Weight Solutions Clinic: Bariatric Surgery Center Harvard Case Solution & Analysis

2. What is the minimum time that a patient paying by cash (requiring no interaction with the insurance company) can exit the hospital after open bariatric surgery? Include the time from which the patient makes the first appointment.

What is the average time for patients using insurance? How does the time change for patients seeking laparoscopic surgery?

 

In the case of bariatric surgery, the minimum time for a patient paying by cash is 7 days from the time the first appointment is scheduled to the time the surgery is completed and the patient is allowed to leave the hospital. This includes two days of wait after the tests are available and four days of being in the hospital after the surgery. As the patient is asked to get himself admitted into the center one day before the actual surgery for seminars, we would count that as an additional day.  In a real case scenario, this could take much longer since the appointment may not be given for the same day and the patient may have to wait for a few days before the actual appointment is scheduled. The seven day calculation is done assuming that the patient gets an appointment right away.

For patients using insurance, an additional three weeks are spent on average in the same procedure. This is because the insurance company takes about an extra three weeks for giving the approval that the case is authentic. Then the patient follows the same procedure as that followed by someone paying cash and would have to go through a minimum of seven days from the time of the appointment to the time of exit from the center. If for some reason the insurance company does not approve the procedure then the process would take an additional two weeks since the insurance company would ask for additional tests and after those are reviewed, a final approval is going after two weeks. Then the same procedure of a minimum of seven days is followed.

The time is reduced for patients seeking laparoscopic surgery by two days in both the cases. In the case of making the paymnt through cash a minimum of five days is required for the whole procedure as the hospital stay is reduced by two days. However if the insurance company is involved, the procedure would take an additional three weeks if the case is approved and another two weeks if additional tests are required before the actual surgery. (356 words)

 

3. If all patients select open surgery and pay by cash, how many patients can the Center handle per week? If all patients opt for laparoscopic surgery and pay by cash, how many patients can be processed? Identify the bottleneck resource for each case.

 

We have to assume a number of factors for answering this question. For instance, if we assume that all patients would be coming only for open surgeries and would get an appointment right away, each surgery would take 45 minutes. The surgeons are available in the center for surgeries between 6:00 am to 6:00 pm and two surgeons can perform surgeries throughout these 12 hours from Monday to Friday. According to the cash study, each surgery requires a 15 minute disinfection procedure in which the room is prepared for the next surgery and the team of operators gets ready for the next surgery. So that means the open surgery would actually take 60 minutes before the next one can be performed.

 

So the center can have 12 open surgeries in one operation theatre performed by one surgeon in a day. Considering that two surgeons would be performing surgeries simultaneously, there would be 24 open surgeries in a day which would be 120 open surgeries in a week by two surgeons. Here again we have to assume that each surgery would take the same time which is an average of 45 minutes and no other hindrance causes a delay in the surgeries and the disinfecting procedure is completed in 15 minutes.

 

However, if we also have to count the number of patients who consult the other two surgeons at this time for open surgeries while the former two are performing surgeries, then given the average consultation time taken by each patient is 30 minutes. If the two surgeons are consulted simultaneously then four patients would get consultations in one hour. In the twelve hours available for consultation from Monday to Friday, there can be 48 consultations in a day adding up to 240 consultations in a week. In this way another 240 patients consult surgeons for surgeries.

 

Likewise, nurses in the out-patient rooms take 60 minutes for each patient who comes for pre-surgery tests. So in this way, 24 patients who want to come for open surgery in the near future would be tackled per day. If the nurses work for 7 days, then it would be a total of 168 patients who would be handled by the center for tests for open surgery.

 

So if the center is handling patients for open surgeries only, then approximately 528 patients can he handled in a week if they pay by cash out of which 120 would be processed and surgeries would be performed while 240 would consult the surgeon and 168 would come for tests before the surgery.

 

On the other hand, if all patients opt for laparoscopic surgeries then a lesser number of surgeries would be processed in a week. This is because the laparoscopic surgery takes longer and so a total of 80 laparoscopic surgeries can be performed in a week. We are assuming that each surgeon has 60 hours available for performing surgeries and so a total of 120 hours are available for performing laparoscopic surgeries in a week considering the 5 days that the surgeons work in a week. As far as the consultations are concerned, since they would take an average of 30 minutes for each type of consultation, so even in the case of laparoscopic surgeries, 240 consultations can be done along with 168 patients who would only come for pre-surgery tests.

