Problem 5

Longhorn Allergy Clinic provides allergy testing and immunotherapy injection services to its patients. Patients, referred to the clinic by private medical practitioners, schedule their allergy testing appointments via the clinics online webpage. The clinic is open five days a week from 8 a.m. to 4 p.m. (no lunch break). The clinics Director has asked a consultant to study the clinics process flow and generate ideas on how to improve the work flow, and possibly increase its revenue and profit. The clinic employs one Admin person, two Technicians (Tech1 and Tech2), two Nurses (Nurse1 and Nurse2), and a Billing clerk. The Admin, Techs, and Billing clerk are paid $ 6,400 per month, and the nurses are paid $ 7,200 per month (20 working days per month, 8 hours per day). As a policy, the clinic does not want to keep employees at work after hours for overtime. Figure 1 shows the process flow for a patient (the diagram does not show the waiting areas for flow units before and after each step). The person(s) handling each step of the process is shown above the station corresponding to this step. After patients Check-in (Step 1), they go for a Breathing Test (Step 2) to either Tech 1 or Tech 2 (working in parallel). In the meantime, the patients billing file is retrieved by the billing clerk to Prepare Bill (Step 3). After the Breathing Test is completed, Nurse 1 Prepares & Administers Injections (Step 4) to the patient. The last two steps, Accept Payments (Step 5) and Release Patient (Step 6) occur in sequence, but can only begin after the injections are administered and the bill is ready. Table 1: Processing Times Step No. Description Performed by Processing Time (mins. per patient) 1 Check-in Admin 6 2 Breathing Test Tech 1, Tech 2 23 3 Prepare Bill Billing clerk 13 4 Prepare & Administer injections Nurse 1 16 5 Accept Payment Admin 7 6 Release Patient Nurse 2 8 Based on extensive data gathering and observation, the Director has carefully estimated the time (in minutes per patient) for each step of the process. These times do not vary much from patient to patient. A. Balakrishnan 2 The processing time per patient at each station is shown below the processing step. For your convenience, Table 1 summarizes the processing time and resource(s) for each step. Observe that Admin performs both Step 1 and Step 6 for each patient. Figure 1: Current Process Flow for Longhorn Allergy Clinic The clinics appointment system creates, for each working day, as many equally-spaced appointment slots as the clinic can handle in a day. If a client finds that all appointment slots for her preferred day are filled, she goes to a different clinic. Clients pay $ 300 per visit for the tests and injection. The clinic incurs a variable cost (for injection, supplies, etc.) of $ 30 per client.

(d) While observing the process flow in order to document it (Figure 1), the consultant noted that preparing injections (6 minutes/patient) and then administering it (10 minutes/patient) can be split into two separate steps (to be done in that sequence). Moreover, injections can be prepared during the time that the patient is taking the Breathing test. And, if needed, injections can be prepared by a different nurse (i.e., need not be the same nurse as the one administering the injections). Based on these observations by the consultant, the Director has asked you to look into the possibility of redesigning the process flow to improve the clinics (operational and financial) performance. Propose Breathing Test Tech 1 23 mins Breathing Test Tech 2 23 mins Check-in Admin 6 mins Prepare & Administer injections Nurse 1 16 mins Release Patient Nurse 2 8 mins Accept Payment Admin 7 mins Prepare Bill 13 mins Billing clerk A. Balakrishnan 3 improvements (and show the improved process flow diagram) and explain what performance metrics can be improved, and by how much.

(e) (Ignore part (d) for this question.) The previous parts assume that every patient who visits the clinic needs an injection. The clinic is now considering the possibility of offering a new diagnostic service. The clinic will charge only $ 200 per patient for this service. Patients seeking this service will check-in (Step 1), take the Breathing test (Step 2), pay the bill (Step 5), and leave the clinic. That is, they do not receive an injection (Step 4), nor do they need to be released by a nurse (Step 6). For these diagnostic patients: (i) bill preparation takes only 9 minutes, and can be done concurrently with the Breathing test; (ii) the Breathing test takes 23 minutes (same as before); and (iii) Check-in and Accept payments (Steps 1 and 5) take 5 minutes and 7 minutes respectively. The variable cost for providing this service is only $ 30 per patient. The Clinic Director anticipates that there will be plenty of demand for this diagnostic service. But, since the current full (diagnostic + treatment) service yields higher revenue per patient, she wants to reserve 25 appointment slots (which is the anticipated daily demand) each day for full service clients. How many daily appointment slots should the clinic create for diagnostic service clients so as to maximize profit while ensuring that it can handle the total (full + diagnostic) workload each day? What is the clinics anticipated total profit (net of variable and payroll costs) if it expands its services to also include the diagnostic service? Which resources are the bottlenecks? Hint: For each resource, first net out the number of minutes of work per day for the full service clients, and then determine the maximum number of diagnostic patients each day that the clinic can handle with the remaining capacity.