salaUno TC evaluation 2013

www.manausconsulting.com

www.manausconsulting.com

Evaluation Report: salaUno Quality and Affordable Eye Care for the Base of the Pyramid in Mexico Prepared by MANAUS Consulting for Opportunities for the Majority at the Inter-American Development Bank February 2014

http://www.manausconsulting.com/

salaUno: Quality Eye Care for the BOP | Page 1

About Opportunities for the Majority

The Opportunities for the Majority initiative (OMJ) promotes and finances market-based, commercially viable business models that engage private sector companies, local governments, and communities in the development and delivery of quality goods and services for the base of the pyramid (BOP) in Latin America and the Caribbean.

Created in 2007 as part of the Private Sector Group of the Inter-American Development Bank (IDB), OMJ provides finance to medium and large companies and financial institutions to support the development or expansion of business models that serve low-income populations and to share the risk of entering BOP markets. OMJ has supported BOP business models in 18 countries of the region in different sectors such as health, education, housing, and financial services, among others.

About MANAUS Consulting

MANAUS provides consulting services to companies and organizations working with corporate responsibility and international development projects. MANAUS works with businesses, nonprofit organizations, and multilateral institutions to help them understand the impact their programs and initiatives are having on beneficiaries and their communities.

MANAUS Consulting was commissioned by the Inter-American Development Bank to evaluate the expansion of the business model of salaUno, a health provider of affordable quality eye care services for populations at the base of the pyramid in Mexico. A MANAUS Consulting team member visited the project in Mexico City to observe its implementation and understand the scope of its results.


TABLE OF CONTENTS

Executive Summary ................................................................................................................ 3

Introduction ........................................................................................................................... 5

Technical Cooperation............................................................................................................. 5

salaUno: Overview & Challenges .............................................................................................. 6

Evaluation methodology ......................................................................................................... 7

Data analysis and methodological limitations ..................................................................................... 8

salaUno Business Model .......................................................................................................... 8

Evaluation Findings ............................................................................................................... 12

General Findings ............................................................................................................................... 12

Specific Findings ............................................................................................................................... 13

Key changes to activities and resource allocation ............................................................................. 21

Conclusion ............................................................................................................................ 23

Appendix .............................................................................................................................. 25


EXECUTIVE SUMMARY

Approximately 60% of Mexicans have some form of visual impairment, half of which can be treated through surgery. In Mexico’s aging population, cataracts are the second leading cause of visual impairment. There are approximately two million untreated cases of cataracts. Being the sixth highest country in number of diabetes cases and given the fact that diabetics are 40% more likely to become visually impaired, the provision of eye care services is a critical public health issue in Mexico. At the same time, cataract interventions are among the most cost effective of all eye-related medical treatments. Despite this, only 135,000 surgeries are performed annually in the country.1

Blindness has severe economic and social consequences. Visually impaired individuals cannot work and, in turn, become economically dependent on their families. Affected people also lose quality of life, since they cannot perform basic activities such as reading, cooking, and cleaning, among others. Visual impairment also affects impaired individuals’ families, as in many cases relatives need to stop working and lose their own independence in order to take care of their visually impaired family member. Furthermore, approximately 76% of Mexicans over the age of 50 do not have health benefits; the public health system is overcrowded; and many affected individuals cannot afford traditional private providers.1

In direct response to this reality, salaUno was created to provide affordable quality eye care services to populations at the base of the socioeconomic pyramid (BOP). Since officially opening its doors in August 2011, the demand for its services grew rapidly and salaUno soon saw the need to expand its model. However, as a new disruptive start-up in Mexico, salaUno was too incipient to attract commercial investors. Additionally, the company served a market segment in which commercial financial institutions lacked experience and adequate financing products for early-stage companies, such as requiring collateral to access financing.

It is within this context that salaUno received the support of Opportunities for the Majority (OMJ), an Inter-American Development Bank (IDB) initiative, in the form of a US$250,000 technical cooperation grant. The project was specifically supported with resources from IDB’s Infrafund, which finances activities for scaling up infrastructure investments.2 The technical cooperation aimed to help salaUno establish and test additional eye care centers necessary for the expansion of its business model. As such, the technical assistance was intended to help salaUno scale its business model, reach investment-readiness, and become an OMJ client.

OMJ commissioned MANAUS Consulting to conduct an independent evaluation on whether the technical cooperation was implemented as planned and achieved the expected results. To this purpose, the evaluation employed various qualitative methodologies to assess the implementation of the technical assistance and use of grant resources.

The most relevant findings of the evaluation are:

1 salaUno, “Eliminating Needless Blindness Through Profits,” April 8, 2013; The Economist, “Diabetes in Mexico: Eating themselves to death,” April 10, 2013; The International Diabetes Federation, “IDF Diabetes Atlas,” Sixth Edition; OMJ, “TC Document - salaUno: Quality and Affordable Eye Care for the Base of the Pyramid, ME-T1220,” August 2012. 2 The Infrafund finances activities that support the scaling up of infrastructure investments, in this case health infrastructure, as outlined in the Fund’s Operational Guidelines (GN-2404-7) and preparation document (GN-2404-4). The latter enables the Infrafund to provide non-reimbursable resources for the preparation of specific programs, plans, and projects to be funded by OMJ/IDB, which may include pre-feasibility and feasibility studies like in salaUno’s case.


The technical cooperation with OMJ was instrumental in accelerating the expansion of the business model. It would have taken salaUno significantly longer to expand its business model without the grant resources and credibility provided by OMJ. Through OMJ’s grant resources, salaUno was able to establish 12 new eye care centers, hire skilled staff, and put into place the necessary operational and managerial procedures to successfully carry out the expansion within a year. Additionally, the partnership with OMJ was instrumental in providing credibility to salaUno and therefore helping to demonstrate the feasibility of the model before key implementation partners and potential investors. The technical cooperation thus provided salaUno with the resources and endorsement necessary for successfully expanding and validating its business model.

Grant resources allowed salaUno to test expansion strategies without delaying scale-up plans. In addition to building new facilities, salaUno needed to pilot various strategies to successfully implement the expansion. For instance, through the technical cooperation, salaUno tested a variety of marketing strategies to identify the best approach to significantly increase its patient volume. Without OMJ’s grant resources, salaUno may not have been able to test multiple strategies to identify the most successful one, potentially resulting in fewer patients and thus putting the expansion and the model at risk. Testing multiple strategies with the use of non-reimbursable resources allowed salaUno to identify the best approaches and carry out the expansion successfully.

The technical cooperation helped salaUno achieve commercial viability. Through OMJ’s technical support, salaUno significantly enhanced its administrative, operational, and managerial practices. For instance, salaUno commissioned a series of consultancies to improve its governance practices and accounting procedures. Additionally, grant resources allowed salaUno’s management to participate in a series of investor forums to disseminate information about the model and attract potential investors. As such, the technical cooperation activities better positioned salaUno to become investment-ready, and attract and absorb capital/debt. As a result, salaUno was able to raise US$4 million in equity from a multilateral development bank and a local investment fund. The company is also structuring a loan jointly with OMJ, which is expected to be approved by mid-2014.

In regards to adjustments to planned activities and use of grant resources, all changes and re-allocations of resources seemed adequate to the objectives of the technical cooperation and with the realities encountered on the ground during the implementation of the expansion.

From its inception in August 2011 through December 2013, salaUno has provided eye care services to nearly 80,000 beneficiaries. Since the technical cooperation with OMJ started in September 2012, salaUno more than tripled its number of beneficiaries.3

Overall, the evaluation found that salaUno is a viable, market-based business solution to deliver quality eye care services to individuals at the base of the socioeconomic pyramid. The assessment also highlighted the importance of grant resources to expand BOP business models with scalability potential and to become investment-ready.

3 Numbers calculated with PULSE metric data and/or salaUno’s internal metrics (provided by OMJ and salaUno). PULSE is the cloud-based data collection software used by OMJ.


