hospital.
1. Dharmanagar Civil Hospital: Located 1-2 hours to the west, this government hospital
provides full inpatient, outpatient, lab testing, and pharmacy services, mostly for free, to
citizens of the North Tripura District of Tripura State. We interviewed the Chief Medical
Officer and then met with several hospital physicians and staff as we toured the facility.
2. Karimganj District Hospital: Located 2-3 hours to the east, this government hospital
similarly offers most hospital services and charges very modest fees (typically 5 Rs. for
outpatient visits). We interviewed the Medical Superintendent and then met with various
hospital physicians and staff as we toured the facility.
3. Burrows Memorial Christian Hospital: Burrows Memorial Christian Hospital is a mission
hospital that is similarly a member of the Emmanuel Health Association and is located 4-
5 hours to the northeast by Silchar, one of the larger cities in northeast India. With 60-70
beds, the hospital provides general surgery, maternal care, and emergency services. It
also has a nursing school. We interviewed the Senior Administrative Officer, Nursing
School Superintendent, Nursing Staff Supervisor, and General Surgeon.

2. Facility Observations
To understand Makunda Hospital’s model, we conducted an extensive tour of the
facilities. First, we followed the outpatient experience from check-in to the waiting area to
physician consultation to the pharmacy. Significant time was spent observing patients and
operational practices in each of these areas. Second, we toured the lab testing rooms, operating
rooms, and inpatient facilities, which include over 150 beds across the female ward, male ward,
maternal ward, pediatric ward, postnatal ward, high dependency unit, and NICU. Finally, we
visited the other facilities surrounding Makunda Hospital, including the Makunda primary and
secondary schools, nursing and nursing assistant schools, grain farms and fisheries, physician
and staff dormitories, and wildlife preservation area.
For purposes of comparison, we also toured the facilities of both government hospitals
and the other mission hospital.

3. Document Analysis
We met with the managerial staff of Makunda Hospital to request and review various
financial and statistical documents. This included over 10 years of historical revenue and cost
data and detailed patient volume statistics. We also reviewed Makunda Hospital’s annual report
and Emmanuel Hospital Association’s annual reports and conducted various financial analyses to
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understand Makunda’s model and how it compares to other hospitals both in the United States
and India. Finally, we reviewed the patient complaint log and statistical data on hospital
complications and mortalities.
Based on these in-depth interviews, facility observations, and detailed document analysis,
we feel confident that we understand the Makunda Model and its impact on the local community.

PART III. IMPACT ASSESSMENT

Below we present the results of our impact assessment of Makunda Hospital’s volume,
efficiency, quality, and overall community impact.

1. Volume
In the 2018-2019 fiscal year, Makunda Hospital completed 109,509 outpatient visits (a
7.7% CAGR from 2014-19); 14,350 inpatient admissions (6.0% CAGR); 3,058 major surgeries
(5.7% CAGR); and 5,889 deliveries (5.1% CAGR).

6000

5000

4000

3000 Deliveries

2000 Surgeries

1000

To put these numbers in context, we looked at the Emmanuel Hospital Association, the
largest Christian non-profit healthcare provider in India with 20 hospitals and 40+ community-
based projects.11 The average hospital in the Emmanuel Hospital Association had 45,825
outpatient visits; 5,034 inpatient admissions; 1,542 major surgeries; and 1,245 deliveries. Of the
19 EHA hospitals reported, Makunda Hospital was the largest by number of outpatients,
deliveries, and surgeries, and second largest by number of inpatients and beds. Furthermore,
many of the other EHA hospitals are facing declining patient volume, as opposed to Makunda,

11
See EHA 2017-18 Annual Report, https://eha-health.org/downloads/annual-reports.

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which has seen consistent CAGR growth over the past several years.12 Although there are many
factors which affect statistics among different EHA hospitals, it is notable that Makunda has
grown to become one of the highest-volume EHA hospitals despite starting off as a completely
closed-down hospital 25 years ago.
For an additional point of comparison, the average hospital in the U.S. has 7,745
discharges per year, with urban hospitals hitting 11,295 discharges per year on average, and rural
hospitals reaching 2,467 discharges per year on average.13 Furthermore, U.S. hospitals tend to
see about twice as many outpatients as inpatients per year, far below Makunda Hospital’s
numbers.14 Overall, Makunda Hospital has achieved very high volumes, especially considering
its location in a more remote area of India.

