Financial assessment of the Ophthalmic Consultants of Boston

Financial assessment of the Ophthalmic Consultants of Boston.
In the financial assessment of the Ophthalmic Consultants of Boston (OCB) for the fiscal year (FY) of 1995 to 1996, Director of Operations Jonathan Herlihy was concerned about implementing some changes in the organization and operation of the OCB partners to meet their specific targets. One of their targets was the ultimate goal of performing 30 surgeries per day and maintaining high revenues. In 1996, the current average was only 18 surgeries per day. Returns had also lowered from 60% from 1990 to 37% in 1996 (Miguel, 1997, p.2).

The results of the financial assessment were said to be affected by higher operation costs, lower revenues and minimal clinic wide opportunities (Miguel, 1997, p. 1). To improve these, OCB had to enhance the efficiency of their current operations to minimize costs, maintain quality and attract more patients. Partner physicians should also be able to adapt to the current trends of the health industry especially in the insurance system. Dr. Bradford J. Shingleton (BJS) is one of the renowned partners of OCB.

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According to the OCB control system records, he had the largest contribution when it came to total revenues earned and patient volume (Miguel, 1997, p. 2). On the OCB Performance Measurements from FY 1994 to FY 1996, clinic revenues especially from the Boston Office were decreasing from 91. 35% in 1994 to 86. 58% in 1996. This was simultaneous with the steady increase of total expenses from 59. 50% in 1994 to 63. 70% in 1996 (Miguel, 1997, p. 14). Because of this, all doctors experienced a decrease in their returns. BJS, however, still maintained as having the biggest percentage from the total compared to the other doctors (Table 1).
Table 1. OCB Partner’s Return Percentages from FY 1994-1996 (Miguel, 1997, p. 14). Year FY 1994 FY 1995 FY 1996 Total Return to MDs BJS’ Return 40. 50% 45. 10% 40. 00% 44. 20% 36. 30% 37. 00% In the 1996 data, 14. 80% of the collections came from BJS alone (Miguel, 1997, p. 14). His patients represented 11% of the clinic’s total and he performed 15% of the total surgeries (Miguel, 1997, p. 4). Aside from his exemplary skills as a physician, his strategies evidently worked so well in maintaining higher returns and in attracting more patients to seek his expertise.
One of BJS’ strengths was his belief in maximizing the full potential of his team and implement teamwork. He initially chose individuals of great potential and initiative to be members of his team. Aside from being highly-skilled in their own areas, BJS cross-trained them so they would be able to do multiple tasks (Miguel, 1997, p. 5). His technicians, for example, not only attended to patients but they also worked hand-in-hand with the administrative staff to manage patient flow.
One of them also acted as a scribe for BJS in the examination room and was tasked to explain the instructions to the patients. All of them were involved in other projects such as in the preparation of materials for BJS’ lectures. In surgical care, BJS had trained his scrub nurses to perform a preliminary incision in the outer layer of the eye for all his patients. This strategy helped BJS save time. When he comes in after an operation in the next room, he can just read the chart, greet the patient and perform the surgery immediately.
BJS’ high regard for efficiency in his clinical and surgical practice led him to standardize processes to manage the volume of patients coming in everyday and still maintain quality patient service. BJS clinical process started with the registration of the patients. After being called, the technicians do a preliminary checkup with the patient by probing about his medical history and his health problems. They also checked the patient’s eyes, vision and glass/contact lens prescription. The patient may then be referred to the optometrist, Dr Mark O’ Donoghue, or to BJS if special care was needed.
The technicians’ advanced skills in attending to patients allowed specialists like BJS to be see more patients and make qualitative use of appointment schedules (Figure 1). Figure 1. Dr. Bradford J. Shingleton’s Procedure for Clinical Care For surgeries, which BJS performs every Mondays and Fridays, he ideally organized his appointments by performing the simplest routines first then progressing to difficult cases by the end of the day. He scheduled his laser surgeries on Mondays while other doctors would prefer performing them after every check-up. His surgical procedures were standardized.
Standardization helped shorten the waiting time of patients and for him as well. BJS administers topical anesthesia to his surgical patients unlike most doctors. Since the dosage is small for this type of anesthesia, the waiting time should be short and the timing perfect. Once the patient is wheeled into the operating room (OR), the scrub nurse cleans and sterilizes the area of the patient’s eye, places retractors and performs the preliminary incision. BJS can then just advance to the next step of the surgical procedure without wasting a lot of time (Figure 2).
Cataract surgery is the most common surgery done by OCB doctors. Seventy-two percent of BJS surgical procedures were for cataracts (Miguel, 1997, p. 19). In a comparison between BJS and two other surgeons, he was able to perform an average of 18 surgeries on a surgical day while the other two were only able to attend to an average of 7 patients. As a result, on Mondays and Fridays, an average number of 26 patients were being operated by BJS and other surgeons while on non-BJS surgical days, average was only 18 (Miguel, 1997, 21).
Productivity was also computed as higher for Pre-Surgery and Post-Surgery periods during BJS surgical days at 89% and 80%, respectively. BJS’ cycle time for the preparation of the OR and the patient before a cataract surgery were significantly lower compared to the others (Miguel, 1997, p. 21). The lower outcome of surgeries performed, productivity and cycle time for other surgeons was due to the fact that they did not believe in standardizing their processes. They did not implement any constants such as schedules which the OR staff can follow or easily anticipate.
