MBC635 Case 1: LazerSharp Lasik Clinic Note: all information in this case, including the information on the lasik technology and market has been edited to fit the assignment and may not be 100% relied upon. Please use this for the case but not for personal decisions about lasik surgery! Dr. Greg DiNardo stood on the steps of LazerSharp Lasik Clinic and looked at the busy New York city evening traffic rushing by. It was the middle of January, 2020, near the end of the day. The air was chilly, and the pedestrians were hurrying home, bundled up against the evening wind. He had founded LazerSharp just 3 years before, leaving his previous position in a private practice to focus entirely on lasik eye surgery and opening his clinic on Grand Concourse in the Bronx. The clinic was doing well, turning a solid profit since the end of its first year. For Greg the shift from patient care to running his own operations had been challenging and rewarding. The lasik operation, obviously, was the core function – the “technology” – but managing all the other tasks, from customer attraction to billing and follow-up, was like managing a small factory, albeit, one with much more variability and uncertainty than a typical manufacturing set-up. DiNardo knew that it was time to think about expansion, but, for the first time, he was uncertain how to move forward. Should simply extend the clinic’s hours? Or increase the size of the existing clinic? Or did they need new facilities, and how would that be managed effectively? BACKGROUND ON LASIK Source: https://www.webmd.com/eye-health/lasik-laser-eye-surgery#1 Lasik, which stands for laser in-situ keratomileusis, is a popular surgery used to correct vision in people who are nearsighted, farsighted, or have astigmatism. All laser vision correction surgeries work by reshaping the cornea, the clear front part of the eye, so that light traveling through it is properly focused onto the retina located in the back of the eye. Lasik is one of a number of different surgical techniques used to reshape the cornea. Lasik has many benefits, including: • It has been around for over 25 years and it works! It corrects vision. Around 96% of patients will have their desired vision after lasik. An enhancement can further increase this number. • Lasik is associated with very little pain due to the numbing drops that are used. • Vision is corrected nearly by the day after lasik. • No stitches are required after lasik. • Adjustments can be made years after lasik to further correct vision if vision changes while you age. • After having lasik, most patients have a dramatic reduction in eyeglass or contact lens dependence and many patients no longer need them at all. Despite the pluses, there are some disadvantages to lasik eye surgery: https://www.allaboutvision.com/visionsurgery/ smile.htm © Syracuse University, do not distribute or post 2 • Lasik is technically complex. Rare problems may occur when the doctor creates the flap, which can permanently affect vision. This is one reason to choose a surgeon who is very experienced at performing these surgeries. • Lasik can rarely cause a loss of “best” vision. Your best vision is the highest degree of vision that you achieved while wearing your contacts or eyeglasses. LASIK SURGERY MARKET Source: https://www.medgadget.com/2019/03/lasik-eye-surgery-market-experiencing-boost-by-demandanalysis-industry-share-size-upcoming-research-advancement-and-forecast-to-2023.html DiNardo had decided to create a clinic which specialized only in lasik, because he was aware of the potential of this niche market. According to one report: The Global Lasik Eye Surgery Market will expand at 6.5% CAGR between 2017 and 2022, projects Market Research Future (MRFR) in its latest report. Lasik standsfor Laser-Assisted in Situ Keratomileusis (LASIK) and is one of the most commonly used surgical procedures for treating vision disorders such as hyperopia, astigmatism and myopia among others. The global prevalence of vision disorders has increased significantly in recent years. In 2015, close to 285 million people were diagnosed with vision impairment issues and that number has continued to grow. Additionally, lasik surgery was now predominantly covered by health insurance providers. Meanwhile, manufacturers of lasik eye surgery devices are ramping up investments in research and development activities in order to improve their product portfolio and provide better treatment