Annual Hospital Inpatient Volume

16000
13,458
14000
12000
10000
7,745
8000
6000 5,034
4000
2000
0
Volume

Makunda EHA Average Hospital US Hospitals

2. Efficiency
In achieving these volumes, Makunda Hospital operates on a total budget of less than
$2M USD per year, which includes the total costs for the hospital, educational, and agricultural
portions of its operations. Furthermore, Makunda Hospital has run efficiently enough to reinvest
nearly 20% of its annual revenue in new buildings and equipment each year and to write off
about 10% of its bills to charity. For the fiscal year 2018-19, the average outpatient cost was only
Rs. 889 ($13 USD), and the average inpatient cost was only Rs. 5148 ($74 USD), figures we

12
Based on analysis of EHA Annual Reports, https://eha-health.org/downloads/annual-reports.
13
“Inpatient Stays in Rural Hospitals,” Statistical Brief #85, Healthcare Cost and Utilization Project, AHRQ,
https://www.hcup-us.ahrq.gov/reports/statbriefs/sb85.pdf
14
Analysis of American Hospital Association Annual Survey data, 2014, for community hospitals. US Census
Bureau: National and State Population Estimates, July 1, 2014.
http://www.census.gov/popest/data/national/asrh/2014/index.html.

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substantiated by examining detailed accounting and financial documents. These numbers

represent very efficient costs per patient treated.15

3. Quality
Makunda Hospital is well-known for its high-quality services, particularly in maternal
care. To make our assessment of quality, we examined the hospital’s certification, key
performance metrics, and qualitative interview responses.
First, Makunda Hospital has achieved entry-level certification for safety and quality from
the National Accreditation Board for Hospitals and Healthcare Providers (NABH).16 Such a
certification requires passing an extensive audit process, creating a detailed quality assurance
process that including continuous tracking of certain metrics, and meeting stringent standards for
the treatment and disposal of medical waste products. To meet these standards—which very few
mission hospitals in India have achieved—Makunda Hospital created a quality team dedicated to
completing the certification process and purchased additional necessary equipment.
Second, Makunda Hospital tracks favorably on key metrics for hospital quality, including
overall inpatient mortality and maternal mortality rates. In 2018, the overall mortality rate in the
hospital was 2.0%, down from 2.4% in 2016. The proportion of maternal deaths among mothers
who delivered in Makunda similarly declined from 0.5% in 2016 to 0.1% in 2018. Considering
that many community members come to Makunda Hospital only for their most complicated
births, this is particularly indicative of its standards of quality. The hospital has been part of a
private public partnership with National Health Mission Assam for maternal and child health
services since 2008 and is recognized as a referral center for high-risk obstetrics patients in the
district. Makunda’s impact on local measures of health is also noticeable. For example, the
MMR and IMR rates for the region dropped significantly in the district of Karimganj during the
years Makunda Hospital increased its number of deliveries17:

Year 2009-10 2010-11 2012-13

MMR per 100,000 live births 474 342 281
IMR per 1,000 live births 87 69 69

Finally, we found near-universal respect for Makunda Hospital among both community
members and competitive hospital administrators. One government hospital administrator

15
For some comparison points in the U.S., see https://www.beckershospitalreview.com/finance/average-hospital-
expenses-per-inpatient-day-across-50-states.html.
16
See https://www.nabh.co/.
17
Based on Annual Health survey fact sheets and Kolkata Missions – November 2016.pptx. Other hospitals in the
area may have contributed to this improvement, including Karimganj Civil Hospital, which had 2,333 deliveries in
2016; and Silchar Medical College, which had 10,236 deliveries in 2016 (see www.smcassam.gov.in for more recent
statistics). But Makunda certainly played a role given its relatively high and rapidly increasing patient volumes.