INTRODUCTION

The purpose of this evaluation was to determine whether the technical cooperation between OMJ and salaUno was successful in supporting the expansion of salaUno’s business model and taking it from a pre-commercial stage to become investment-ready. To this end, the assessment employed various qualitative methodologies, including a review of primary data gathered through interviews with key stakeholders, as well as the use of secondary data sources. MANAUS Consulting, an evaluation consulting firm, completed the assessment between November 2013 and January 2014.

The evaluation report is organized into seven sections. The first section of the report provides a synopsis of the structure of the technical cooperation between OMJ and salaUno. It also summarizes the main activities of the technical assistance. The second section briefly describes the history, principles, and mission behind salaUno’s business model, including a succinct description of the Aravind model in India—the eye care model that inspired salaUno’s model. This section also outlines the most significant challenges that salaUno faced before the technical cooperation, thus providing the justification for grant resources.

The third section presents the evaluation methodology utilized to assess the implementation and results of the technical assistance. It describes the types of qualitative techniques the evaluators used to gather and triangulate information. This section also describes how the data was analyzed to arrive at the most relevant findings. Lastly, it outlines the main methodological limitations of the evaluation, along with their implications for generalizing identified results.

The fourth section provides a thorough description of salaUno’s business model and the rationale for serving populations at the base of the pyramid. Specifically, this section describes the operational schemes that make the business model possible. This section also elaborates on key implementation partners as well as existing alternatives to salaUno’s model in Mexico.

The fifth section of the report presents the most relevant findings of the evaluation, along with key lessons learned during the expansion of the business model. It also discusses challenges the business model still faces. The sixth section outlines the most significant changes to the original technical assistance plan, as well as the justifications and results of those changes. Further, this section discusses the most important changes in the planned allocation of resources.

Finally, the seventh section of the report outlines the main conclusions of the evaluation.

TECHNICAL COOPERATION

Opportunities for the Majority (OMJ), an Inter-American Development Bank (IDB) initiative, promotes and finances commercially viable, sustainable, innovative, and scalable business models that engage private sector companies, local governments, and communities in the development and delivery of quality goods and services for the base of the pyramid. More specifically, OMJ provides loans and partial credit guarantees to private sector companies to support the development or expansion of business models that serve low-income populations and share the risk of entering BOP markets. The OMJ portfolio also includes technical assistance grants for business acceleration to assist pre-commercial models in becoming investment-ready, building capacity, and transferring knowledge.

salaUno and OMJ formalized a technical cooperation agreement in August 2012 to provide quality, affordable eye care services to BOP populations in Mexico. The cooperation consisted of a US$250,000


grant from IDB’s Infrafund to support the launch and pilot of new eye care centers. Importantly, the technical assistance aimed to help salaUno move beyond its pre-commercial phase and become investment-ready in order to absorb an OMJ loan of approximately US$5 million. The loan will serve to continue the expansion of the business model.

Grant resources sought to support the following activities:

• Strengthen salaUno’s back office and accounting procedures to enable it to manage its operations and expansion plans.

• Transfer knowledge and expertise from the Indian health care model, Aravind, that salaUno used as the basis for its model.

• Help build brand and customer recognition through various marketing strategies and educational campaigns.

• Build and pilot vision centers (VCs) in different locations to meet salaUno’s target population and refer vision impairment cases to the surgical clinic.

• Support salaUno in its growth by leveraging equity from impact investors through several events and dissemination activities.

A more detailed discussion on how salaUno implemented these activities and how it utilized grant resources can be found in Evaluation Findings.

SALAUNO: OVERVIEW & CHALLENGES

Engineers Javier Okhuysen and Carlos Orellana founded salaUno4 in 2011 with the purpose of establishing a business that produces social value alongside financial returns. Despite not having substantial background in eye care, the story of Aravind Hospital in C.K. Prahalad’s book, The Fortune at the Bottom of the Pyramid, inspired these social entrepreneurs to pursue a similar model to meet BOP needs in Mexico. Okhuysen and Orellana visited the Aravind model in Madurai, India to learn how to build and operate an eye hospital. They also attended various training workshops where Aravind shared best practices with those interested in emulating their eye care model. Further, to strengthen salaUno, Okhuysen and Orellana formed a board of directors with a variety of technical backgrounds to ensure the proper design and implementation of the model. Board members include nationally and internationally recognized professionals with sound financial, managerial, and health expertise. They also built a management team with vast experience in eye care. After months of infrastructure development and staff recruitment, salaUno started serving patients in August 2011.

The business model started generating profits from the second month of serving patients and demand grew rapidly for salaUno’s services. The company soon saw the need to expand the model to meet increased demand. However, profits were not sufficient to properly expand the model and the company was too incipient to obtain resources from traditional lenders and investors. This is a common scenario that business models with high potential often face throughout Latin America. Another key challenge was that salaUno was serving a market segment in which Mexican commercial lenders lacked

4 The business was named salaUno, “room one” in English, in reference to the lean production surgical approach where multiple patients are treated simultaneously.


experience and adequate financing tools. Additionally, salaUno introduced a surgical technique never before used in Mexico, which made it even more difficult to attract investors who typically would be interested in supporting less risky, common health projects. For these reasons, the partnership with OMJ was imperative for salaUno to share the risk in testing different expansion strategies, scaling up the business model, and attracting commercial capital/debt.

EVALUATION METHODOLOGY

The evaluation employed various qualitative methodologies to assess whether the technical cooperation was properly executed and whether resources effectively enabled salaUno to become investment-ready. These methodologies included reviewing secondary data sources, such as project documents and project output indicators, conducting desktop research, and collecting primary data through stakeholder interviews. A member of MANAUS Consulting conducted a three-day visit to the project in Mexico City in December 2013.

Project documents supplied by OMJ and salaUno were carefully reviewed to provide insight into the project’s background, activities conducted to date, and documented outputs. These documents included the technical cooperation agreement, project work plans, project internal indicators, financial statements, independent case studies, and marketing and communications documents, among others.

Additionally, the evaluation included interviews with salaUno staff members to further understand the scope and implementation of the business model. A total of 12 staff members were interviewed, including the co-founders and general directors, operations manager, vision centers manager, financial planning manager, human resources manager, and staff at vision centers. See Table 1 in the Appendix for a list of all salaUno staff members who were interviewed.

The evaluation also incorporated interviews with various stakeholders to gather their perspectives on the project. Among these stakeholders were 10 direct beneficiaries (i.e., patients) and two strategy and implementation partners, Cinepolis Foundation and Nacional Monte de Piedad. Of the 10 patients

The Aravind Eye Care System

Dr. Govindappa Venkataswamy founded the Aravind eye care system in 1976 to end curable blindness. The Aravind Hospital started as an 11-bed hospital and has since grown into the world’s largest eye care system, performing more than 600,000 surgeries annually. In order to serve patients regardless of their ability to pay and still be a self-sustaining hospital, Aravind utilizes two key innovations: high patient procedure volumes and a cross-subsidization pricing strategy. In order to operate with a high volume of patients, Aravind implements its “lean production” healthcare principles: focus on the patient; identify value for the patient; and minimize time to treatment.

A cross-subsidization pricing strategy means that patients pay what they are able to. In this sense, patients who are unable to afford services do not pay, while others choose from a “tariff” of service and product bundles at varying price points. For example, patients choose the type of recovery room, the time to surgery, and the type of lens. Price differentiation among services and product bundles aim to appeal to different patient segments. The model places a great emphasis on maintaining the quality of clinical outcomes across the various paid and free care options. The ability to attract paying patients is what makes the cross-subsidization pricing scheme possible, allowing poorer patients to receive free care.

