Question

Dr. Julia Connors from ClearEyes Cataracts Clinic is thinking about expanding her clinic, by considering different options: first, she could keep her physical facility as is and expand the hours. Second, she might expand space in the same building she owns, with additional equipment and fixtures within her building. The third option is to expand to a new location. The fourth alternative, which is the focus of this study, would increase volume by increasing the yield of potential patients, most of whom drop out before completion. This alternative would require only minor increases in capacity and avoid the expenses of physical expansion as well as the personnel risks of extending the hours of operation.

As the first step in determining whether the fourth option was even possible, Dr. Connors uses the process flow diagram (Exhibit 2) to calculate utilization for each category of staff and also the yield from initial inquiries through surgeries.

Annual non-surgeon minutes capacity (5 days*48 weeks*8 hours*60 min) = 115,200 minutes

Receptionist utilization = 26,678/115,200 = 23.2%

PSR utilization (per person) = 347,742/115,200 = 301.9% /4 workers for this job title = 75.5%

Technician utilization (per person) = 168,638/115,200 = 146.4%/3 workers for this job title = 48.8%

Cleaner utilization = 41,049/115,200 = 35.6%

Annual surgeon minutes capacity (5 days*48 weeks*7 hours* 60 min) = 100,800 minutes

            Staff surgeon utilization = 92,220 /100,800 = 91.5%

Dr. Connors also calculated the capacity utilization of the two examining rooms at 50% and of the three surgical rooms at 66%.

Task, Annual Demand, and Job titles	Demand (# patients)	Calculations
Initial patient call	14,345
22% defect after this point
Mail paperwork	11,189	= 14,345*78%
Call to remind	11, 189
28% defect after this point
Arrive at clinic for intake	8,056	=11,189*72%
74% insured, 26% cash payers
Remind call	8,056
40% reschedule call
30% insured defect, 47% of cash payers defect
Check-in at clinic	5,283	=8,056*65.58%
Surgery, clean –up, record	5,283
First follow-up	5,283
21% defect after first follow-up
3-week follow-up	4,174	=5,283*79%
Yield from initial inquiries through surgery : 5,283/14.345 = 36.8%

This 65.58% represents those who return for surgery after completing intake. It is calculated as a weighted average of the patients paying with insurance and cash and their different propensities to defect.

(.74 insured*.70 insured retained) + (.26 cash payers*.53 retained cash payers) = 65.58%

Based on the information presented in the case and above, please answer the following questions:

1. (20 points) What are some of the factors specific to ClearEyes Cataracts Clinic that make the clinic so profitable despite the apparent low barriers to entry for this procedure? Please list as many factors as you can think of, but no less than 6 factors. Explain their contribution to the success of the clinic.

Answer 1

Factor 1

Clear Eye Cataracts have key factor of Staff Surgeon mintues, hence we may need to employ one more surgeon so as to increase surgeon mintues as at yield from enquiry to surgery is only 36.8% where as our surgeon's time utilised is more than 91%.

Factor 2

Defect in insurence - Clear Eye Cataracts may need to focus on rejection reason of insurance as because of this reason they are lossing more than 20% after first visit. This will enhance overall yield to great extent.

Factor 3

Clear Eye Cataracts may required to increase PSR worker as increase in customer intake will required more support staff. AS % of PSR staff time utilisation is as good as more than 75%.

Factor 4

Clear Eye Cataracts would also need to scrutinised rejection of enquiry after mail paper work and call to remind, this requires reason to analys the cause of rejection. Remedial action needs to be planned as per rejection reason.

Factor 5

Clear Eye Cataracts has also get into utilisation rate of cleaner's time. This may requires some action on its part for not discharging its duty.

Factor 6

Clear Eye Cataracts hospital has contstrant capacity of surgery room howeve this can be managed till its utilisation goes beyond 90% however patient increases beyond this level they may required to construct surgery room also.