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indicated his hospital loses “many, many patients” to Makunda Hospital despite the fact that
Makunda Hospital charges for its services (as opposed to government hospitals, which are
essentially free) and the fact that it is located hours away. Though he had not visited Makunda
Hospital himself, he told us, “We hear from patients that the services are much better there;
people tell us that it is well-managed, patient satisfaction is high, and it has good cleanliness.”
Another government administrator said that Makunda Hospital was well respected by
their staff of doctors, and many of this hospital’s patients know it for its strong maternal services
and travel hours to go there instead for baby deliveries. When we spoke to the general surgeon of
Burrows Memorial Christian Hospital, he stated that Makunda is “probably the best-run mission
hospital in India” and added that many healthcare professionals like to start their careers there
because of the great training it provides.
We heard a similar refrain when visiting local community members. When we asked why
one family decided to use Makunda Hospital rather than another hospital, one previous patient
asserted that it is the “best hospital in Assam” and “we know that they will take care of us.”
Similar confirmations of the community’s trust in Makunda Hospital were made in each of the
five communities we visited. In the tea garden community, one mother said that she brought her
dying son to Makunda Hospital at the urging of friends despite believing it was too late. Her
positive experience with her son’s recovery led her to bring back her three other children over
the years and to strongly recommend the hospital to any of her friends who need services.

4. Community Impact
Makunda Hospital is unique from many private hospitals in that it was founded with the
intent to help the poor, and it stands out for the hospital management’s proactive efforts to ensure
that all hospital policies and decisions are carefully designed to benefit them. A large proportion
of its patients do not receive any bills for the services it provides; in many cases, these patients
would otherwise not have received treatment at all and would have died or lived with great pain.
Over time, Makunda has built a reputation for low baseline prices and charity for those who
cannot afford even these prices, and more generally for taking care of anyone who comes to its
doors.
While Makunda Hospital has had a substantial impact on healthcare in the local
community, we also gleaned from interviews that its impact extends far beyond that to the
community at large. One of the most direct and obvious impacts is in the lives of the 1000+
students that receive a K-12 education. One student we spoke with, a graduate of the high school,
described how many local students used to stop attending school after 10th grade to work at home
because the local schools were of such poor quality that they could not typically transfer to
“college” for 11th and 12th grade. Makunda has changed this dynamic by opening a school, which
has attracted educated families with young children to the region and become the go-to place for
local teachers at other schools to send their own children. Last year, 100% of the 12 graduating
seniors passed their board exams, and all are going to reputable colleges across India to study a
variety of subjects across the sciences. In addition to its K-12 education program, Makunda
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operates nursing assistant and nursing school programs to train local community members in
preparation for working at Makunda Hospital and other locations.
In addition to education, Makunda provides direct employment to hundreds of people,
with cascading benefits on the local economy. Some people we interviewed described the
transformation in the local marketplace over the past few decades as more people with more
income have stayed in the area because of the employment and educational opportunities. The
government has also recognized the value of Makunda as a service provider for the local
community, bestowing it with the Chief Ministers Certificate of Commendation in 2015, and has
invested money in local infrastructure and provided support for new hospital construction
projects.