Source: M. Singhal, J. Moe, and R. Bartlett (2013). “Replicating Indian Eye Care Innovations in Mexico: The Founding and Expansion of salaUno,” International Partnership for Innovative Healthcare Delivery (IPIHD).


interviewed, seven were patients who had already undergone eye surgery (in at least one eye) and three were patients who had not been operated on yet. To guide the interviews with stakeholders, MANAUS designed an open-ended questionnaire. The Appendix includes the list of the beneficiaries (Table 2) and partners (Table 3) interviewed.

The review of secondary data sources alongside the collection of primary data allowed MANAUS evaluators to have an in-depth understanding of the project and gather various perspectives regarding its efficacy. Specifically, the methodology allowed the evaluation team to have a solid grasp of the implemented project activities, as well as to understand changes in planned activities. Further, this methodology enabled the evaluation team to thoroughly evaluate the main project results and challenges.

Data Analysis and Methodological Limitations

The information collected through primary and secondary data sources was cross referenced to determine whether salaUno implemented all planned activities and to identify the extent to which such activities produced the expected results. The evaluation also identified changes to the original work plan and the reasons for and the results of such changes. Similar questions related to project activities, benefits, and limitations were asked to compare responses and verify information among various stakeholders.

This methodology provided the evaluation team with a solid understanding of the implementation of project activities, accomplishment of project objectives, and outputs achieved. The evaluation team also gathered the perceptions of beneficiaries on how the project affected their lives. Finally, the evaluation identified areas of the project that could be implemented differently to produce greater benefits.

The evaluation is limited, however, to answering questions regarding the outcomes for project beneficiaries and its results cannot be generalized to regional or national populations. This is largely because the sample of beneficiaries used in the evaluation is not statistically representative of the project’s target population and the methodology did not include a comparison group. Not having a statistically representative sample means that the group of respondents interviewed for this evaluation was too small to ensure that the entirety of the target population would have provided similar answers.

Similarly, lacking a comparison group prevents the evaluation from knowing if, in the absence of the project, the same outcomes would have taken place. In this sense, the evaluation cannot claim any direct causal links between the observed results and salaUno, but can only provide a broad assessment of the changes perceived by key stakeholders.

SALAUNO BUSINESS MODEL

salaUno aims to mitigate preventable blindness in Mexico. To that purpose, the business model uses high patient volume and a cross-subsidization pricing strategy. The high patient volume system relies on the “lean production”

Facts & Statistics

Cataracts represent…

2nd cause of visual impairment in Mexico.

50% of blindness cases. 40% increased risk of blindness

among diabetics.

Additionally…

22% of Mexicans will be over the age of 50 by 2020 and at greater risk for cataracts.

Mexico has the 2nd largest diabetic population in the world.

Only 23.9% of Mexicans over the age of 50 have health benefits.

Source: salaUno, “Eliminating Needless Blindness Through Profits,” April 8, 2013; The Economist, “Diabetes in Mexico:

Eating themselves to death,” April 10, 2013.


healthcare principles of the Aravind model. These principles are:

1) Focus on the patients and design care around them; 2) Identify value for the patient and remove all else; 3) Minimize time to treatment.

In this sense, the high patient volume system centers the patient in all organizational decisions, while assessing and subjecting all hospital operations to continuous optimization processes. In a traditional healthcare model, a doctor conducts two to three surgeries a week and is responsible for pre-diagnosis, diagnosis once lab and other medical exams are ready, surgery, post-op care, and all related administrative work—e.g., updating patients’ medical history, prescribing medication, etc. salaUno’s model removes most of these steps so that doctors can focus their time only on validating the diagnosis, performing the surgery, carrying out post-op consultation, and doing very limited administrative work. Through this system, a salaUno doctor can conduct an average of 10 surgeries per week.5

The following table summarizes salaUno’s high patient volume process:

Figure 1. High Patient Volume Process

STEP 1. Floor Assistant

The Floor Assistance staff receives the patient and explains the different types of consultations. Once the patient chooses a service, the staff provides next step procedures. Floor Assistants can also conduct basic examinations, such as visual acuity, intraocular pressure, and conduct questionnaires on the patient's medical history.

STEP 2. Optometrist

Optometrists conduct refractive examinations (e.g., direct ophthalmoscopy) and decide whether it is necessary for the patient to see a doctor (ophthalmologist).

STEP 3. Ophthalmologist

Ophthalmologists corroborate the patient's medical history, conduct a comprehensive ophthalmological check, diagnose the ailment, and provide treatment.

STEP 4. Counseling

Counseling staff reviews the checklist created by the doctor and determines the type of counseling the patient needs. Counseling staff also keeps track of and updates patient information on Netsuite, salaUno’s customer management system. Counseling staff also follows up on first-time patients to make sure they continue the treatment.

Note: This table describes the model of salaUno very broadly. There are multiple additional steps that can take place across these four general steps, depending on the service bundle chosen by the patient, the type of treatment, the stage of the

treatment (e.g., pre-consultation vs. post-op consultation), and surgery technique, among others. Source: salaUno’s operation manuals and interviewed staff.

At each point in the high patient volume process, salaUno keeps diligent track of wait times and patients’ feedback. For example, the current average time between arriving at salaUno and seeing the doctor is one to two hours. The time to see the doctor at a public provider center can range from four to 10 hours, according to interviewed stakeholders. The high patient volume scheme also allows salaUno to reduce time to surgery, which is currently between eight and 30 days. In contrast, the time to surgery is about eight months through the public system and three to six months through NGOs—according to interviewed patients, salaUno staff, and partners.

5 This average is calculated using data provided by salaUno on surgeries and medical staff for 2013.


The cross-subsidization pricing scheme is a cost-tiering system by which patients pay for products and services as they are able to. Patients thus choose from a series of product and service bundles that range from free options to bundles at varying price points. The pricing of paid bundles depends on the patient’s selection of time to surgery and type of recovery room, among others. By offering price-differentiated products and services, salaUno appeals to different segments of patients and makes the cross-subsidization pricing scheme possible.

The main products and services that salaUno offers include:

• Cataract Surgery. salaUno offers two types of cataract surgery: PHACO and SICS.

a. PHACO uses phacoemulsification6 and generally requires a shorter recuperation time (two to three days). Hospitalizations are rare.

b. SICS (Small Incision Cataract Surgery) uses an intracapsular cataract extraction technique and generally has a longer recuperation period (approximately seven days). SICS is more affordable (see pricing below) and hospitalizations are rare.

• Retinopathy. These laser treatments can delay vision loss caused by illnesses such as diabetes. The procedure takes less than one hour.

• YAG Laser. The laser surgically removes part of the iris. People who have cataract surgery eventually need YAG laser surgery to remove the cloudy membrane, which is often referred to as a secondary cataract.

• Pterygium removal. The pterygium is a benign growth in the eye. Although its exact cause is unknown, pterygium is often associated with excessive exposure to wind, sunlight, or sand. It thus occurs more frequently in populations that live in areas near the equator.

• Optical services. Optometrists evaluate vision levels and prescribe lenses; eyeglasses can be fashioned the same day. salaUno offers a wide range of frame styles, high-quality lenses, and varying prices.

• Pharmacy products. salaUno’s pharmacy offers post-operative home care kits to increase the success rates of cataract surgery as well as outpatient remedies for common eye problems.