options. In addition, many of the companies operating in the market are actively implementing merger and acquisition strategies to expand their operations to new markets and create stronger synergies. Over the years, government funding and support in R&D has also increased in the field of ophthalmology, hence creating greater possibilities of providing cost-effective eye care. The aforementioned factors are expected to influence the market throughout the forecast period. On the other hand, reducing the cost of vision correction treatments remains a formidable challenge for market players. Moreover, some lasik companies work with insurance providers and certain large employers to provide lasik discounts to their employees and CareCredit (a healthcare credit card) that covers all medical expenses, including lasik eye surgery. These easy payment plans offered by lasik companies fosters the market growth making lasik as the most preferred surgery. OPERATIONS AT LAZERSHARP Even as he was setting up the clinic, DiNardo had made sure that his IT systems were able to track and store data about his operations, and one of his main tasks was to make sure that the data was being correctly and regularly recorded and actively used. For example, DiNardo regularly updated the cost of lasik surgeries from around New York and New Jersey and adjusted his prices to maintain the status of a low-cost provider. He also kept immaculate records of all his costs, patient retention information, and measured the activity times for the individual tasks of his employees. © Syracuse University, do not distribute or post 3 In 2019, the clinic had performed 5,283 surgeries. The average payment for a surgery was $1,338. The clinic operated five days a week, 48 weeks a year, from 9 a.m. to 6 p.m. and was closed on Sundays and Mondays. Any post-op checks that had to be performed on Sunday were done by a single technician. All staff (other than the staff surgeon) had a half an hour for lunch and two 15-minute breaks during the day. The surgeon had two hours for lunch and breaks combined. The total non-staff, direct variable cost averaged $510 per operation. FACILITIES The clinic owned a 4,200-square-foot building in the Bronx, New York City, for which, the mortgage, taxes, and utilities were $5,000 per month. The clinic used 60% of the space, and rented the rest to a small company for $2,000 per month. The tenant could be expelled with six month’s notice and a onetime payment of $60,000. As shown in Figure 1, LazerSharp had a 600-square-foot waiting area with 40 seats. Each seat took up about 8-square-feet and was equipped with a small flat-screen video monitor (as in an airplane) for individual viewing. Each chair cost $1,100. While waiting, patients were asked to watch videos about the lasik procedure and post-operative care. Additionally, there was an option to watch from a large selection of films (including for children) and TV programs. There was a reception area and two private pre-op rooms (11-foot by 11-foot each) where patients, friends, and family members could sit with a patient care representative (PCR) who helped them complete medical and insurance forms. The layout is shown in Figure 1. Figure 1: Facility Layout at LazerSharp SCHEDULING SURGERY The typical flow of events for a lasik operation started with a phone call to LazerSharp from a prospective patient. The PCR would take the patient’s information over the phone, enter it into the Pre-Op Pre-Op Telephone Exam Exam Surg Surg Surg Corridor Restrooms Supplies Offices, Break room Waiting Room © Syracuse University, do not distribute or post 4 clinic’s database, and schedule a pre-op appointment. This step took the PCR an average of about 7 minutes. DiNardo had worked with the team to develop a checklist which would ascertain if the lasik surgery was a viable option for the patient and to screen out any patients with complicating medical conditions. About 22% of the callers were screened out. One week before the scheduled pre-op appointment, PCRs mailed medical and insurance forms to the patients and called them a few days ahead to remind them about the appointment. The mailings took 1 minute per patient and calling took 2 minutes on average. About 72% of the patients actually showed up for the appointment, although 40% had to reschedule, which took an additional 2 minutes on average. A list of the task and task-times by type of employee is shown