Indian Institute of Management, Bangalore

ClearEyes Cataract Clinic | Case Write-up | Operations Management

Submitted by: Group 6 | Section G

Hiral Gandhi 2111472

Mohit Sharma 2111488
Siddharth Mittal 2111505
Siddhartha 2111506
Subalakshmi V 2111512
Abhimanyu Roat 2117042

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a) Use the process flow diagram exhibit to calculate capacity utilization for each category of
staff, and for intake, surgical, and examination rooms. What is the clinic’s capacity per
year?
Ans: As per the details given in the case, we have provided the office details in Annexure I. In
order to find the capacity utilization of each category of staff we need to find the total available
time of each category. The following table shows capacity utilizations:

Staff Utilization
Receptionist PSR Technician Staff Surgeon Cannors Cleaners
Total Minutes
Utilized 26,678 3,47,742 1,68,638 92,220 13,440 41,049
No. of Workers
by Job Title 1 4 3 1 1 1
Total Available
Time 1,15,200 4,60,800 3,68,640 1,00,800 1,00,800 1,15,200
Capacity
Utilization 23.16% 75.46% 45.75% 91.49% 13.33% 35.63%

As per the calculation, it is evident that capacity utilization of Receptionist & cleaners is lowest.
We can also see that since Staff Surgeon has 91.49%, which is highest attained utilization of
any staff type. Also, to find the bottle neck of the process we can determine the respective cycle
time of each process. This is shown in Annexure II.

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As Annexure II clearly shows that the process of “surgery, clean-up and record” has the highest
cycle time and is therefore the bottleneck among all processes. Taking this bottleneck into
consideration we can find out the maximum flow rate as (7 hours * 60 mins)/ (20 mins/patient) =
~21 patients/day.

We can also find the utilization of different room categories based upon the demand as shown in
table below:
Capacity Utilization by Room category
Intake Room Examining Room Surgical Room
Total Minutes Utilized 1,61,120 1,14,593 1,74,339
Number of Rooms 2 2 3
Number of weeks 48 48 48
Days per week 5 6 5
Total Available Time 2,59,200 3,11,040 3,88,800
Capacity Utilization 62.16% 36.84% 44.84%
Here, we can see that all the rooms are used well within the maximum capacity utilization hence
Connor can look for ways to improve the patient capacity further.

b) By what percentage would patient volume and capacity utilization change if ClearEyes
cut in half of the patients who complete intake but fail to show up for surgery? If the clinic
could increase customer yield as described above, would it need to add any staff or room
capacity?
Ans: The Staff Surgeon can theoretically perform: 20 surgeries/day * 5 days/week * 48
weeks/year = 4800 surgeries per year. Actual surgeries carried out by the current Staff Surgeon is
4611 (= 5283- 672).

Total additional annual surgeries are 1387. Therefore, additional surgeries that can be taken up
by existing Staff Surgeon are 189 (= 4800 – 4611).
Clearly, to address the remaining surgeries (1387 – 189 = 1198), we would need to alleviate
resource constraints, particularly by hiring an additional surgeon with the Clinic. Also, note
that we have one additional surgery room available (unused), along with underutilized technical
support, therefore there are no room & personnel constraints.

By adding another surgeon, we will be able to double the volume of patients handled to 42
patients per day (with 2 surgeons and the cycle time will come down to 10 min/patient). The
projected data, after considering halving of No-show patients post Intake, shows that the clinic
will handle 6670 patients for surgery annually (~28/day).

The subsequent increase in capacity utilization will however depend upon the demand.
Considering this demand, we can find the total utilization time of the two surgeons as 133,400

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minutes annually (~556 minutes/day) meanwhile the total available time will be 2 surgeons *48
weeks * 5 working days * 7 hours * 60 minutes = 201,600 minutes. Hence the new capacity
utilization after hiring a surgeon will be, 133,400/201,600 = 66.17%.

Percentage change in Volume of patients = (6,670 – 5,283)/5,283 = 26.25%

Percentage change in Utilization of surgeon(s) = (66.17 – 91.49)/ 91.49 = -27.67%

Labour Utilization (with Increased yield & additional staff)

Receptionist PSR Technician Staff Surgeon Cleaners

Total Minutes Utilized 29,452 3,53,290 2,12,906 1,33,400 51,826

No. of Workers by Job Title 1 4 3 2 1

Total Available Time 1,15,200 4,60,800 3,68,640 2,01,600 1,15,200

Capacity Utilization 25.57% 76.67% 57.75% 66.17% 44.99%

Also, it is important to note that the capacity utilization of different room categories will not
exceed the available capacity. This has been calculated and shown in Annexure III.

c) How much would pretax profit change if this increase in yield were accomplished?
Ans: As stated above, we would be having additional 1387 surgeries per year. This would lead to
an incremental revenue of 1387 * 1338 USD = $ 1,855,806. To achieve this increased yield, we
have hired another Staff Surgeon at the provided cost structure. Total incremental costs incurred
by the Clinic = $ 1,027,181.
Two key assumptions in the above analysis:
• Connors is not performing any surgeries
• ClearEyes is not hiring a part time or older surgeon. If this is done then the costs would
reduce further by the saving amount for a part time or older surgeon.

Therefore, net increment in pretax profits after successful implementation of increased yield = $
828,625, that is, 30.11% increase in pretax profit.

d) What actions could ClearEyes take to increase yield?

