Charitable Pharmacies
INSTITUTE FOR RURAL HEALTH STUDIES (IRHS)
Organizational Vision
Citizen Base Strategy
How It's Working
Lessons Learned
The Institute for Rural Health Studies (IRHS) provides and advocates for the improvement of health care services for India’s marginalized populations. In one of its more innovative initiatives, IRHS developed two non-profit pharmacies that contribute to the organization’s sustainability and fund costly surgery for the very poor.
IRHS primarily targets rural populations, including landless laborers, stonecutters, and farmers. The organization manages two village clinics in a drought-prone district, run by paramedic and health workers recruited from the area and including simple pharmacies, labs, gynecology facilities and a referral service to the district hospital. The organization also administers a large applied research program in collaboration with the regional cancer center hospital, focused on the early detection and cure of cervical cancer, the number one killer of Indian women. In addition, IRHS founded and runs Traveler’s Aid for the Sick, an initiative based in India’s Central Bus Terminal (the largest in Asia) to link rural inhabitants to access to state medical care through the guidance of trained Patient Counselors.
After many years in operation, staff in all locations (rural clinics, individual and district hospitals, and IRHS’ bus station center) found more and more patients desperate for funding to pay for operations, special medicine, and medical supplies and care. State government hospitals had fees for everything from an outpatient visit to lab tests, CT scans and surgical supplies. To help provide funding for such patients and to establish its own sustainability, IRHS set up two non-profit pharmacies to finance a program run jointly with a major hospital for costly surgeries for the very poor.
Seize opportunities
In 2006, Nizam’s Institute of Medical Sciences (NIMS), a specialty hospital with 1,000 beds, placed a call for bids to run two of its pharmacies. IRHS knew an opportunity for sustainable funding was at hand.
With the help of the Indian School of Business (ISB), IRHS successfully won the bid for two hospital-based pharmacies on the NIMS campus. In an innovative use of funds, the organization allocated the surplus income not only to support its own operations, but also to fund surgeries for the very poor. After expenses, 60 % of revenue from Karuna Pharmacies goes to the NIMS Fund, a special fund managed by IRHS, the ISB and NIMS. The NIMS Fund pays for cardiac surgery for poor, rural children, as not a single government hospital in the state conducts open-heart surgery on children free of charge. Remaining funds go directly to IRHS to support direct health care provision for IRHS’ core constituencies, including rural clinics, Traveler’s Aid for the Sick, and the costs of medical and surgical care for of a large number of children and young people with special needs unmet by the state. The two Karuna pharmacies cover their own administrative and overhead costs and sell between $4,500 and $5,000 worth of stock per day. With over a thousand daily transactions, they are now the second largest pharmacies in the entire state.
Highlight creative vision to attract support
The effort to win the NIMS bid and subsequently set up the two pharmacies required enormous capital input and backing from a number of partners. The sheer innovation of the idea was often a catalyst for support, particularly with regards to the government and other authorities. For example, the Drug Commissioner, impressed by the idea of creating a model pharmacy, gave Karuna Pharmacies their drug licenses in record time. The Indian Health Minister volunteered to inaugurate the pharmacies, and publicly acknowledged that this could be a model for all government hospital pharmacies. The hospital staff members, including the Director, were very supportive of the pharmacies from the beginning, as well as professors, who supplied lists of appropriate drugs.
In addition to such formal demonstrations of support, the organization received tangible support from a variety of sources in response to their creative idea. The Indian School of Business made the launch of the charitable pharmacies a student project, providing four MBA students to help IRHS with everything from branding the pharmacies to assisting with publicity, with their well-developed and effective Department of Communication. Perhaps the most influential physical support, however, came from Mor Chemists, the largest commercial pharmacy in the state. Mor Chemists identified wholesalers to provide IRHS with favorable terms of credit, and provided experiential acumen and training to IRHS staff. Finally, IRHS harnesses the power of the local community by using ‘gray’ (elderly) volunteers to educate patients and attendants in the campus park about drugs. As the elderly are often more frequent users of medicine for chronic conditions, by sharing knowledge acquired at the pharmacies they benefit not only themselves, but also their families, friends, NIMS patients, and their attendants.
Be transparent and strategic about the use of funds
IRHS committed themselves from the beginning to transparency and accountability in their business model. This commitment stimulated confidence and trust in the organization, which in turn allowed for financial resource mobilization. For example, when IRHS looked to cover its start-up costs in establishing the pharmacies, Syndicate Bank, IRHS’ bank for 22 years, extended a $17,350 line of credit. It also offered the organization an $11,575 loan, which persuaded the hospital to waive its traditional security deposit.
IRHS transparency in operations extends to its use of funds. The NIMS Fund to fund surgeries for the poor has its own bank account on hospital grounds, into which the surplus allotted to the Fund is deposited. It is co-signed by a professor at the Indian School of Business and the Director of the IRHS. A half-time Patient Counselor Administrator, paid for by the fund, organizes the cases found for surgery or medical treatment, which are presented periodically to a committee comprised of IRHS members, NIMS’ Medical Superintendent, and an orthopedic surgeon. IRHS then writes a policy paper that sets out the guidelines for selection of cases, which is widely distributed. This involved yet transparent selection process ensures that everyone is clear about who receives specialized medical treatment and why, which promotes understanding and increases organizational accountability.
- IRHS has been in continuous operation for over 25 years.
- Through the IRHS applied research center, five thousand rural women are being screened for cervical cancer in their own villages and followed for three years
- The pharmacies make approximately a 10 % profit above costs
- Each month of the pharmacies’ combined revenue (approximately US$2,300) can fund up to five operations for children with congenital heart defects
- Share cost burdens to encourage support. Karuna funds allow the organization to ‘case share’ with doctors in other hospitals: In one case, Karuna paid $575 for a procedure for which the hospital was then able to donate a stent (specialized piece of medical equipment) worth $800.
- Closely monitor resources to maximize profits. In March of this year, IRHS set out to take a proper inventory of all stock. It closed both pharmacies for several days to streamline stock orders, cutting costs by decreasing waste.