PART IV. DISCUSSION

How has Makunda Hospital achieved such levels of impact? After delving into
interviews, documents, and facility observations, we realized that Makunda Hospital’s business
model revolves around three key business practices: (1) poor-centric strategies, (2) thoughtful
cost management, and (3) continuous improvement.
These three business practices enable Makunda Hospital to operate a business model
similar to Walmart, the leading U.S. big box retailer. While no longer the Wall Street darling it
was in the 1980s to 2000s, Walmart remains a behemoth in the retail industry, commanding 26%
of U.S. retail sales and employing 1.5 million people across its nearly 5,000 U.S. stores.
Walmart’s operating model works by generating large amounts of total profits through the
practice of selling very high volumes of very low-margin products. Producing high volumes
allows Walmart to achieve economies of scale and lower prices, drawing in more price-sensitive
consumers, which in turn creates more scale and enables them to further lower prices—creating a
virtuous cycle.
In a similar fashion, Makunda Hospital has attracted high volumes of patients over time
by charging very low prices. Through the high volumes of patients, Makunda Hospital has been
able to achieve scale efficiencies and attract talented young professionals seeking good training
opportunities at a high-volume facility. These three business practices—poor-centric strategies,
focused cost management, and continuous improvement—are keys to this virtuous high-volume,
low-margin strategic advantage.

1. Poor-Centric Strategies
Makunda Hospital employs a range of innovative poor-centric strategies that have
enabled it to drive high patient volume in a low-resource setting, including (a) an ability-to-pay
based pricing approach, (b) equal services for all, (c) hyper-tailored charity, and (d) addressing
cultural barriers to usage through community engagement. These elements drive demand in
Makunda’s model.

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(a) Ability-to-Pay-Based Pricing Approach. Rather than deciding on a set of services to

offer and then retroactively identifying the right price point for those services, Dr. Vijay and Dr.
Ann first asked themselves “What can the poor afford to pay?” and then figured out how to
provide services that fit within that price point. This decision—to start with consumer’s ability to
pay—drove all of the other decisions that they made about their business as it defined the upper
bound of the cost they could incur to provide services. We noticed, in speaking with many
Makunda Hospital patients and employees, that many hospital patients are already hard pressed
to pay for a car ride to the hospital, which often costs more than the actual hospital services. The
decision to make the hospital’s price points more accessible was the difference between touching
only a wealthier subset of the population and reaching nearly the full local population—with
important implications for a high-volume, low-margin strategy.
(b) Equal Services for All. Another key decision made early on was to provide equal
services to all patients regardless of wealth. Dr. Vijay noted that many mission-driven hospitals
utilize what amounts to a freemium-like model, in which wealthy individuals pay much more for
much better services in order to subsidize services to the poor. In these models, the wealthy are
placed in a separate, shorter queue; receive private rooms; and have a private consultation with a
physician of their choice. In contrast, the poor are placed in the longer queue and in general
inpatient wards.
The problem with the freemium-like model is that the wealthy expect better services
because they know they are paying more and thus demand more attention from physicians and
staff. In addition, to keep their business, hospital administrators must cater to the needs of
wealthier patients by providing what they want, when they want it. Over time, the organization
and processes of the hospital become increasingly oriented towards providing services for the
wealthy at the expense of the poor—often unintentionally. As this occurs, the poor feel more and
more out of place in the hospital and come to see themselves as second-class citizens, so they
come less and less often and refer their family and friends less and less often. At the end of the
day, this reduces volumes, which reduces scale and increases costs, which requires higher pricing
to compensate—creating a vicious cycle.
In contrast, Makunda Hospital has held to its philosophy of providing equal services to
all patients, regardless of wealth. The hospital is unique in that it has no private wards, only
general wards with reasonable privacy. According to Makunda administrators and employees,
this practice is probably the most glaring evidence of equal treatment for the poor when they
come to the hospital. This has served to bolster Makunda Hospital’s brand as a place for the poor
to go, which drives volumes and revenue up while simultaneously upholding the ideals that led
Dr. Vijay and Dr. Ann to reopen the hospital in the first place.
(c) Hyper-Tailored Charity. In fulfilling its mandate to help the poor, Makunda
Hospital—like many other mission hospitals—frequently provides services to poor patients for
free. Doing so exposes mission hospitals to both type I and type II errors; that is, they may fail to
provide aid to those who truly need it, or they may provide aid to those who do not actually need
it and lose the corresponding revenue they could have earned to support their hospital.
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What makes Makunda Hospital unique is the hyper-tailored methods it uses to both
identify those who truly need charity and provide it to them in the most effective manner.
Historically, Makunda Hospital has identified the poor primarily through a set of behavioral
observations, and more recently, it has experimented with more formalized diagnostic tools. Two
notable examples of behavioral observations—the “shared meals test” and “vital assets test”—
merit specific mention.
First, in the shared meals test, physicians and nurses (who spend the most time with
patients) are instructed to pay attention to the meal habits of family members and friends who
accompany a patient at the hospital. If family members and friends frequently skip meals or
share a single meal among multiple people, physicians and nurses are instructed to provide that
family with charity.
Second, in the vital assets test, Makunda employees pay attention to how patients act
with regards to their medical bills. The poorest of patients will frequently ask how much an
additional service will cost and may try to limit their stay in the hospital when they feel they
have exhausted their budget even when a doctor recommends that they stay longer. Interestingly,
Dr. Vijay found that the poorest patients are actually much less likely to ask for charity than the
moderately well-off patients, who are more likely to try to negotiate on hospital bills to get them
reduced even though they can afford to pay. In contrast, the poor typically go to great lengths to
pay a bill, including selling so-called “vital assets” that they need for basic living (such as their
home) or to maintain their livelihood (such as a work animal or farming equipment). One
technique Makunda employees use is to ask how a patient will pay for a planned or billed
medical expense. If the patient says they have the money, will be able to borrow the money, or
will sell some non-essential items, they are not typically given much charity. However, if they
mention a “vital asset” that is specially mentioned on a list created by Makunda, they receive
charity. Furthermore, if Makunda Hospital finds out after the fact that a patient has sold a “vital
asset,” it goes out into the community and repurchases the asset on behalf of the patient.
Once it has identified the poorest patients, Makunda Hospital has been able to provide
charity care in a very targeted and effective manner. For example, if a patient responds that they
will need to sell a vital asset in order to pay for services, they are asked how much they could
pay if they do not sell the vital asset. They are then asked to pay that amount, and the rest is
written off as charity. Many poor people have a strong sense of dignity and often ask for the
pending amount to be kept as “due” rather than ask for charity. One practice Makunda engages
in is to write off all “due” amounts at the end of the financial year.
Another way Makunda Hospital provides charity in a targeted way is to write off large
medical expenses related to unexpected complications. As Dr. Vijay explains, because
complications happen so infrequently, writing them off is a relatively small cost for the hospital
to incur when spread across many procedures, while not doing so would impose a huge financial
burden on a single individual. In effect, Makunda Hospital is providing a form of informal
insurance to make healthcare more accessible to the poor.