6 Phacoemulsification refers to modern cataract surgery in which the eye's internal lens is emulsified with an ultrasonic handpiece and aspirated from the eye.

salaUno’s main surgical clinic


Although other institutions offering similar services exist in Mexico City, salaUno offers significantly lower prices. For instance, public providers offer free cataracts surgery but patients must purchase the intraocular lenses, which cost about US$1,500 each. Private not-for-profit providers are the closest to salaUno in terms of pricing, offering cataracts surgery at US$850-1,400.7 Private for-profit institutions are at the high end of the price options, offering cataracts surgery at US$2,700-4,000. The following table presents the price ranges of cataracts surgery per type of provider:

Figure 2. Price Range of Cataracts Surgeries in Mexico per Type of Provider8 (Mexican Pesos and U.S. Dollars)

Technique salaUno Public Providers Private Providers

Not for profit For profit

PHACO MXP 9,000-22,500

(US $705-1,740)

Free surgery but patient must purchase lens, approx. MXP

20,000

(US $1,500)

MXP 11,000-18,000

(US $850-1,400)

MXP 35,000-50,000

(US $2,700-4,000)

SICS

MXP 5,000-16,500

(US $415-1,285) N/A

(Only salaUno performs this technique in Mexico) MXP 5,000 (subsidized surgeries)

(US $415)

Source: M. Singhal, J. Moe, and R. Bartlett (2013). “Replicating Indian Eye Care Innovations in Mexico: The Founding and Expansion of salaUno,” IPIHD. Interviewed salaUno’s staff and patients.

For the cross-subsidization pricing scheme to be successful and keep prices low, salaUno must maintain a high volume of patients. Specifically, the model must keep the following structure to break even:

• 100 subsidized surgeries (campaigns)

7 The best-known not-for-profit eye care providers are Hospital de la Ceguera, Hospital de la Luz, and El Conde de Valencia. 8 Currency converted using www.oanda.com as of 12/16/13.

Characteristics of salaUno Beneficiaries The average salaUno patient has the following characteristics:

62 years old 63% are women 57% are married Has three children 80% come accompanied by a relative, usually by his/her children 41% are head of household 54% have taken the decision to pursue eye care treatment 37% is not privately insured and usually covers health expenses with out-of-pocket resources 54% have an average monthly income of US$210-528 (MXP 2,700-6,799)

Source: salaUno

http://www.oanda.com/


• 160 private (paid) surgeries

In order to work with this cost structure, salaUno partnered with two key organizations: Seguro Popular and Cinepolis Foundation. Seguro Popular is the government health insurance for low-income informal and/or self-employed individuals, which currently covers about 43 million Mexicans. 9 Cinepolis Foundation is the philanthropic arm of Cinepolis, the largest cinematographic company in Latin America.10 Through these two organizations, salaUno can subsidize services to patients who are unable to pay for the full or partial cost of the surgeries.

Cinepolis Foundation covers 100 cataract surgeries a month. These subsidized surgeries are assigned based on a socioeconomic assessment to ensure that the patient really needs economic support. Cinepolis Foundation and salaUno identify potential patients for these 100 surgeries through community campaigns. Once the patients are identified, salaUno provides free transportation between the patient’s community and salaUno’s facilities for initial consultations and/or to undergo surgery.

Patients affiliated with Seguro Popular can undergo surgery at salaUno for free and Seguro Popular later reimburses salaUno for the cost of the surgeries. It is important to note that Seguro Popular is currently suspended, as the government is making adjustments to its funding procedures, and will be re-activated during the first quarter of 2014.

Since starting operations in August 2011 through December 2013, salaUno has provided eye care services to nearly 80,000 beneficiaries.11

EVALUATION FINDINGS

This section presents the most relevant findings of the evaluation. More specifically, it discusses whether salaUno implemented activities as originally planned and how such activities achieved the expected results. The section also describes how the technical cooperation was successful in taking the business model from a pre-commercial stage to becoming investment-ready.

General Findings

The technical assistance provided by OMJ allowed salaUno to successfully expand its business model in Mexico City and become investment-ready. In general, the most significant accomplishments of the technical cooperation between OMJ and salaUno are:

The technical assistance with OMJ was instrumental in expanding salaUno’s business model. It would have taken salaUno significantly longer to expand its business model without the grant resources and credibility provided by OMJ. Even though salaUno was profitable since its beginning, the company needed financial support to quickly expand the model. Because the company was at a pre-commercial stage, it was difficult for salaUno to qualify for a loan from commercial lenders. Even for lenders that support BOP models, such as OMJ, salaUno did not have yet the conditions to absorb a sizeable loan.12 In addition to the monetary support, the credibility of OMJ was important for salaUno to demonstrate the feasibility of the model to key

9 TC Document - SalaUno: Quality and Affordable Eye Care for the Base of the Pyramid, ME-T1220 (2012). 10 Cinepolis (n.a.). “Nuestra Historia.” Retrieved on 12/23/13 from: http://www.cinepolis.com 11 Numbers calculated with PULSE metric data and/or salaUno’s internal metrics (provided by OMJ and salaUno). 12 OMJ loans usually range between US$5 to 10 million.


implementation partners and potential investors. The technical cooperation thus provided salaUno with the resources and expertise necessary for successfully expanding and validating the business model.

Grant resources permitted salaUno to test various strategies without the risk of delaying expansion plans. In addition to building new facilities, salaUno needed to identify a series of strategies to make the expansion successful. For instance, the company needed to implement a solid marketing strategy to significantly increase the number of patients to meet its high volume requirement. Through the technical cooperation, salaUno was able to test several marketing strategies and identify the most effective ones. Without the grant resources, salaUno may have only tested a few of the strategies and perhaps not the most successful ones. This could have resulted in a low volume of patients, thus putting the expansion and the entire model at risk. salaUno also tested other similar expansion strategies, such as recruiting new staff with the right skill set and conducting consultancies to improve salaUno’s operational processes and work environment. Testing these strategies with the use of non-reimbursable resources allowed salaUno to identify the best approaches and hence successfully carry out the expansion.

The technical cooperation helped salaUno reach commercial viability. Through OMJ’s technical support, salaUno significantly enhanced its administrative, operational, and management practices. For instance, the company acquired technological platforms to better gather, monitor, and assess financial performance, inventory management, and client, partner, and supplier relationship management. salaUno also commissioned a series of consultancies with Ernst & Young, Aravind, and Great Place to Work in order to improve its governance practices and accounting procedures. Additionally, grant resources allowed salaUno’s management to participate in a series of investor forums to disseminate information on the model and attract potential investors. In addition to the credibility provided by OMJ, the technical cooperation activities better positioned salaUno to become investment-ready and to attract and absorb capital/debt. As a result, salaUno has already raised US$4 million in equity from a multilateral development bank and a local investment fund, and is currently structuring a loan with OMJ that is expected to be approved by mid-2014.

Specific Findings

This section presents the most relevant results of each of the activities outlined in the technical cooperation agreement.

salaUno is a viable business model for providing affordable quality eye care services to low-income populations. salaUno has successfully reached and provided basic quality health services to BOP populations. Since starting operations in August 2011 through December 2013, salaUno has provided eye care services to nearly 80,000 beneficiaries. Approximately 84% of salaUno’s patients belong to the BOP earning less than US$899 per household.13

The following table presents the distribution of salaUno’s beneficiaries according to income level:

Figure 3. salaUno Patients per Income Level, 2012

13 Data provided by salaUno.


Monthly Income Per Household (USD)

salaUno Clients (%)

0 - 209 9%

210 - 527 54%

528 - 899 21%

900 - 2,715 14%

2,716 – 6,596 2%

Source: salaUno

Since the beginning of the technical cooperation with OMJ through December 2013, salaUno has benefited approximately 66,000 additional people.14 These individuals correspond to OMJ’s BOP pyramid for Mexico, as shown in Figure 4.

Figure 4. BOP Pyramid for Mexico, 2012

Note: Local currency at 2012 prices converted to USD using 2005 PPP.

Source: Opportunities for the Majority (OMJ)

The following figure presents the number of beneficiaries across time. The graph also shows the increase of beneficiaries after the technical cooperation with OMJ started in September 2012. In a little over a year, salaUno more than tripled the number of beneficiaries assisted.15

14 salaUno has received resources and in-kind support from organizations other than OMJ, such as Fundación Cinépolis and Nacional Monte de Piedad. Therefore, the aforementioned results are not the isolated impact of OMJ’s grant resources.


Figure 5. Number of Beneficiaries, Q1 2012 – Q4 2013

Source: PULSE metric data provided by OMJ and salaUno.

