Prepared for Board of DirectorsDecember 2, 2010

Shirley Li, Rachna Pande, Archana Raghavendra, Jenny Son

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SmileTrain’s stated mission•Provide safe and quality treatment of

cleft lip and palate, free of cost, to poor children in developing countries•Provide free cleft-related training to

doctors and medical professionals•Until “we have completely eradicated the

problem of clefts” in children•Give kids “a second chance at life”

Our vision for India•Short term•Reach the “last mile”•Long term•Extend care beyond cleft by leveraging

existing capabilities, while remaining sensitive to SmileTrain’s spirit and brand

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Founded in 1999 when the co founders broke away from Operation Smile, now operates in 78 countries

Built on existing infrastructure by partnering with local surgeons, hospitals and social organizations

Efficient team includes only 43 employees worldwide◦ Technology to ensure quality & cost efficiency

Cost effective◦ “Per cleft surgery cost brought down by 90%”◦ "100% of your donation goes to program - 0% goes to

overhead."

Source: SmileTrain website; Co founders speech Interview with Mackinnon Webster

Surgeons Hospitals Local NGOs

Accountable

Patients

Partnerships Accreditation $250* per surgeryTraining

Cleft lip and palate surgeriesSource: SmileTrain website; Co founders speech Interview with Mackinnon Webster* Exact amount subject to local conditions, at the discretion of regional directors 4

Since SmileTrain’s India operations began in 2000, the number of patients treated annually increased five-fold

Partner with over 180 local hospitals, 250 cleft surgeons, and social organizations for 250,000 surgeries

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35,000 babies are born in India with cleft palate/lip.

92% of them cannot afford surgery.

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Singular focus on

cleft lip and palate

Treatment

Awareness

Empowerment of local doctors

Safety & quality

Holistic care

Accessibility

• 500,000 cases treated successfully worldwide

• Zero charge to patients

• Pre surgery care with nourishment

• Post surgery care, give toys, food for poor

• Community outreach programs

• Educational materials, flyers

• Emphasis on safety and quality of treatment

• Accessible treatment clinics “no one has to walk more than 100 km to get treated”

• Augmenting existing skills with state of art training

Source: SmileTrain website; Interview with MacKinnon Webster

Acting as a payor and not a direct provider, unlike other cleft organizations

Leveraging local available talent of doctors in lieu of “importing” talent to create a network of partners

Standardized guidelines, or protocol, for treatment of cleft

Sophisticated use of electronic medical records to maintain safety and quality

Excruciating focus on costs and execution – very lean administrative set up

Breadth and depth of donor base, and extraordinary fundraising capability

7Source: SmileTrain website; Interview with Mackinnon Webster

• Maintain lean management & operating structure but incentivize monetarily

• Set clear goals to scale up rapidly• Leverage cutting-edge technology

• Tap diverse media channels to raise awareness

• Engage and motivate prominent supporters and promoters

• Secure high-profile pledges as revenue sources

• “Franchise” cleft operations to partner hospitals

• Enable and empower local health practitioners

• Achieve much greater coverage dollar-for-

dollar

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Strategic –Local

Partnerships

Cultural – Business Mentality

Political –Resourceful Marketing

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Reaching the last cleft patient is costly•Geographic coverage handicapped by available partners•Some population beyond reach of media channels

Growing network increases monitoring costs•Coordination issues among partner hospitals•Scalability heavily dependent on technology and staff

Decline in backlog creates incentive to shift focus•Reaching patients on the margin – best use of resources?•Prevention vs. treatment?•Leverageable model to other services

Shift in focus may hurt SmileTrain’s brand•Resistance from donors and other stakeholders who support

singular focus•Transparency of business model and visibility of results

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•Double outreach efforts through media and social workers•Provide incentives to people who refer cleft patient, combined with

clear goal-setting for partners•Stay at forefront of cutting edge technology for safety and quality

Reaching the last

cleft patient

•Have pre and post surgery care teams visit patient’s neighborhood•Rehabilitation•Broaden network to primary care providers, orthodontists, and speech

therapists

Providing ancillary services

•Leverage network of partners•Reparative surgery and prosthetics•Annual check-ups, Primary care/referrals•Vaccinations, Pre-natal care, Obstetrics, Preventive care

Going beyond

cleft

“Aishwarya made goodwill ambassador of Smile Train NGO”, The Economic Times, November 1, 2009.