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The Wharton Global Healthcare Volunteers
The Wharton School of Business, University of Pennsylvania

From a business perspective, Makunda Hospital’s unique focus on identifying and

providing tailored charity enables it to retain revenues from those who can afford to pay—
essentially operating as a form of efficient price discrimination—and drives patient volume by
reinforcing Makunda Hospital’s brand as a hospital for the poor, by retaining patients, and by
encouraging referrals.
(d) Removing Cultural Barriers to Usage Through Community Engagement. During the
early years of Makunda Hospital, it sought to expand its labor and delivery services but initially
faced slow growth. At the time in northeast India, most villages had an informally designated
woman to help with childbirth within that village. Based on local infant and maternal mortality
rates, Dr. Vijay and Dr. Ann knew that many mothers and babies were dying during childbirth,
but when they asked the de facto village midwife in each of the villages if they had seen any
deaths, each of them indicated that they had not. However, by digging deeper, the doctors
realized that the village midwives were witnessing significant infant and maternal mortality but
were afraid to admit it and were secretly terrified of complicated deliveries—such as
malpresentation, haemorrhage and eclampsia—but did not know what to do about them because
their communities looked to them as the experts.
In response, Makunda Hospital began to encourage village midwives to send only their
most complicated cases to the hospital. However, they did not stop there—when a preventable
death happened in a community, they would also reach out to the village midwife and explain
that such a death was preventable, and that the midwife should refer future cases with similar
characteristics of high-risk births to the hospital. Over time, the midwives began doing so and
actually felt relieved to pass their most complicated cases to the hospital. By seeking to
understand the barriers to usage and building community partnerships, Makunda saw large
growth in the number of deliveries performed, helping it to achieve its strong reputation within
maternal care as a hospital for everyone, including the poor.
In summary, each of these four poor-centric strategies—an ability-to-pay-based pricing
approach, equal services for all, hyper-tailored charity, and addressing cultural barriers to use
through community engagement—play into the success of Makunda’s high-volume, low-margin
approach.