Nine of the 10 interviewed beneficiaries explained that they would not have undergone cataract surgery if salaUno’s services were not available. Half of the interviewed patients received free cataracts surgery through salaUno community campaigns, while the other half paid for the eye surgery at different price points. All interviewed beneficiaries identified alternatives to salaUno services (mostly Hospital de la Ceguera and Hospital de la Luz) but explained services were more expensive and time to surgery was significantly longer. In this sense, the technical cooperation served to prove that the business model is effective in providing high-quality, affordable services to Mexicans at the base of the pyramid. Please refer to Table 2 in Appendix for more details on interviewed beneficiaries.

salaUno successfully built and piloted vision centers (VCs) necessary for the expansion of the business model. salaUno tested the feasibility of a “hub-and-spoke” model where the new vision centers would act as referral points (or spokes) for patients to the main surgical clinic (or hub). The VCs are located in communities with salaUno’s target population; areas with a high concentration of BOP individuals over the age of 50 (i.e., the population at risk for cataracts). Initially, salaUno planned to build three VCs from scratch with OMJ’s resources—i.e., finding and renting the spaces, preparing the facilities to provide salaUno’s services, etc. Instead, salaUno found it more cost-effective to establish VCs in their partners’ existing facilities.

15 Ibid.

Technical Cooperation

begins in


When the government stopped Seguro Popular in February 2013, salaUno had already partnered with Nacional Monte de Piedad (NMdP) to provide eye care services to NMdP’s clients. NMdP is a not-for-profit organization and the largest pawnshop in the country.16 NMdP’s clients are individuals who meet the characteristics of salaUno’s target population: 50+ year BOP individuals who cannot access traditional credit sources. NMdP’s clients resource to NMdP to pawn goods off for cash. Given the similar characteristics of NMdP’s clients and salaUno’s target population, the partnership was mutually beneficial and allowed salaUno to establish its vision centers within NMdP’s existing stores.

salaUno currently operates 12 VCs that refer, on average, 30% of salaUno’s patients. The majority of the referred patients go to the clinic for cataract-related services. salaUno originally opened a total of 15 VCs but later closed three of them. The company closed these VCs because they were located in public health centers that only functioned through Seguro Popular. After the government suspended Seguro Popular, it did not make sense to keep these VCs. When Seguro Popular resumes its funding activities in the first half of 2014, salaUno will evaluate whether it is beneficial for the company to re-open these VCs in public health centers.

salaUno improved the management of its operations and expansion plans through the adoption of key back-office procedures and technologies. salaUno acquired a cloud-based ERP (Enterprise Resource Planning) system called Netsuite. This system improved the process of tracking and generating key financial and operational information, such as number of consultancies, number of treatments, medicines sold, payments to suppliers, etc. The implementation of this IT system particularly helped manage inventory. salaUno also adopted a CRM (Customer Relationship Management) software license to manage patient, supplier, and partner databases efficiently. This software particularly helped salaUno’s counseling team to follow up on patients after the first visit and provide greater visibility into the likelihood of the patient to continue treatment and undergo surgery (if needed).

In 2012, salaUno also underwent an audit by Ernst & Young to ensure compliance with best practices in corporate governance and accounting processes, as well as in reporting and back-office procedures. After auditing salaUno, Ernst & Young produced a report with key findings and recommendations for improvement. Most of the findings and suggestions had to do with better recording and tracking important administrative and financial transactions, such as better control of inventory, accounts payable and accounts receivable, and cash flow, among others.17 As previously mentioned, the adoption of Netsuite helped salaUno improve key back-office and accounting procedures, including the practices identified in Ernst & Young’s audit report.

salaUno effectively carried out staff trainings and implemented knowledge transfer strategies to sustain expansion plans. Because salaUno’s business model—particularly the high patient volume

16 For more information on Nacional Monte de Piedad, please visit www.montepiedad.com.mx. 17 Ernst & Young (2013). “SalaUno Salud, S.A.P.I. de C.V. Carta de hallazgos y recomendaciones. Enero de 2013.” Accessed on 12/17/13 through OMJ’s PULSE portal.

Vision center at the main NMdP store


scheme—is substantially different from that of a regular eye care center, the provision of training to introduce and adapt staff to the model and organizational culture proved extremely beneficial in expanding the model. Training and knowledge transfer strategies included:

• Training doctors in Small Incision Cataract Surgery (SICS) and the Aravind model. salaUno has trained a total of eight doctors to perform SICS, two of which have left salaUno and two are currently in training. After receiving SICS training in Mexico, two current doctors traveled to India for two weeks to receive further training at Aravind. Trained doctors explained that, beyond the medical technique, the visit to Aravind was particularly beneficial to further learn about the lean operational process and the overall social mission behind the business model. Specifically, the doctors believed this experience was key to better adapting to salaUno’s high patient volume scheme and further changing cultural patterns around serving BOP populations.

• Developing a Hospital School to train nurses. salaUno created a one-year nursing program specialized in ophthalmology. The training consists of six months of theory18 and six months of hands-on work. During the year, nurses work full time at salaUno and receive a salary and benefits by law. As stated in the technical cooperation agreement, salaUno used part of the grant resources to develop the material for the training program. Specifically, salaUno put in place a web-based platform, Edu 2.0, with digital text, videos, and other training materials, as well as material for screening potential candidates (e.g., psychometric tests).

In general, OMJ’s resources also helped to partially cover the costs of the training program. At the end of the program, salaUno provides nurses with a certificate validated by the National Polytechnic Institute of Mexico. A cohort of five nurses has already graduated from the Hospital School and another six are expected to graduate in February 2014. According to management, medical, and administrative staff, the Hospital School allows salaUno to recruit new staff and provide them simultaneously with the technical and operational skills necessary to make the business model possible. Adapting staff to the particularities of salaUno’s model has been key in consolidating and expanding the model.

Because of the success of the nursing program in recruiting and retaining high-quality staff, salaUno is now in the process of creating a similar program for doctors to specialize in SICS, PHACO, and the Aravind model. This program will be implemented in partnership with the Anahuac University and is expected to start in March 2014.

• Hiring Aravind consultants. Three Aravind consultants visited salaUno in November 2012 to oversee overall operations. The consultants focused on process streamlining, cost reduction, and output maximization. According to salaUno management, the consultancy with Aravind

18 During these first six months, nurses have a one-hour theory class each day and then practical work at salaUno. In other words, these six months are not purely theoretical training but also incorporate hands-on activities.

An optometrist examining a patient


was extremely beneficial in improving processes and achieving better results. Specifically, Aravind consultants identified procedures that could be eliminated and/or added to reduce consultations at the clinic and thus allow doctors to operate on patients the day they arrive. The consultants also provided useful suggestions on how to reduce wait times, allowing salaUno to serve more patients in a given day. salaUno implemented all recommendations provided by Aravind consultants and this led to an overall improvement of the model’s functioning.

• Hiring high-skilled staff. In order to accelerate the expansion process, salaUno planned to hire highly skilled specialists to provide support in finance, marketing, back-office work, and administration. However, salaUno was only able to hire an operations manager with extensive experience in auditing and controls implementation. This person was the former regional manager of Costco's optical stores. The operations manager was to work on streamlining processes and smoothing the replication process of the second surgical center. Nonetheless, this specialist did not produce the expected results and left salaUno after approximately seven months. According to salaUno’s management, the person met the required experience but was not a good fit for the type of business model salaUno runs.