 

In the case of open surgeries, there are four nurses who work in a team of two during the operation so in this way all four of them are booked for surgeries. For any further surgeries to be performed, the number of nurses dedicated for open surgeries would have to increase. Likewise, an additional operation theatre would be needed to perform more surgeries. So for open surgeries, additional nurses and an operation theatre would be needed for any further surgeries to be performed simultaneously. Even in the case of laparoscopic surgeries, the number of surgeries cannot increase unless an additional operation theatre is there. However, if the same number of consultations have to be carried out in both cases then additional doctors should be there for consultation so that all four surgeons can perform surgeries while consultations can be handled by the doctors.  (699 words)

 

 

7. Assume that all patients use insurance for their payment and opt for laparoscopic surgery. Where should the Bariatric Center invest to improve capacity? The choices include hiring another bariatric surgeon or two general practitioners (for $200,000 each) who will handle the Initial consultation.

 

If all of the patients use insurance for their payment that would mean an additional 20 minutes spent on each patient for writing a letter to the insurance company. Plus this would require an extra 50 minutes of work from the nurses as the patients would have to come back for a second round of tests after the approval is done. Plus in the case of payment through the insurance company, 10% of approved cases in any cases may not decide to continue with the surgery. So it can be seen that with the payment plan being followed through the insurance company, not only would the surgeon’s time and effort be wasted in writing letters to for the patient but lesser surgeries would be there overall as 10% of the patients out of the approved ones may not decide to continue with the surgery after all.

 

Looking at the financial aspect of this, the surgeons are paid $500,000 per year and as there are four surgeons working at the center, currently they are charging $2000, 000 for their services. Hiring two general practitioners for $200,000 each seems like a better option as it would relieve the four doctors from the burden of writing letters to the insurance company.

 

Hiring another bariatric surgeon would increase the fixed cost by $500000 which is not a good idea as the number of surgeries would certainly be lesser if the insurance company would be responsible for making the payments and the kind of work that is currently needed for processing a request to the insurance company does not need the services of another bariatric surgeon.

Hiring two general practitioners would cost the center $400,000 which is again $100,000 lesser compared to the cost of a bariatric surgeon.

 

Had the payment plan been cash right away, there would have been a more surgeries comparatively and another bariatric surgeon would have made more sense as the others would have been over-worked. In the case of involving the insurance company, the hospital needs someone who can deal with the general medical reports and write-ups and so hiring two general practitioners makes more sense. (356 words)

 

8. From a financial perspective, is the Center better off encouraging more laparoscopic or open surgeries?

 

Answer: For figuring out whether the center is better off encouraging more laparoscopic or open surgeries, we would have to go do a financial cost benefit analysis of the two surgeries on the basis of their fixed and variable costs and the revenue earned from both surgeries.

If we simply look at the fixed costs such as the salaries of doctors, nurses, the receptionist and the anesthetists, we can see that open surgeries would cost more compared to laparoscopic surgeries. For instance four nurses charging $50000 each are kept solely for open bariatric surgery.

Although the cost of laparoscopic surgery for the hospital is $1000 more for the hospital since open surgery costs $1000 and laparoscopic surgery costs $2000, but the hospital recovers it from the patient since laparoscopic surgery is for $18000 and open surgery is for $15000 and so automatically the hospital earns $3000 more through laparoscopic surgery and so the extra $1000 incurred for laparoscopic surgery should not even be an issue.

However, it should be noted that on average open surgery takes 60 minutes while laparoscopic surgery takes 90 minutes and so if the two operation theatres are used for five days between 6:00 am to 6:00 pm to perform each type of surgery, 60 hours are available for performing surgeries. In this time, if both operation theatres are used, 12 open surgeries can be performed in each operation theatre while 8 laparoscopic surgeries can be performed in each operation theatre daily. In this way, 120 open surgeries can be performed in a week while 80 laparoscopic surgeries can be performed.

If we look at the average cost of each surgery, open surgeries would cost the hospital $120,000 in variable costs in a week while laparoscopic surgeries would cost $160,000 in a week in variable costs. So in this way, laparoscopic surgeries would cost $40,000 more in a week compared to open bariatric surgeries, considering the direct variable costs of surgery.  Considering 52 weeks of a year, that is an extra $2,080,000 in variable costs for laparoscopic surgeries in a year.

Considering the earnings from both types of surgeries, if 120 open surgeries can be performed in a week, the total earnings in a week are $1,800, 000 whereas if only laparoscopic surgeries are performed in a week the total earnings are $1,440,000. That is about $36,000 earned more through open surgeries every week so looking at a yearly difference that is about $1,872,000 in earnings from open bariatric surgeries compared to laparoscopic surgeries. So the initial cost that we had talked about for the four nurses who were only working for open surgeries was only $200000 which is easily paid back through the revenue generated by open surgeries.

So, from a financial perspective, the center is better off performing open surgeries as they generate a greater revenue for the center and the variable costs are much lesser compared to laparoscopic surgeries. The fixed costs of the nurses should not even be an issue as they have to be paid even if these nurses were used for laparoscopic surgeries. (512 Words)

 

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