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"Is Compassionate Capitalism the Cure?"

An Interview with David Green,
Founder of Project Impact

(First appeared in The Stanford Daily, 4/5/2005)

David Green is a leader in social innovation and international health. His innovations in technology and distribution have helped make healthcare accessible and affordable in developing countries. He is the founder and executive director of Project Impact, based in Berkeley. He has been awarded both a MacArthur Fellowship and an Ashoka Fellowship.

The Daily: You’ve helped prevent disabilities across the developing world. How did you do it?

David Green: There are basically two ideas behind what I’ve done. The first ideas is that it is possible to make healthcare both self-sustaining and still orientated towards providing for the the poor. You can do this with a multi-tiered pricing system—where free is the lowest price.

The second big idea is that you can reduce the price of key medical products.

The Daily: How do you reduce the cost of medical products?

David Green: Consider the case of intraocular lenses. In the 1970’s in America, using intraocular lenses became the procedure of choice for cataract surgery. I was getting lots of intraocular lenses donated, since cataracts are the main cause of blindness in the world.

When the donation of lenses started drying up, we started looking to making interlocutor lenses. That’s when we set up Aurolab in south India.

The Daily: You created Aurolab to design cheap lenses for surgery. Was it successful?

David Green: Aurolab’s first product was intraocular lenses. It now sells over 600,000 lenses a year to over 80 countries. It meets the same regulatory requirements as other companies do in order to sell in Europe.

When we started, the lenses sold for $300 in developed country markets, and over $100 in markets in India. Now, our price is around $4. We have been able to bring down the price of key technology and make them available to non-profit programs. In turn, this helps those programs become sustainable.

Since then, we have done the same for producing suture and hearing aides.

The Daily: You promote a “sliding-scale” of payment for medical services. How can that be sustainable?

David Green: A lot of my earlier work I did in conjunction with Aravind Eye Hospital in India. It is one of the largest eye care programs in the world.

Aravind Eye Hospital has a model where 47% of patients pay nothing, 10% pay two-thirds cost, and 35% pay well above cost. That model allows it to be self-sustaining. For every dollar they spend, they make about a $1.60. They do over 220,000 surgeries a year.

With multi-tiered pricing, you can offer first-rate quality to rich and poor alike, rather than offer third-rate quality to people.

The Daily: You design, produce, and distribute medical devices—just like any other company. What’s different about your approach?

David Green: We have consciously chosen to maximize distribution—while still remaining sustainable.

That’s quite different from how most corporations exist. Most corporations have an ethical responsibility to provide a return on investment to shareholders.

In the case of Aurolabs, we have no shareholders. Our shareholders are the communities and the people that benefit from our work. It’s a different business model.

The Daily: Obviously, there’s a lot of need at the “bottom of the pyramid.” Why aren’t multinationals serving those people better?

David Green: Multinational corporations usually are not convinced that developing markets are viable for them to go into. Usually, multinationals perceive such markets as costing too much to develop, and having too low of margins.

We consciously decided that if we can’t convince companies to lower their prices and still make margins, then we would instead try to gain control of technology, production, distribution, and pricing to better serve the poor.

For me, the question is this: how can we transform corporate behavior so that corporations use more of their core competencies and assets to help the world? How do you make important products more affordable to those that need them?

The Daily: You promote “compassionate capitalism.” How do you become a compassionate capitalist?

David Green: There are two ways you can pursue compassionate capitalism. First, you can do what we have done and develop a fresh approach. That is really hard. You have to be willing to take risks, and you have to be ready for failure. Most ventures like mine fail.

Second, you can be a force for change in the corporate environment in which you find yourself. This route is probably equally hard. Most corporations in the industries I work in have similar cost structures to mine, and have a lot more wherewithal.

Stanford students, as they move into the corporate world, have the intelligence and wherewithal to bring about that level of transformation in their corporations.

The Daily: Okay, I want to be a compassionate capitalist. What do I need to know?

David Green: If you’re going to do something different, wake up every morning embracing the possibility of failure—while still acting. You have to keep acting, even when the fear factor sets in and you think you’re going to fail. You have to find a way to keep acting in spite of the fears and anxiety that accompany this type of work.

Wow, great interview. How can I read them all?

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