In addition to these activities, salaUno initiated all procedures to obtain an additional certification from the Ministry of Health. salaUno had already obtained accreditation from the Ministry of Health as a public health provider in May 2012. The new certification will allow salaUno to offer its services to privately insured patients—as insurance companies require such certification—which is key to increasing the number of private surgeries. The company expects to obtain this new certification by the first quarter of 2014.

salaUno gained significant new learnings from testing various marketing strategies to attract new customers. Among other things, the technical cooperation aimed to support salaUno in building brand and customer recognition. To this end, salaUno hired a public relations agency, Zimat, to identify a series of marketing strategies to promote salaUno’s services. The strategies included radio commercials, magazine ads, free consultation tickets in Wal-Mart, and printed advertisements in tortillas wrapping paper.19 According to salaUno’s management, the most effective marketing channels were the radio campaigns and the magazine ads. The radio strategy consisted of announcing salaUno’s services in the fonografo radio station, a popular station for BOP elders. The first time the fonografo announced salaUno’s services, the clinic received 868 people, 106 of which eventually underwent surgery. The printed media strategy consisted of placing ads in a popular entertainment magazine called TV Notas. From this strategy, salaUno received 1,269 patients, 286 of which underwent surgery.20

On the other hand, the free Wal-Mart consultation tickets and the printed advertisement in tortilla wrapping paper were not successful. The Wal-Mart campaign consisted of providing free consultation tickets after a customer made a given purchase amount at Wal-Mart’s pharmacy. The campaign was run in 10 Wal-Mart stores and only resulted in 15 patients. The tortilla campaign consisted of placing advertisements in 50,000 tortilla wrapping papers. Only three people came to salaUno from this publicity.

19 In Mexico, it is common to include publicity in the wrapping paper for tortillas. 20 The radio strategy was part of the consultancy with the PR agency, Zimat, and had no additional cost to salaUno. salaUno’s management found the magazine ads through personal contacts and this had no cost to the organization.


salaUno also tested various social media platforms to reach the BOP market. With this strategy, salaUno intended to target younger BOP segments that could either seek certain salaUno services (e.g., refractive services) or learn about the treatments for elder relatives (e.g., cataract surgery). The social media outlets included Facebook, Twitter, YouTube, Google Ads, and the salaUno blog. These platforms also proved successful in attracting new customers and building brand recognition. According to salaUno staff, social media outlets bring in about 5-10% of patients.

salaUno also tested educational and community campaigns. These campaigns aimed to not only provide patient education on preventive health care but also to diagnose and promote services. These campaigns led to 586 surgeries. According to salaUno’s management, the campaigns are always successful in driving new customers because they are sponsored by Cinepolis Foundation and services are thus free. As such, the campaigns are not as effective to drive private surgeries.

The overall experience of testing these different marketing strategies, including unsuccessful strategies, provided salaUno with valuable learnings. Without OMJ’s grant resources, salaUno could not have tested as many strategies without affecting the expansion process. Specifically, if salaUno had invested its own resources in testing marketing strategies that eventually proved unsuccessful, the company would have not opened as many vision centers or perhaps could not have hired new medical staff—both key steps for the expansion.

salaUno has successfully leveraged additional financial support to continue the expansion. Among other objectives, OMJ’s technical assistance grants are usually used for business acceleration to assist pre-commercial models in becoming investment-ready. As such, the technical cooperation aimed to support salaUno in its growth by leveraging equity from impact investors.21 Specifically, the technical assistance sought to leverage US$1-2 million to meet the requirements to opt for an OMJ loan. In order to leverage such additional financial support, salaUno’s management participated in several investor forums and carried out various dissemination activities.

In December 2012, salaUno’s senior management participated in the International Endeavor Panel to become part of the Endeavor Network.22 By being members of the network, salaUno’s management benefited from mentorships, creating new contacts, and accessing grants—e.g., a grant from Mexico’s National Institute for Entrepreneurs (INADEM). In February 2013, salaUno participated in the Latin American Impact Investment Forum where the organization met with Adobe Capital (a Mexico-based impact investing fund), among other institutions, and explored a potential equity investment. In August 2013, salaUno participated in the Stanford Leadership Program. Participation in this event resulted in a two-week visit of a Stanford team to salaUno to be part of the Center for Social Innovation (CSI).23 salaUno expects to benefit from CSI students’ work in conducting an impact research project on its business model.

These dissemination activities were successful in helping salaUno leverage additional financial support. According to salaUno’s management, the company has been able to raise US$4 million in equity from a

21 Impact investments are investments made to companies, organizations, and funds with the intention of generating measurable social and environmental impact alongside a financial return. Source: Global Impact Investing Network (n.a.) “What Is Impact Investing?,” Retrieved on 12/20/13 from: http://www.thegiin.org/ 22 Endeavor is a global network of business leaders that aims to provide mentorship, strategic advice, and space for networking to entrepreneurs around the world. For more detail information, please visit: www.endeavor.org. 23 The Stanford’s Center for Social Innovation aims to promote the mutual exchange of ideas and values across sectors and disciplines and between theory and practice. For more information, please visit: csi.gsb.stanford.edu


multilateral development bank and a local investment fund. Additionally, the company expects to receive approval for an OMJ loan in mid-2014 to continue its expansion.

salaUno has been able to continue the provision of services despite the Seguro Popular funding cut. As explained earlier, the government suspended Seguro Popular to adjust funding and management procedures.24 In early 2013, cataract surgeries through Seguro Popular accounted for nearly 60% of salaUno’s revenue. Since the government announced the measure in February 2013, this percentage rapidly fell to zero by June 2013.

The sudden stoppage of Seguro Popular naturally affected salaUno’s financial situation. In December 2013, salaUno had a negative EBITDA25 (-US$48,914) and negative net income (-US$101,257)—see Table 5 in the Appendix. Despite significantly increasing private surgeries, salaUno has yet to compensate for the surgeries of Seguro Popular. Before Seguro Popular was suspended, salaUno performed an average of 40 private surgeries per month. After the government’s announcement, private surgeries went up to an average of 120 private surgeries per month. More importantly, private surgeries went from representing 15% of revenues in January 2013 to 41% in December 2013. Yet, in the past six months salaUno has not been able to meet the target for private surgeries necessary to break even (160 private surgeries)—see Tables 6 and 7 in Appendix.

Nonetheless, salaUno implemented a series of strategies to further increase private surgeries. The company has already put in place different methods of payment to make private surgeries even more accessible. The table on the right briefly describes such payment options. As mentioned before, the company will obtain a new certification from the Ministry of Health in early 2014, which will allow salaUno to provide services to privately insured patients and thus increase the number of private surgeries.

Additionally, salaUno will implement other strategies in early 2014 to further stimulate private surgeries. For instance, the company is closing a partnership with Wal-Mart to open vision centers within the retailer’s stores, offering their entire portfolio of products and services and not only cataract surgery. The purpose of this strategy is to appeal to a different age group (e.g., younger individuals interested in refractive products or LASIK surgery), as well as to directly approach BOP segments with higher purchase capacity (e.g., students and/or young professionals).

salaUno’s management stated that the company is close to break even and expects to have a positive balance by the first quarter of 2014.

24 As of 2012, the federal government managed and directly funded Seguro Popular. The insurance will supposedly be now managed at the state level. Seguro Popular is expected to be up and running again by March 2014. 25 Earnings Before Interest, Taxes, Depreciation, and Amortization. Financial information provided by salaUno.

salaUno’s Payment Options

Monedero: This option allows patients to progressively save (by pre-paying in installments prior to the surgery) with salaUno until they reach the amount needed for the surgery. This is the most common option selected by patients.

Credit: This option is provided through a partner, Alivio Capital, which provides financing specifically for healthcare.

Plan de Pago: This option refers to financing the surgery through credit cards with fixed interest rates. This is the least common option since many patients do not have credit cards.


Key Changes to Activities and Resource Allocation

This section presents the most significant changes to the activities and resource allocation planned for the technical cooperation. Overall, salaUno implemented the majority of activities outlined in the technical cooperation agreement. As with any business model in its early stages, salaUno needed to adjust strategies and activities during implementation in order to ensure that the expansion was properly carried out.