2. Thoughtful Cost Management

Given its commitment to providing care to the poor, Makunda Hospital has by necessity
always been intensely focused on cost management—the “supply side” of their operating model.
To succeed in providing low-price services, it has primarily reduced costs through two
innovative methods: (a) implementing a “revised gold standard” of care that reduces unnecessary
testing and procedures for patients, and (b) recruiting and retaining individuals who are willing
to accept lower salaries and heavier work obligations because of the training opportunities it
provides or their commitment to Makunda Hospital’s mission.
(a) “Revised Gold Standard.” Medical students are often taught the “gold standard”
approach to medicine: a broad set of tests and procedures that should be done to maximize
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The Wharton Global Healthcare Volunteers
The Wharton School of Business, University of Pennsylvania

diagnostic accuracy and patient health in an ideal world. Unfortunately, physicians in low-
resource settings typically do not have the luxury of running all of the tests and procedures
outlined under the “gold standard” of care for two reasons: first, their facility may lack the
necessary medical equipment; and second, the patients they treat may simply not be able to
afford such full-scale services.
To deal with these realities, Makunda Hospital has developed a set of “revised gold
standards” to provide services that are affordable to its patients. These standards serve to impact
both how physicians make clinical assessments and what lab tests, procedures, and drugs they
recommend to patients. One of the physicians we interviewed indicated that physicians at
Makunda Hospital must rely more on their clinical judgment to make judgement calls than do
doctors in higher-resource settings, who are more likely to order a test to aid them in making a
diagnosis.
When recommending lab tests, procedures, and drugs, physicians also take into account
the affordability of treatments. Rather than test for every possible diagnosis, a physician at
Makunda Hospital might simply prescribe a medication when a certain diagnosis is 80% likely to
be correct or when multiple diagnoses result in the same recommended course of treatment. In
the case of surgical procedures, surgeons at Makunda might look to older methods that are nearly
as safe but much cheaper for patients. For example, Dr. Vijay performs
choledochoduodenostomies as an alternative to ERCP in patients with calculi in the common bile
duct. He has published several articles on interventions that are as safe and effective or nearly as
safe and effective as much more expensive alternatives commonly used today.18
In terms of drugs, Makunda Hospital’s pharmacy and physicians focus on generic drugs
and other less expensive versions of drugs that produce most of the effect at a significantly lower
cost. Considering the affordability of drugs is particularly important for prescriptions that require
long-term adherence and/or particularly strict compliance, because if a drug is not affordable,
patients will simply not comply, which results in more health complications and high long-term
costs for poor patients. In other words, it may be more impactful to achieve 80% compliance on
a drug that is 80% as effective than to achieve 10% compliance with a drug that is 100%
effective.
Makunda Hospital’s “revised gold standard” approach has enabled it to lower the cost of
providing health care services so it can in turn lower prices, which drives greater volume.
(b) Recruitment and Retention of Efficient Labor. In addition to practicing its “revised
gold standard” practices, Makunda Hospital has lowered costs for patients by recruiting and
retaining individuals who are willing to accept lower salaries and heavier work obligations
because of the training opportunities it provides or their commitment to Makunda Hospital’s
mission.