below in Figure 2: Figure 2: Tasks and times. When a patient arrived for his or her pre-op appointment, the receptionist checked them in in about 2 minutes. Then the PCR took over, taking about 20 minutes on average, to discuss the procedure with the patient, answer questions, complete insurance paperwork (if insured) or take a payment (if not insured. The payment would be returned if the surgery was not completed). In 2019, 74% of the clinic’s patients were insured, while 26% paid cash. Finally, the PCR would schedule the surgery. LazerSharp Clinic Figure 2: Process Flow and Task Times by Job Title (Annual Minutes) Task, Annual Demand, and Job Titles Minutes Demand Receptionist PCR Technician Staff Surg * DiNardo Cleaner Initial patient call 7 14,345 100,415 22% defect after this point Mail paperwork 1 11,189 11,189 Call to remind 2 11,189 22,378 40% reschedule call 2 4,476 8,952 28% no-show after this point Check in at clinic 2 8,056 16,112 Pre-Op 20 8,056 161,120 74% Insured, 26% cash Remind call 2 8,056 16,112 40% reschedule call 2 3,222 6,444 30% of Insured no-show, 47% of Cash Check in at clinic 2 5,283 10,566 Prep for surgery 10 5,283 52,830 Surgery, Cleanup 15 5,283 69,165 10,080 Record Surgery 5 5,283 23,055 3,360 (Staff surgeon 4,611; DiNardo 672 ops) Bandage, walk to waiting 5 5,283 26,415 Room cleaning 3 5,283 15,849 PCR checks patient out 4 5,283 21,132 First (next-day) follow-up (Tues-Sat) – Check in 1 4,226 4,226 First (next-day) follow-up (Tues-Sat) 10 4,226 42,264 Tues-Sat only (80%) First (next-day) follow-up (Sun) 10 1,057 10,566 Sunday only (20%) Tuesday-Saturday room clean 3 4,226 12,679 Tues-Sat only (80%) Sunday room clean 3 1,057 3,170 Sunday only (20%) 3-week follow-up 8 4,174 33,392 21% no-show after first follow-up 3-week room clean 3 4,174 12,522 Total annual minutes task time/ job title: 30,904 347,742 168,637 92,220 13,440 41,050 # workers by job title 36.6% 1 4 3 1 1 1 2 Pre-Op rooms 2 Examining rooms 3 Surgical rooms * Staff surgeon completes (5,283-672) = 4,611 operations per year; DiNardo completes 672 © Syracuse University, do not distribute or post 5 PCRs called the patients several days before the surgery, taking 2 minutes per call on average. As before, about 40% of the patients rescheduled the surgery, which took another 2 minutes of the PCR’s time. THE NO-SHOW PROBLEM One of DiNardo’s biggest headaches was the no-show rate. Even though the patients had made the first inquiry and had taken the time to come to the pre-op appointment (and, in the case of noninsured patients, had paid for the surgery), only 70% of the insured patients and 53% of the cash (noninsured) patients actually showed up for their surgery. This high no-show rate was very difficult for the clinic’s scheduling, and, with a target market that was mostly lower income, there was no deposit system in place which would cover any operational expenses due to a no-show. Such a deposit system would be very unattractive and hurt the clinic’s reputation towards its lower-income base. DiNardo had started to investigate the no-show problem, asking the PCRs to call those patients who either had called to make a pre-op appointment but had not shown up or those who had completed the pre-op but not shown up for surgery. Many patients simply refused to say, but the PCRs managed to get a rough idea, shown in Figure 3 a&b: Figure 3a: Survey on no-shows for Pre-op Reasons after call: Costs reasonable but don’t have funds 89 33% Costs too much 61 23% Afraid of eye operation, pain, recovery 32 12% Afraid might not improve much 24 9% Afraid of INS 22 8% Family members oppose it 12 4% Not a real problem 8 3% Will try a home remedy first 6 2% Other 14 5% Total responses: 268 Figure 3b: Survey on no-shows for Surgery Reasons after Pre-op: Lack funds 45 27% Problem getting ride to and from clinic 38 22% Plan to do it in the future 22 13% Bad day for unrelated pain, medical problems 20 12% Afraid of eye operation, pain, recovery 18 11% Called to work unexpectedly 8 5% Forgot appointment 7 4% Other 11 7% Total responses: 169 DiNardo had already tried to tackle the no-show problem for the surgery by working with the PCRs to develop a set of questions to help ascertain if the patient would be a “no-show.” During the reminder conversation for the surgery, the PCR would go through the list of questions and together had built up a set of “indicators” which would indicate whether or not the patient would return for