“BBB Wise Giving Report for Smile Train”. Better Business Bureau. http://www.bbb.org/charity-reviews/national/human-services/smile-train-in-new-york-ny-644. Retrieved November 22, 2010

"DFS and partners raise US$300,000 for The Smile Train". Moodie Report, August 2, 2009. http://www.moodiereport.com/document.php?c_id=1178&doc_id=19764. Retrieved November 22, 2010.

"Freakonomics, Bottom-Line Philanthropy, the 'Soccer Boy' effect". New York Times Magazine, Stephen J. Dubnerand Steven D. Levitt, March 9, 2008. http://www.nytimes.com/2008/03/09/magazine/09WWLN-freakonomics-t.html?ref=magazine. Retrieved November 22, 2010.

“Making kids smile again with software”, by M. Somasekhar, Hindu Business Line, November 10, 2000.

MacKinnon Webster phone interview. Program Officer of Smile Train. Conducted November 23, 2010

The Official Smile Train Website. http://www.smiletrain.org/site/PageServer. Retrieved November 22, 2010.

"Scaling Up Charity: Smile Train’s Brian Mullaney". Harvard Magazine, Nell Porter Brown, Sep-Oct, 2009. http://harvardmagazine.com/2009/09/smile-trains-brian-mullaney. Retrieved November 22, 2010.

“Smile Pinki wins best short Oscar”, BBC News, Geeta Pandey, February 23, 2009.

Smile Train India Home Page. http://www.smiletrainindia.org/. Retrieved November 22, 2010.

“Smile Train”. Guidestar Charity Check. http://www2.guidestar.org/organizations/13-3661416/smile-train.aspx. Retrieved November 22, 2010.

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• Instead of sending traditional mission teams from the U.S. or other developed nations• SmileTrain India has 180 hospitals and more than 250 surgeons, who have now

performed 250,000 cleft surgeries in India• Partner hospitals chosen based on “maximum number of children for the minimum

amount of money”, pre-existing cleft operations, and “champions” for the cleft cause

“Franchise” cleft operations to

partner hospitals

• By providing free equipment, free education, training, and on-going financial support•Doctors, nurses “learn how to fish” and become self-sufficient cleft surgery operators•Doctors, nurses incentivized by SmileTrain’s flexible financial and frequent technical

support provided by 4 staff members under Regional Director of South East Asia

Enable and empower local

health practitioners

•Due to India’s more established medical infrastructure and hands-off approach•Cost-per-surgery reduced by 90% from mission team model (e.g. Project Smile)•4 SmileTrain staff maintains constant communication and carries out frequent visits to

each partner hospital to assess patient needs• Smile Grants cover transportation, education, and other expenses to facilitate care

access and post-surgery integration into community

Achieve much greater

coverage dollar-for-

dollar

Source: SmileTrain website; Harvard Magazine; NYTimes; Interview with Mackinnon Webster of SmileTrain

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Maintain lean management & operating structure but incentivize monetarily•Globally only 43 staff with 24 based in the U.S.; Satish Kalra overseas all of South Asia•With G&A ~1% of total expenses and fund raising ~18%, 80% of resources funneled

towards supporting partner hospitals (today, each surgery costs 12,000 rupees, with flexibility allowed on a case-by-case basis, decided by Mr. Kalra)