Ans: Action recommendations to increase yield:
1. Gabriela Herrera has maintained a lower no-show percentage than the other PSRs. She is
also energetic and respected by other employees. She should be monitored to see how she
communicates with the patients, particularly when she deviates from the script. The
lessons learned should be shared with the other PSRs, who should be encouraged (and
incentivized) to follow suit.
2. From the survey which shows consumer reasons for No-shows for Surgery, it is observed
that 22% of respondents have problems getting a ride to and from the clinic. At an

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 average cost of $ 90 per round trip for the patient, the Clinic can sponsor the ride. This
additional cost can help us in retaining 22% of 2773 drop outs, potentially resulting in
additional revenue of 0.22 * 2773 * (1338 – 90) = $ 761, 354.
3. Another insight from the survey is the lack of funds reported by 27% of patients. Since
the surgery/procedure is not very expensive, the Clinic can try to offer surgery payment
in installments (6-mth or 12-mth), for those who pay in cash.

e) What course of action would you recommend to Connors?

Ans: Connors was considering the following options, broadly (with issues presented alongside):

• Extending working hours and days: This option would have received severe resistance
from the existing personnel, and also Connors did not want Staff Surgeon to work more
hours.
• Increasing the physical size of the clinic: This was deemed to be expensive and difficult.
This would have also disrupted the current operations. Connors’ past experience with
renovation projects had led her to believe there usually were delays involved in such an
exercise.
• To expand to a new site within the greater Boston area: Connors simply did not have the
bandwidth to handle a new Clinic, as she was already spending most of her time in the
current Clinic during operating hours, handling various aspects pertaining to
management. She also believed that it would be difficult to replicate current success in
another building.
We present another option for Connor, to increase yield for the current processes, by hiring
another resource for surgery. This option looks most attractive after analyzing the current
capacity utilizations of various staff. The data shows that Surgeon has close to 100% capacity
utilization and also it drives the process of bottleneck. If the clinic if able to increase the yield
through suggestions mentioned in answer d) above, the clinic can go ahead with more surgeries
per day (at ~42 patients/day capacity at full utilization). As also calculated in Annexure V, with
increased yield of 26.25% in customers, the profits after hiring the surgeon increased by
30.11%.

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ANNEXURES
ANNEXURE I

Particulars Labour type Detail

Clinic timings All 9am - 6pm
Staff surgeon 2
Breaks (hour(s)/day) All others 1
Number of Weeks All 48
Technician - I (5) 5
Working days in week Technician - II (1) 6
All others 5

ANNEXURE II
Number of Cycle time
Task Minutes
staff members for process
Initial 7 4 1.75
Mail Paperwork 1 4 0.25
Call to remind 2 4 0.5
40% Re-schedule 2 4 0.5
Check in clinic 2 1 2
Intake 20 4 5
Reminder call 2 4 0.5
40% Reschedule 2 4 0.5
Check in clinic 2 1 2
Prep for surgery 10 3 3.33
Surgery clean-up record 20 1 20
Bandage Walk to waiting 5 3 1.67
Room Cleaning 3 1 3
PSR Check patients out 4 4 1
First follow-up next day 10 3 3.33
Tuesday to Saturday room cleaning (80%) 3 1 3
Sunday Room cleaning (20%) 3 3 1
3-week follow-up (21% no show) 8 3 2.67
3 Week Room clean 3 1 3

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ANNEXURE III

Capacity Utilization by Room category

Intake Room Examining Room Surgical Room
Total Minutes Utilized 1,61,120 1,44,672 2,20,110
Total Number of Rooms 2 2 3
Number of weeks 48 48 48
Days per week 5 6 5
Total Available Time 259200 311040 388800
Capacity Utilization 62.16% 46.51% 56.61%

ANNEXURE IV:

Statement of P&L (Current State)

Procedure per year 5,283
Revenue @1338$ per procedure 7,068,654
COSTS
DVC @480$ per procedure 2,535,840
Wages
Surgeon 2,00,000$ + 40$ per procedure 384,440
1 Receptionist @38000$ 38,000
4 PSRs @38000$ 152,000
3 technicians @48000$ 144,000
1 Cleaner @31000$ 31,000
Benefits
@28% labor costs 209,843
Other Cost
Advertising 48,000
Facility Cost net of rent 36,000
Cleaning and Maintenance 36,000
Other facilities: Insurance, IT, and
various 90,238
Legal 280,969
Miscellaneous 80,420
Accounting 90,000
Depreciation Expense 160,000

Profit 2,751,904

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ANNEXURE V:

Statement of P&L (Increased Yield)

Procedure per year 6,670
Revenue @1338$ per procedure 8,924,460
COSTS
DVC @480$ per procedure 3,201,600
Wages
Surgeon 2,00,000$ + 40$ per procedure 666,800
1 Receptionist @38000$ 38,000
4 PSRs @38000$ 152,000
3 technicians @48000$ 144,000
1 Cleaner @31000$ 31,000
Benefits
@28% labor costs 288,904
Other Cost
Advertising 48,000
Facility Cost net of rent 36,000
Cleaning and Maintenance 36,000
Other facilities: Insurance, IT, and various 90,238
Legal 280,969
Miscellaneous 80,420
Accounting 90,000
Depreciation Expense 160,000

Profit 3,580,529