surgery as © Syracuse University, do not distribute or post 6 “good,” “likely,” or “weak.” The staff would then use over-booking to compensate for “probable” and “weak” surgeries scheduled on a particular day. Obviously, this entailed some risk, but this approach was working well enough so that the staff surgeon was rarely idle and DiNardo could take over surgeries if needed. Patients rarely waited over an hour from their scheduled arrival time. But, just to be careful, the staff had “Sorry you had to wait” goodies (baskets of gourmet coffees and chocolate) which they gave to patients who had delays. DiNardo also tracked the no-show rate of each PCR, and noticed that one of the new PCRs, Virgilyn Abilas, who had just been hired 6 months ago, had particularly low no-show rate, as shown in Figure 3c: Figure 3c: No-show Percentages by PCR PCR Name Pre-op No-Show % Surgery No-Show % Lee Katron 32 45 Kevin Smatzer 17 32 Katherine Tracet 27 38 Virgilyn Abilas 12 23 SURGERY PROCESS On the day of the surgery, the patient checked in at the reception desk. This took about 2 minutes per patient in order to check the patient identity and check payment and contact information. LazerSharp required that each patient be accompanied by an adult who could take the patient home after the surgery. One of the three technicians brought the patient to one of the three surgery rooms, where the patient was prepped for surgery, which took about 10 minutes on average. The staff surgeon, or DiNardo (who operated 672 times in 2019) would then enter the surgery, introduce themselves, and perform the lasik surgery. This took about 12 minutes, including a few reassuring words to the patient. The clinic scheduled 15 minutes for each surgery to give a 3 minute buffer. The surgeon would then leave the surgery room and change gowns, wash up, and record the surgery. This took an additional 5 minutes. The technician would apply the eye bandaging and walk the patient back to the waiting area, which took 5 minutes. Between surgeries, a cleaner took 3 minutes to prepare the rooms for the next surgery. It also took 3 minutes to prepare between follow-up visits in the examining rooms, as shown in Figure 2. See Figure 4 for an example of a two-hour block of scheduling. Room Start End Time Staff Surgery 1 9:00 9:10 10 Tech 1 Surgery 1 9:10 9:25 15 Surgeon Records 9:25 9:30 5 Surgeon Surgery 1 9:25 9:30 5 Tech 1 Surgery 1 9:30 9:33 3 Cleaner Surgery 2 9:20 9:30 10 Tech 2 Surgery 2 9:30 9:45 15 Surgeon Records 9:45 9:50 5 Surgeon Surgery 2 9:45 9:50 5 Tech 2 Surgery 2 9:50 9:53 3 Cleaner Surgery 1 9:40 9:50 10 Tech 1 Surgery 1 9:50 10:05 15 Surgeon Records 10:05 10:10 5 Surgeon © Syracuse University, do not distribute or post 7 Surgery 1 10:05 10:10 5 Tech 1 Surgery 1 10:10 10:13 3 Cleaner Surgery 2 10:00 10:10 10 Tech 2 Surgery 2 10:10 10:25 15 Surgeon Records 10:25 10:30 5 Surgeon Surgery 2 10:25 10:30 5 Tech 2 Surgery 2 10:30 10:33 3 Cleaner Surgery 1 10:20 10:30 10 Tech 1 Surgery 1 10:30 10:45 15 Surgeon Records 10:45 10:50 5 Surgeon Surgery 1 10:45 10:50 5 Tech 1 Surgery 1 10:50 10:53 3 Cleaner Figure 4: Example of Typical Surgery Room and Staff Scheduling at LazerSharp Normally the technician would seat the patient in the waiting area with the patients awaiting surgery. However, if the patient seemed anxious or distressed, they were seated with anyone who had accompanied them in another area. All patients were asked to wait 30 minutes, after which, a PCR would help them sign the paperwork that the operation was complete, schedule an appointment for the next day, and remind them of the steps for postoperative care. This took about 4 minutes. At the follow-up appointment on the following day, the patient would first check in with the receptionist (1 minute), then the technician would take ten minutes to bring the patient to an examining room, check the eye, clean and bandage as necessary, walk them back to the receptionist, and schedule the next follow-up appointment for three weeks later. The examining rooms were cleaned for 3 minutes following the checkup. For any follow-up appointments on Sunday, one technician was on duty and handled all the tasks (checkup, cleaning, and scheduling) on that Sunday. About 21% of the patients did not return for their three-week follow-up. There were rarely other follow-up appointments needed. LAZERSHARP STAFF LazerSharp paid the receptionist and the PCRs a salary $38,000 per year, on