•Retain business talent via market-rate salaries

Set clear goals to scale up rapidly• Expansions and penetration pursued with business “precision”. Every fiscal year begins

with target setting (on # of surgeries to be performed in the year)• Since India operations began in 2000, # of patients treated annually increased five-fold to

50,000•Donors are treated like shareholders; cleft children are “nonperforming assets”

Leverage cutting-edge technology•Continuously train and increase efficiency of local operators via “virtual surgery lab” •Monitor quality control of local operators through digital imaging and “grading” by U.S.

cleft experts•Reduce delay and facilitate knowledge sharing across sites via digital medical records –

Indian hospitals especially good at “before and after” photos

Source: SmileTrain website; Harvard Magazine; NYTimes; Charity evaluator Guidestar; Interview with Mackinnon Webster of SmileTrain

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Tap diverse media channels to raise awareness •Outreach teams are led by trained social workers that create trust with families of patients • Psychosocial impact of clefts is brought home in Smile Pinki an Oscar-winning short

documentary film in 2008 about SmileTrain India• According to co-founder Mullaney, a major motion picture is in the making

Engage and motivate prominent supporters and promoters• Bollywood megastar Aishwarya Rai named in November 2009 as SmileTrain’s first Goodwill

Ambassador• Former President of India, Dr. APJ Abdul Kalam talked about “the success of SmileTrain, the

virtues of doctors and the need to reach a million Indian children still suffering from cleft and palate defects” In July 2010

Secure high-profile pledges as revenue sources•DFS Group, the world’s leading luxury travel retailer, raised an US$300,000 for SmileTrain

following an extensive campaign across its global network to raise funds and visibility for the cause in 2009

• Global events such as the $1M event 'The Bombay Revelation', centered around five Bombay Sapphire Gin hand-made crystal bottles in 2008

Source: SmileTrain website; Harvard Magazine; Interview with Mackinnon Webster of SmileTrain

Network of PartnerProviders

Access to cleftpatients No. of cleft surgeries

performed

Learning across theorganization

Safety and Quality

Positive Press andWord of Mouth

Donations

+

+

+

+

+

Reimbursement, free equipment& training, Smile Grants to

Indian providersInvestment in medicalinfrastructure by providers

Availability ofphysicians and medical

staff

+

+

+

Investment inoutreach efforts

Awareness amongcleft patients

Demand for clefttreatment

++

+

+

Investment in cuttingedge technology

Ability to monitor safetyand quality at low cost

R

Learning increasessafety quality and

coverage

Coverage (Patientsserved / Dollars spent)

+

+

+

+

+

Social Appeal

Engagement ofprominent supporters Ability to tap diverse

media channels

Investment intraining

+

+

+

+

+

+

+

+

R

Technologypromotes Lean

R

Positive Returnsfrom Infrastructure

R

Outreach

R

CelebrityBandwagon

R

PhysicianEmpowerment

+

Note: positive reinforcement (labeled R) and negative reinforcement or “balancing” (labeled B); + and –indicate positive and negative correlation, respectively

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Transparency of businessmodel and visibility of

results

Cost of reaching cleftpatients on the margin

Backlog

Attractiveness of providingother services with better

coverage

CoverageNetwork of partnerproviders

Ability to monitor safetyand quality at low cost

Donations

-

+

Positive Press andWord of Mouth

+

+

+

B

Growing networkincreases monitoring

costs

Access to cleftpopulation

No. of cleft surgeriesperformed

+

+

--

-

B

Reaching the lastcleft patient is costly

Shift in focus to serviceswith better coverage

Resistance from donors andother stakeholders who support

singular focus on cleft

+

++

-

-

-

R

Decline in backlogcreates incentive to shift

focus

B

Shift in focus may hurtSmile Train's brand

Note: positive reinforcement (labeled R) and negative reinforcement or “balancing” (labeled B); + and – indicate positive and negative correlation, respectively

We also have a number of systems in place to monitor and detect potential fraud. Ideeinc, SmileTrain’s fraud detection software, scans every record that is uploaded to our patient records database for potential red flags and will notify our staff if a record matches previous records based on facial recognition or name and birthday repetition.