The most relevant changes to the planned activities of the technical cooperation include:

• Improving staff recruitment process and work environment. salaUno initially wanted to recruit a number of highly skilled specialists to accelerate the expansion process. As mentioned before, salaUno only hired an operations manager who did not produce the expected results. Instead of continuing to recruit new staff, salaUno decided to use the allocated resources to improve its recruitment process and enhance the work environment for current and new staff. Specifically, salaUno acquired a series of psychometric tests26 to find the right talent for its organizational culture. salaUno has used these tests with more than 40 applicants, of which approximately half have been hired.

Additionally, salaUno hired a human resources consulting firm, Great Place to Work, to assess and improve the company’s work environment. The consultancy conducted a diagnosis of salaUno’s workplace and provided recommendations for improvement. As a result of the consultancy, salaUno put in place six initiatives to improve personal and career development, team building capacity, leadership development, and the communication of its strategic plan throughout the organization (see Table 8 in the Appendix for detailed information on the initiatives). According to salaUno’s management, these initiatives have been key to retaining high-quality employees and reducing turnover rates.

• Building and testing salaUno Plus. In addition to building and testing the VCs, salaUno also piloted a “higher end” health center, salaUno Plus, targeting BOP patients with capacity to afford paid service bundles. salaUno Plus offers patients reduced time to surgery (usually one week), premium facilities, and high-end products (e.g., brand-name lenses). Because salaUno partnered with Nacional Monte de Piedad to establish VCs in existing stores, the company was able to use part of the resources allocated to build VCs to build salaUno Plus.

The original technical cooperation plan also included carrying out a market study. The market study was to understand where the greatest needs were for eye care services and thus expand the model to those locations (i.e., where to build the new VCs). However, salaUno expanded within Mexico City, a market the company already knew well. Additionally, Mexican institutions produce reliable socioeconomic and demographic information, making it easier for salaUno to identify BOP communities with a high concentration of individuals over the age of 50. The company therefore decided to allocate the resources of this market study to build and test salaUno Plus.

26 The psychometric tests are implemented using web-based technology Pyxoom.


These changes and the reallocation of resources proved successful. As of December 2013, private cataract surgeries through salaUno Plus represented approximately 34% of the company’s revenues.

All changes to the structure of the technical cooperation, including the reallocation of grant resources, were justified and conformed to the objectives of the cooperation project and the realities encountered on the ground when executing the expansion plan. OMJ was aware of the changes and approved them accordingly.

The following table shows the original resource allocation plan and the actual use of resources:

Figure 6. Technical Cooperation Resources: Projected vs. Actual Allocation (USD)

Activity OMJ salaUno Total

Projected Actual Projected Actual Projected Actual

Credit Structuring, Building and Strengthening Back office Capacity

15,000 5,317 49,000 25,021 64,000 30,338

Credit Structuring 15,000 5,317 - - 15,000 5,317 IT System - - 10,000 12,847 10,000 12,847

Software License (three years) - - 39,000 12,175 39,000 12,175

Staff Training, Consultants & Knowledge Transfer

134,000 110,222 69,000 65,639 203,000 175,861

Hospital School 51,000 24,080 - - 51,000 24,080 Aravind Training - - 15,000 7,885 15,000 7,885

Doctors' Training in SICS 15,000 29,918 - - 15,000 29,918 Hire Seasoned Training 40,000 25,083 34,000 12,042 74,000 37,126

Health-care consultants 20,000 12,002 - 16,146 20,000 28,148 Ministry of Health Certification 8,000 7,883 20,000 29,566 28,000 37,449

Great Place to Work Survey - 6,404 - - - 6,404 Psychometric Tests - 4,852 - - - 4,852

Marketing & Communications 15,000 16,242 2,000 2,060 17,000 18,302

Public Relations & Marketing 5,000 9,183 - 921 5,000 10,104

Social Media 5,000 3,007 2,000 1,139 7,000 4,146

Educational Campaigns 5,000 1,013 - - 5,000 1,013

Wal-Mart Campaign - 1,241 - - - 1,241

Tortilla Campaigns - 1,798 - - - 1,798

Expansion and Pilot of VCs 66,000 98,220 5,000 10,231 71,000 108,450

Build 3 Vision Centers 60,000 37,197 - - 60,000 37,197

Financial Model - - 5,000 10,231 5,000 10,231

Feasibility & Market Studies 6,000 - - - 6,000 -

salaUno Plus Pilot - 61,022 - - - 61,022

Evaluation & Dissemination 20,000 20,000 - - 20,000 20,000

Investor Forum & Dissemination: 10,000 9,702 - - 10,000 9,702

Endeavor International Panel - 3,625 - - - -

Foro de Inversion de Impacto - 1,685 - - - -

Stanford Leadership Program - 4,392 - - - -

Evaluation 10,000 10,000 - - 10,000 10,000

TOTAL 250,000 250,000 125,000 102,951 375,000 352,951


salaUno invested all of the US$250,000 grant resources from OMJ. Of the US$125,000 salaUno would invest from its own resources, the company still has a remaining balance of US$22,049 to be used. The balance of resources corresponds to acquiring the IT system, which was to be used over a three-year period (i.e., 2012 through 2015). Besides this specific activity and considering all the changes mentioned before, salaUno spent technical cooperation resources according to plan.

In the next three to five years, salaUno plans to continue its expansion with the raised equity and pending OMJ loan. Specifically, salaUno will open new vision centers and diagnosis centers. The diagnosis centers will be an intermediate point between the vision centers and the surgical clinic and will be located close to various vision centers. The intention is to conduct preliminary examinations at the diagnosis centers and only have patients go to the clinic for surgery. This will make the business model even more lean and allow doctors to operate on more patients on any given day. salaUno has decided to resume surgeries through Seguro Popular when the government finalizes the funding re-adjustment process; however, expansion plans will emphasize reaching sustainability without Seguro Popular. Lastly, salaUno plans to expand operations outside Mexico City and the metropolitan area into other states of Mexico.

CONCLUSION

The technical cooperation with OMJ was instrumental in helping salaUno’s incipient business model to become investment-ready and absorb debt and equity. Without the technical assistance provided by OMJ grant resources, salaUno would have taken significantly longer to put in place the necessary steps for its business model to qualify for and take in commercial lending. For a business model that relies heavily on high patient volume, a lengthy expansion process could have risked the viability of the model and thus the availability of affordable, quality eye care for BOP segments.

In this sense, the technical cooperation provided by OMJ effectively helped salaUno to expand its business model and serve BOP populations. Specifically, the technical assistance was important for salaUno to share the risk of piloting the vision centers. salaUno currently has in place 12 vision centers and has been able to serve nearly 80,000 BOP individuals27 since starting the technical cooperation—more than triple the beneficiaries that the company had before the cooperation with OMJ.

The cooperation also facilitated capacity building and knowledge transfer. salaUno successfully trained doctors and nurses on ophthalmology as well as on the overall business operations. These strategies resulted in helping salaUno to recruit staff while ensuring that new personnel have adequate high-quality skills as well as the right fit to adjust to salaUno’s social mission and high volume patient scheme.

The acquirement of the new IT infrastructure, including the ERP system and the CRM software, helped salaUno to better manage the vision centers and clinics. This also facilitated tracking and pulling information on patients and suppliers. Likewise, the consultancies with Ernst & Young and Aravind further enhanced salaUno’s operational and administrative capacity.

More importantly, the technical cooperation was key for business acceleration and assisting salaUno to become investment-ready. Because of the expansion, enhanced capacity, and the credibility provided

27 Number of beneficiaries as of November 2013.


to the business model through OMJ’s support, salaUno was able to leverage equity and be better positioned to absorb an OMJ loan or financing from other organizations. Through a series of impact investor events and dissemination activities, salaUno was successful in securing US$4 million in equity to continue the expansion of the business model.