18
See, e.g., https://www.researchgate.net/publication/12040333_Pneumonostomy_in_the_surgical_ management_
of_bilateral_hydatid_cysts_of_the_lung, and https://www.researchgate.net/publication/281792341_Use_of_plastic_
material_from_a_urine_drainage_bag_in_the_staged_closure_of_gastroschisis

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The Wharton Global Healthcare Volunteers
The Wharton School of Business, University of Pennsylvania

According to our interviews, government hospitals tend to pay physicians and nurses
nearly twice as much as Makunda Hospital, and many government physicians work in their own
private practice in the evening after leaving the government hospital, further boosting their
salaries. Makunda Hospital also gets much more leverage from employees by asking them to
multitask throughout the day and work longer hours to meet the high patient load. A typical
nurse at Makunda Hospital works 8 hours a day, 6 days a week, but may also voluntarily work
overtime during a particularly busy shift transition. Because salaries make up the largest expense
category for Makunda Hospital, being able to reduce that cost translates to significant savings for
patients and contributes to the hospital’s low-price approach.
Despite the heavy obligations and lower salary, many employees choose to work at
Makunda Hospital either because of the training it provides or their commitment to the mission
of Makunda Hospital. For example, because Makunda has a nursing school on site, skilled
physicians, and high patient volume, many aspiring nurses come to Makunda Hospital to get
their training and meet certain curricular requirements before moving on to other hospitals. Even
more striking, however, is the strong commitment to Makunda’s mission that starts with Dr.
Vijay and Dr. Ann and extends to employees in both the hospital and the school system. Most, if
not all, of the people we interviewed cited their commitment to Christian service and Makunda’s
focus on the poor as the driving force in their decision to work at Makunda Hospital.
Furthermore, despite the heavy obligations, these employees tend to find great satisfaction in
their work; or in the words of one supervisor, they leave their shift “tired, but happy and
content,” knowing their work is full of purpose.
Makunda Hospital leaders reinforce the culture of commitment by focusing on service in
the mantras they repeat during the workday and the sermons that they give outside of it. At the
same time, Dr. Vijay and Dr. Ann’s efforts to develop the school system have helped to retain
young professionals with families who might have left sooner but now have viable local
educational opportunities available for their children.

3. Continuous Improvement
The final element of Makunda Hospital’s success is its unending commitment to
continuous improvement. There is a culture of staff members continually keeping an eye out for
areas where they can step in to help or make improvements. In addition, quality control systems
in place help to identify potential issues and to troubleshoot them until they are eliminated. This
approach to improvement extends beyond the doors of the hospital itself as Makunda Hospital
has expanded into other areas such as education, agriculture, and biodiversity efforts.

PART V. CONCLUSION

We believe that many of the principles identified above can be used by mission-focused
healthcare providers in low-resources settings around the world. For example, hospitals can drive
volume by utilizing poor-centric strategies such as setting prices according to ability to pay,
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The Wharton Global Healthcare Volunteers
The Wharton School of Business, University of Pennsylvania

creating equal services for all patients, tailoring charity according to observable indicators of true
need, and engaging with the community to overcome cultural barriers to usage. They can also
reduce costs (thus enhancing their ability to lower prices and virtuously drive up volumes even
further) by creating customized “revised gold standards” and decrease labor costs by providing a
work environment conducive to training and a strong commitment to service.
We do believe that some factors may limit the transferability of this model. For example,
Makunda Hospital’s model requires sufficiently high volumes in order to generate sufficient
profits on low-margin services. This may require a certain level of population density and/or a
lack of closely situated competition. In addition, hyper-tailored charity only works if a mix of
incomes exists in a region such that the wealthier can be charged to offset charity for the poor.
Nonetheless, we believe that this study illuminates several extremely promising and
innovative approaches to providing high-quality, accessible care in low-resource settings that can
be applied elsewhere. Indeed, some of the general principles warrant further evaluation in the
context of discussions about healthcare costs around the world and particularly within the United
States, which faces overutilization of healthcare and the highest healthcare costs as a percent of
GDP in the developed world. In conclusion, we believe that the “Makunda Model” painstakingly
developed by Dr. Vijay and Dr. Ann offers encouragement for those seeking to provide high-
quality, accessible healthcare in low-resource settings across the world.

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