Sala Uno is an excellent case for seeing how a socially minded organization can generate earned revenue to not only sustain itself, but also scale. With this sustainability and scalability through earned revenue, Sala Uno is enabled to more effectively achieve its mission to provide “health treatments with a high social and economic impact, providing personalized service and quality, accessible to all people through an innovative model of excellence.”1 In this blog post, we’ll provide background on Sala Uno, breakdown its revenue model, and consider its structure and approach.
Founded in 2010 by Javier Okhuysen and Carlos Orellana, Sala Uno provides cataract surgeries in Mexico. It seeks to offer the highest quality surgeries at the lowest possible price. The organization currently operates in Mexico City and hopes to expand across Latin America in the near future. In its short history, Sala Uno has already provided over 4,000 surgeries enabling many low and middle income patients to see again.2 Sala Uno creates real social good like a traditional nonprofit would, but has also found a way to fund the work through earned revenue discussed in the next section.
To provide surgeries to both the wealthy and the poor, Sala Uno prices surgeries on a sliding scale or as they describe it, a “tiered service scale.” To deliver this, they have taken a lesson from low-cost airlines where one can pay extra for added amenities such as boarding the plane early, having flexibility with ticket changes, etc. At Sala Uno, every patient is able to get the same high quality surgery, but by paying more, patients get added perks such as scheduling their surgery more quickly, recovering in their own private room and so on. With this model, the surgery price is not directly tied to a patient’s income, but is driven by what he or she can and wants to pay for. This enables Sala Uno to provide surgeries for a broad range of people helping achieve economies of scale.
Even with the sliding scale pricing, many of the poorest people still cannot afford surgeries. To provide surgeries for this demographic, Sala Uno receives subsidies from the Mexican government and NGOs. According to cofounder Javier Okhuysen, Sala Uno performs approximately 40% of its surgeries through Seguro Popular, a government subsidy program.3 With this sliding scale model and the added subsidies, Sala Uno is able to perform approximately 85% of its surgeries on impoverished patients.3
Structure & Approach
While its revenue model is impressive, Sala Uno could not produce such great results without its innovative organizational structure & approach.
For example, Sala Uno has relentlessly tried to reduce the costs of cataract surgeries to help make it more affordable to low income families. To this end, they introduced a new surgery that had not been used in Mexico previously. This surgery is cheaper to perform, while still maintaining results, helping bring the price down.3
To expand its reach at a low cost, Sala Uno uses what it describes as a Hub and Spoke model. The hub is a surgical center where all the surgeries are performed around the hub are spokes, which are small centers with optometrists who can exam and diagnose the patients. The spokes create a buffer from the hub by on directing them to the surgical centers if surgery will help them. Likewise, these optometrists can direct patients to other hospitals if the patient’s needs are beyond the scope of Sala Uno’s work. The hub and spoke model has helped enable Sala Uno to capture economies of scale, even while they are still a small organization.
As a result of these efforts, among others, they are able to provide surgeries for less than a one-third of the cost of a typical operation in Mexico.4 This mix of research and innovation has helped foster the success of Sala Uno.
- Utilizing variations of the sliding-scale pricing model could help your organization reach low-income markets without making the products/services completely free.
- Subsidies can be implemented on top of sliding scale pricing to make products/services even more affordable.
- Economies of scale can be critical in reducing costs, and therefore, in reducing prices.