On the other hand, the technical cooperation also produced new learning for salaUno regarding effective and ineffective strategies. Specifically, grant resources allowed salaUno to test different marketing strategies that, if implemented with salaUno’s own resources, would have significantly delayed the expansion process. The funding cut of Seguro Popular and the subsequent need to diversify revenue sources, particularly from private surgeries, was also an important learning for salaUno’s management.

Finally, the changes salaUno made to some of the originally planned activities for the technical assistance were justified in order to properly expand the business model. Overall, the company invested grant resources as planned and achieved the expected results. These results highlight the importance of grant resources for expanding BOP business models with scalability potential and for business acceleration to reach commercial viability.


APPENDIX

Table 1. Interviewed salaUno Staff

No. Name Position

1 Javier Okhuysen Co-founder & General Director

2 Carlos Orellana Co-founder & General Director

3 Sofia Garrido Financial Planning Manager

4 Juan Carlos Rodriguez Operations Manager

5 Diana Monserrat Nursing Staff Chief

6 Jonathan Lowemberg Ophthalmologist & Medical Staff Chief

7 Omar Honerlage Ophthalmologist

8 Angelica Creixell Commercial Strategies Coordinator

9 Andrea Portilla Human Resources Manager

10 Abel Garcia Vision Centers Manager

11 Diana Sandoval Optometrist & Vision Center Staff

12 Carmen Luisa Diaz Optometrist & Vision Center Staff


Table 2. Interviewed Beneficiaries

No Name Gender Age Treatment Occupation Paid Surgery/

Campaign Amount Paid

1 Zanaida Sanchez

F 55 Cataracts Cook Campaign Free

2 Enrique Soto M 78 Cataracts Driver Paid MXP 16,000 (USD 1,242)

3 Lorenza Guerrero

F 62 Cataracts N/A Paid MXP 13,650 (USD 1,060)

4 Luz M.

Vazquez F 84 Cataracts Packer Paid

MXP 9,900 (USD 768)

5 Porfirio Cuevas

M 83 Cataracts Farmer Campaign Free

6 Pedro

Rodriguez M 63 Retinopathy Farmer Paid

MXP 1,770 (USD 137)

7 Roberto

Gonzalez M 70 Cataracts N/A Campaign Free

8 Anzelmo

Torres M 66 Cataracts N/A Campaign Free

9 Aurora

Arellanos F 73 Cataracts N/A Paid

MXP 12,000 (USD 931)

10 Laura

Villafuentes F 64 Cataracts N/A Campaign Free


Table 3. Interviewed Partners

Organization Contact Name Position

Fundación Cinépolis

Lorena Guille Executive Director

Daniela Rodriguez Coordinator, “Del Amor Nace la Vista”

Program

Nacional Monte de Piedad

Lorena Mac Farland Executive Coordinator

Conrado Monroy General Manager, Casa Matriz


Table 4. salaUno’s Products & Services Prices (Mexican Pesos and U.S. Dollars)

Product and Services salaUno’s Price Range

Check-up MXP 22-45

(US$1.75-$3.50)

PHACO cataract surgery MXP 9,000-22,500

(US$705-$1,740)

SICS cataract surgery

MXP 5,000-16,500

(US$415-$1,285)

MXP 5,000 (subsidized surgeries)

(US$400)

Retinopathy MXP 700-1,200

(US$60-$100)

YAG Laser MXP 1,300-4,200

(US$105-$330)

Pterygium removal MXP 4,000-7,500

(US$300-$580)

Optical services MXP 950 (average)

(US$75)

Pharmacy products MXP 120-400

(US$10-$30)

Source: M. Singhal, J. Moe, and R. Bartlett (2013). “Replicating Indian Eye Care Innovations in Mexico: The Founding and Expansion of salaUno,” International Partnership for Innovative Healthcare Delivery (IPIHD).

Note: Exchange rate from www.oanda.com.



Table 5. Financial Indicators, 2013 (U.S. Dollars)

Indicator Jan Feb Mar Apr May Jun

Earned

Revenue1 247,845 225,057 213,209 210,218 242,799 189,023

EBITDA1 57,170 37,992 56,801 4,918 13,239 (26,040)

Equity / Net Assets2

810,183 851,221 931,291 934,420 946,766 923,546

Net Income1 96,268 41,037 80,071 3,129 12,345 (23,608)

Operating Expense1 190,675 187,065 156,407 205,300 229,559 215,062

Total Assets2 1,375,505 1,602,815 1,728,568 1,649,372 1,745,671 1,691,870

Total Liabilities2 565,322 751,594 797,277 714,952 798,905 768,324

Indicator Jul Aug Sep Oct Nov Dec

Earned

Revenue1 169,707 163,002 129,097 135,097 145,268 135,613

EBITDA1 (38,777) (36,872) (52,682) (25,067) (36,780) (48,914)

Equity / Net Assets2

880,229 883,664 823,143 753,576 708,794 613,940

Net Income1 (43,317) 3,435 (60,132) (32,827) (44,726) (101,257)

Operating Expense1 208,485 199,875 181,780 160,164 182,048 184,527

Total Assets2 1,640,230 1,622,880 1,273,289 1,251,275 1,566,899 1,673,027

Total Liabilities2 760,001 739,217 450,146 497,699 858,105 647,590

Source: salaUno’s management. Note: Exchange rate from www.oanda.com (as of 12/10/13). 1 Flow indicators; 2 Balance indicators.



Table 6. Revenue Share Breakdown, 2013

Service Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD

Cataract Surgery - Private

15% 8% 25% 44% 29% 50% 45% 45% 42% 49% 45% 41% 34%

Cataract Surgery - Cinepolis Foundation

14% 16% 25% 18% 16% 24% 24% 23% 28% 16% 22% 29% 21%

Cataract Surgery - Seguro Popular

56% 59% 28% 13% 36% 0% 0% 0% 0% 0% 0% 0% 20%

Optical Shop 7% 5% 6% 9% 7% 9% 10% 14% 10% 13% 11% 11% 9%

Pharmacy 3% 4% 5% 5% 4% 6% 5% 6% 5% 5% 5% 6% 5%

Consultations 3% 3% 4% 4% 3% 4% 5% 5% 5% 5% 6% 4% 4%

Clinical Studies and Analysis (Exams)

1% 2% 4% 3% 2% 2% 3% 3% 3% 3% 5% 4% 3%

Laser Treatments 2% 2% 3% 4% 3% 4% 5% 5% 5% 5% 4% 3% 4%

Glaucoma Surgeries 0% 0% 0% 0% 0% 1% 0% 0% 0% 1% 1% 1% 0%

Refractive Surgeries 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

Other 0% 1% 0% 0% 0% 1% 2% 1% 1% 1% 1% 0% 0%

Source: salaUno’s management


Table 7. Cataracts Surgeries per Source, 2013

Service: Cataracts Surgery Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Private Surgery 49 29 87 168 130 152 123 120 86 108 103 83

Cinepolis Foundation 98 98 143 102 105 125 112 100 99 57 78 113

Seguro Popular 238 221 133 62 153 1 0 0 0 0 0 0

Total Surgeries Performed 385 348 363 332 388 278 235 220 185 165 181



Table 8. Human Resources Initiatives

Initiative Description

salaUno Experience Committee A multidisciplinary team to help identify and

implement strategies to make salaUno a better place to work

Integration Program A program to help team members to know each other

better, build confidence, and improve teamwork

Communication of Strategic Plan A communication strategy at all levels to better

disseminate salaUno’s strategic plan and learn how staff can contribute to achieve such plan

Enhancements to the Integration Program and Buddy System

An initiative to improve induction and integration of new employees so that they can adapt faster to the

organization and their work teams

Personal and Career Development Plan

An initiative aimed to improve personal and career development through various benefits (e.g., health, finance, family, conferences, medical examinations,

agreements with suppliers, etc.)

Leadership Development Program An initiative to strengthen teams and its leaders to

support the development of the organization


Documents

salaUno TC evaluation 2013