average, and all tax + benefits averaged 28% of these salaries. The receptionist also handled the billing paperwork and collection phone calls. Technicians were paid $48,000 and the cleaning employee, $31,000. The salaries were all in the top 25% of the salaries paid in the New York area, which, DiNardo assumed, contributed to the very low staff turnover, the good morale, and the competent and kind management of the patient flow. In fact, the clinic received many emails, phone calls, and even hand-written notes of thanks, particularly mentioning the “wonderful and caring staff.” DiNardo also had the feedback that the staff appreciated the regular, normal hours of a full-time position with good pay and benefits, not always easy to find in the New York area. DiNardo not only involved his staff in the improvement of the operations (for example, as described earlier, in the development of questions to identify a risk of a “no-show”), but also allowed them to interview candidates for open positions and have some influence in his hiring decisions. He also strongly believed in a work culture which respected breaks, holidays, and annual leave – and could be flexible enough for emergencies. This meant that staff were given flexibility on when they had to perform certain tasks (e.g. reminder calls) and were responsible for arranging coverage. This level of © Syracuse University, do not distribute or post 8 autonomy worked well, and the staff thought of themselves as a team, willing to give and take as the situation demanded. The staff surgeon, Amanda Marcon had been with the clinic since it began. She was a hard-working, experienced, middle-aged woman with an impeccable record in lasik surgery. She balanced her fulltime job at LazerSharp with time for her family and appreciated the regular working hours as did the rest of the staff. ADDITIONAL EXPENSES LazerSharp contracted with a building cleaning and maintenance company for $36,000 per year, and in 2019, the facilities expenses were $90,238. After purchasing the building, DiNardo had invested roughly $650,000 in the clinic infrastructure, not including the medical equipment cost. An examination room could be built and equipped for $42,000 and a surgical room for $93,000. Pre-op rooms cost $30,000 to build. DiNardo also used an accounting and payroll service for $90,000 per year. Although there was only a very small percentage of patients who were dissatisfied and either threatened or carried out legal actions, DiNardo kept a lawyer on retainer and occasionally made small settlements, totaling thus far $280,969. Additionally, there were miscellaneous expenses of $80,420. DiNardo did not draw a formal salary but maintained a personal account which he could draw on. The calculated depreciation was $160,000 per year. The list of revenue and expenses are shown in Figure 5: Figure 5: LazerSharp’s Finances (Revenue and Expenses) Procedures per year: 5,283 Revenues: 1338 net revenue per procedure $1,338 $7,068,654 Costs Direct Variable Cost per procedure $510 $2,694,330 Wages Surgeon $200,000 + $40/operation $200,000 1 Receptionist @ 38,000 $38,000 4 PSR’s @ 38,000 $152,000 3 Technicians @ 48,000 $144,000 1 Cleaner @ 31,000 $31,000 Benefits at 28% of labor costs $106,557 Commission Surgeon $40/operation $184,440 Other Costs Advertising $48,000 Facility Cost net of rent $36,000 Cleaning and Maint $36,000 Other facility: insurance, IT, various $90,238 Legal $280,969 Miscellaneous $80,420 Accounting $90,000 Depreciation $160,000 © Syracuse University, do not distribute or post 9 PLANS FOR EXPANSION DiNardo pondered his options for expansion as he looked at the evening traffic along Grand Concourse. The first – and simplest — option he had would be to simply use the existing clinic space and extend the hours; for example, to open on Mondays and to extend the working day by 2 hours. He had discussed this with his most senior PCR, Lee Ketron, and the suggestion had been met with almost disbelief. Ketron was completely against the idea of more working days and longer hours and said that these would never be accepted by the staff. A second option would be to maintain the current clinic hours but increase the size of the clinic by expanding into the area currently rented by the small business. This would mean notifying and moving the tenant, requesting permission from NYC to do the work, and paying for the construction of new facilities, including the