Ideeinc also sends a notification if it cannot detect signs of surgery on a patient record or if a photo appears to have been altered (via Photoshop, etc.).

We also look for clues like if the before and after picture are taken within a few minutes of each other. The system is quite sensitive and has managed to catch photos that were re-uploaded under multiple patient names, even when each record contained unique metadata or is uploaded at different hospitals.

- Correspondence from Mackinnon WebsterNovember 24, 2010

SmileTrain takes the safety of its patients and the quality of its surgeries seriously. As safety and quality are our #1 priority, we have a number of protocols in place to ensure only the best surgeons are our partners and only the best care is being provided to our patients. These processes include, but are not limited to, the following: ◦ All surgeons applying for partnership are vetted through a review of their curriculum vitae

and photographs of 3-5 past cleft patients.

◦ All new partners must sign SmileTrain’s Safety & Quality Protocol to confirm future adherence to all outlined standards of care.

◦ To receive funding, all partners must upload medical records with pre and post operative photographs to SmileTrain’s online database, SmileTrain Express (STX). These records are then manually reviewed and graded by SmileTrain’s external medical consultant. This tracking of medical outcomes is called SmileTrain’s Quality Improvement (QI) Process.

◦ As outlined by the Protocol, all life-altering events during/after a SmileTrain surgery must be reported to SmileTrain Headquarters. Detailed documentation must be submitted within a certain time period, followed by a thorough review and summarization of the events by the Medical Advisory Board (MAB). This is called SmileTrain’s Sentinel Event Process.

◦ Mid-career training is provided to all partners in the form of conferences, workshops and hands-on training. This is offered by SmileTrain’s Education and Training Grant Program.

Source: SmileTrain website

This Protocol was developed by the SmileTrain’s Medical Advisory Board (MAB) in 2000 and has been continually audited for improvements. The Protocol has requirements on the maintenance of medical records; review of medical results; reporting of sentinel events; selection of healthy patients; administration of pediatric anesthesia; maintenance of operating space; and monitoring of post-operative patients. As of January 2010, it includes the Surgical Safety Checklist, as developed by WHO, Harvard School of Public Health, and World Federation of Societies of Anesthesia.

Source: SmileTrain website

This is a system by which the first ten lip and five palate records for each newly registered surgeon is manually reviewed by a medical consultant through STX. Those who successfully pass the initial review are transferred into the established surgeon pool where 1% of their annual total records are reviewed on an ongoing basis. Surgeons who receive poor scores are subject to further review.

If a new surgeon receives an average failing score for their 10 lip records, or if they fail 2 out of 5 palate surgeries, the identified surgeon is relegated to a second round of record review. In round 2, 10 more lip and 5 more palate records are reviewed. Those surgeons who successfully meet ST criteria are transferred to the established surgeons group.

If the surgeon fails their 2nd round, then the Chairman of the MAB reviews their records and makes a recommendation as to whether further training is needed. If needed, a final set of 10 lip and 5 palate records are reviewed after the training is complete. If the surgeon is still receiving failing scores, then he/she will be brought to the MAB to determine the next steps to be taken.

During the QI Review, records can be flagged as problematic. A surgeon with a flagged record will receive an email notification and must explain the issues raised by the reviewer. Generally, the primary surgeon responds to the queries in an expeditious manner and the record’s questions are resolved without further review. In this setting the flag is removed when the review is complete. In the event that a record’s issue remains open for review even after the response of the surgeon, then the record in question is presented to the head of the MAB for final review and recommendation. (To date 3 cases have taken this path.) SmileTrain reserves the right to hold payment for further surgeries uploaded by the surgeon in question until all case related issues are resolved are resolved by the MAB or its emissaries.

Source: SmileTrain website