BJS’ nurses, for example, can estimate the exact time as to when they should administer the anesthesia and when the patient is to be wheeled into the OR and when to give the preliminary incision before BJS comes in from the other room. Figure 2. Dr. Bradford J. Shingleton’s Procedure for Surgical Care With his excellent skills and standardized procedures, BJS was able to add some personal touches to his clinical and surgical practice. He was able to acknowledge people who referred patients to him by sending follow-up letters or “thank you” notes.
From FY 1993 to 1996, the total number of referrals for BJS had been steadily increasing. In 1993, the total number of referrals was 1,289 while in 1996, it increased to 1,828. A large percent of the surgeries that BJS performs also came from referrals. This accounted to 61. 7%. Majority of the referrals came from Medical Doctors (MDs) (Miguel, 1997, p. 16). As a personal touch for his surgical patients, he was able to assign one of his staff to take souvenir pictures of the patient after the operation. Patients also went home with flowers or plants from BJS’ staff.
These strategies made him even more renowned and attracted more patients. Many would highly recommend him as a physician and as a surgeon. Patients would not only come in because of his skills but also because they have great confidence that they would be well taken cared of. OCB partners can be made aware of BJS’s strategies and how they worked in generating revenues to the clinic. Through their weekly meetings, Herlihy can start by stressing the need for added efficiency within the operations of the OCB partners.
He may explain the rewards that will come afterward like higher revenues, less waiting time and quality patient service. He may present the clinical and surgical procedures of BJS as a model. With proper motivation, Herlihy can encourage OCB partners to pattern, innovate or improve their own methods. Medical doctors need not emulate BJS. Doctors have varied approaches with regards their practice. They differ on how they attend to their patients, what procedures they follow to identify the problem and the prescriptions to give out. Hence, BJS’ methods may not work for all doctors as it did for BJS.
One example would be BJS’ use of topical anesthesia. Not all doctors are equally skilled and experienced as BJS. Some would not resort to this kind of anesthesia as the patient is still conscious and may do a lot of movement during the operation. With the high sensitivity of the operation, some doctors may not be willing to take the risk. Some doctors are also not very comfortable about entrusting some processes or their patients to the members of their team. BJS focused on developing skills among members of his team so he can entrust them with other tasks. Some of these tasks were done by doctors like him.
But to be able to attend to more patients, he had innovated to teach these skills to others so he can concentrate on the major concerns of the patient. His technicians were able to handle patients at their level and only passed patients when special care was necessary. His scrub nurses were not only passing surgical tools to the doctor or providing assistance during the operation but they were also responsible in performing the first step which was to do a preliminary incision. OCB’s strategy was to leave the strategic and tactical decisions to the partner physicians while the organization takes care of the business side.
There was no formal business plan (Miguel, 1997, p. 2). Physicians were given the power to maneuver their individual practices according to their preferences and personal goals. They got to choose their own team members and to create their own procedures for clinical and surgical care. OCB had a board of directors and an administrative department. The latter took care of business transactions such as billing. The board of directors was composed of twelve partner physicians. A director of operations overall managed the business side of OCB.
He was also responsible in giving strategic options for the partners which they would decide through consensus (Miguel, 1997, p. 2). Since the partner physicians may become so engrossed with their clinical and surgical work that they may tend to forget the business targets that they have to meet, OCB becomes a venue for them to convene and do a “check and balance” with the current business situation in the health care industry. In their meetings, they get to recall their targets as a group, review the statistics and assess if there should be steps to take or decisions to make. OCB’s organizational structure conforms well to their strategy.
Major decisions still come from the practitioners themselves. The director of operations as a business expert only gets to recommend options. With the goals being clear to all partners, member physicians can then just implement the appropriate methods in their practice. As what Herlihy saw in the financial results for FY 1995-1996, he was determined to have the partners reassess their current strategies so the OCB targets will be met. He would have to discuss the current situation of the health industry which had been evolving and had had been affected by rapidly increasing health care costs and the emergence of managed care organizations.
He would have to bring up a convincing argument that would motivate the Board to take action. It may also be an appropriate time to re-evaluate their goals if they still conform to the current trends in the health industry (Miguel, 1997, p. 11). The current strategy of OCB may be necessary to be changed. As evident from the success of BJS’ practice, other doctors may have to pattern or reconstruct their procedures to be able to attract more patient volume and revenues. Many of the partner physicians may not like to be dictated or pointed out that their strategies were not working.
Like BJS, a number of the partners may have joined OCB because of its unique model of allowing physicians to make their own business plans. However with proper education and democratic discussion, the partners may be able to realize that there is nothing wrong with change especially if it means going with the current flow and not straying from it. It would also be twice as fulfilling to realize that both the goals of personal practice and of OCB as a group were met in the process. Reference: Miguel, Maria Fernanda (1997). Opthalmic Consultants of Boston and Dr. Bradford J. Shingleton. Boston: Harvard Business School.

Financial assessment of the Ophthalmic Consultants of Boston

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