equipment, HVAC, telecommunications, and furnishings. This would be disruptive to the current operations and would take a long time, likely longer than planned. The current clinic would have to close for at least a month, if not longer. For both these options, he would have to hire a part-time surgeon, as Marcon was working steadily throughout the day, with DiNardo stepping in to do any extra surgeries. However, he decided that 672 operations per year (the number he did in 2019) would remain his target, so with longer hours or more facilities, a second surgeon would be necessary. There would not be enough work for another fulltime staff, and finding a part-time surgeon might be difficult. A third option would be to expand to a new site within the greater New York area. However, DiNardo was already in the clinic as much as possible during operating hours, performing surgeries and helping out as needed. Often patients and their family members insisted on speaking with “a doctor” before or after surgery. Also, many patients were impressed to meet the “boss,” and felt that they had received extra-special attention. Of course, DiNardo was always busy with daily decisions, emergencies, communications with vendors, sales people, data collection and analysis, personnel management, and all the small tasks which a small business owner had to handle. Duplicating this in a second location would simply not be possible. DiNardo was also bothered by the “yield.” In other words, people called, inquiring about lasik with a genuine interest and, often, insurance coverage, but still, only some of these initial inquiries actually resulted in surgeries. The “no-shows” from the initial call to the pre-op, and from the pre-op to the surgery was puzzling. What could be the problem? Communication? Marketing? Quality? Or just the fact that with a lower-income customer base, no-shows would remain high. And, if this “yield” could be improved, then they would definitely need to expand. Just then Virgilyn Abilas joined him on the step, on her way home. She was young and motivated, always upbeat and friendly. She said, “Dr. DiNardo, Lee says you want us to work on Mondays and two hours longer every day, maybe even bring in new people that we have to train. Is that right?” © Syracuse University, do not distribute or post 10 Case 1 Assignment: Please answer the case questions below and submit as a complete work in your groups, making a fair effort and respecting each other’s time constraints. Emails cannot always be answered immediately, but you are expected to support your group and prioritize this assignment accordingly. In your groups, no one should be the “boss” and no one should be the “laggard.” § Read the assignment and work in your assigned group to answer the questions in this document. Turn in 1 report per group (.doc, .docx, or .pdf) with all questions answered. § The case study must be your own group’s work. No use of outside sources. § Do not include a cover sheet. Include your names at the top of the first page (or in the header/footer). § Do NOT upload an Excel sheet. All calculations must be clearly stated in the document. § Due: upload before Synchronous Session 5. § The file name should be LazerSharp_SectionXXXXXX_GroupX_TeamLastNames.docx (or .pdf). § Only upload the submission for 1 group member to the Assignments section. Turnitin will be used to check for plagiarism (as stated in the Syllabus). § Your report should be a minimum of 6 pages and no longer than 8 pages, including all figures and tables (Times New Roman 11 pt., single spaced, 2 cm margins), including tables, figures, charts, etc. with answers to case questions. Use clear tables to document your answers. § Grading criteria include: 1) accuracy and clarity of presentation for the quantitative results 2) quality and thoughtfulness/thoroughness of qualitative answers 3) appropriate application and original thought 4) organization and structure of the documents It is strictly forbidden to share your work beyond this course. Cases and solutions are under copyright! Q1. Help Dr. DiNardo evaluate the current situation at LazerSharp. Using the Tasks and Times (Figure 2), calculate the capacity utilization for each category of staff (Receptionist, PCR, Technician, Staff Surgeon, and Cleaner) and for the pre-op, surgical and examination rooms. Don’t forget that DiNardo needs to use this information to make an expansion decision, so take into account what makes sense for this decision. Hint: use the data given in the table and calculate the yearly capacity as • Annual non-surgeon minutes capacity = 5 days * 48 weeks * 8 hours * 60 min • Annual surgeon capacity = 5 days * 48 weeks * 7 hours * 60 min • Rooms are available for 9 hours a day. In your report clearly show how you calculate each of the 8 utilizations. You will not receive credit if the calculation is not clear in the report, including all the individual times you have used to calculate the utilization. >> 2 points each (5 staff types, 3 room types), total of 16 points © Syracuse University, do not distribute or post 11 Q2. a) By what percentage would patient volume change if LazerSharp reduced by halfthe patients who complete pre-op but who fail to show up for surgery? (This is the “No Show Problem” between the pre-op and surgery.) >> 4 points Hint: here you need to work backwards from the current situation with 5283 procedures in 2019 and the yields given in the case. To start you off, the case states: In 2019, 74% of the clinic’s patients were insured, while 26% paid cash. Finally, the PCR would schedule the surgery. PCRs called the patients several days before the surgery, taking 2 minutes per call on average. … One of DiNardo’s biggest headaches was the no-show rate. Even though the patients had made the first inquiry and had taken the time to come to the preop appointment (and, in the case of non-insured patients, had paid for the surgery), only 70% of the insured patients and 53% of the cash (non-insured) patients actually showed up for their surgery. This means that only (0.74 * 0.70 + 0.26 * 0.53) = 0.6556 or 65.58% of the patients who attended the pre-op appointment actually had surgery. So, to calculate the number of patients who attended the pre-op appointment you need to divide 5,283 by 65.58%, or, 5283/0.6558 = 8,056 patients attended the pre-op appointment. To answer Q2 a) you need to redo the above calculation, but this time the No Show percent between the Pre-Op and Surgery should be reduced by half. b) If the clinic could reduce the No Shows by half as specified in Q2a), there might be a need extra staff or room capacity. Calculate the capacity utilization change for each category of staff and type of rooms to answer this. >> 1 point each (5 staff types, 3 room types), total of 8 points c) Using the new utilization numbers for Q2 b) What new staffing/rooms would you propose and why? Make exactly 3 suggestions for staffing/room increases and calculate the new utilizations and explain why for each. Hint: For this question it is important for you to consider that this is a service operations with high volatility. Therefore, your answer should consider what is an acceptable utilization for this situation. *Keep in mind, we learned in the lecture that in a much more stable production situation, capacity utilizations >80% will cause long waiting times when there is variability in the system. Assumptions: • Use the demand for 2019 (do not take into account any market increase in your answer, although this is actually an important point!) • DiNardo will continue to do 672 lasik operations per year © Syracuse University, do not distribute or post 12 >> 6 points for each suggestion (2 points for the capacities + 4 points for the explanations, total of 18 points >> Q2 Total 30 points Q3: What actions could LazerSharp do to increase the “yield” (i.e. reduce the No-Shows)? Give 3 suggestions based on the information given in the case and your reasoning. * Qualitative answers only. >> 6 points each, total 18 points Q4: How do you think DiNardo should expand? a) Here we expect you to analyze the finances (revenues from surgeries, costs, wages, benefits, and other costs) and compare the pre-tax income for the current situation with the improved situation using the values you calculated in Q2 b). The data should be presented clearly in table form with explanations of the calculations indicated. b) Based on these results, do you think your expansion suggestions in Q2 c) are realizable? Explain and give an overall “Executive Summary” of the situation (max ½ page) >> 4 points each (before and after yield improvement, total 8 points for Q4 a)) for the financial analysis, 8 for recommendation for Q4 b). >> Q4 total 16 points. Order and structure of document (including readability and spelling) >> 20 points Total points: 100
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