Chapter 04: Strategic Operations


[Enhancing Entry Speed, Efficiency and Organization] 

By Susan C. L. Theuns

By David Edward Marcinko

By Hope Rachel Hetico

Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat – Sun Tzu

IntroductionStrategic Operations

Once start-up capital is secured with the help of a well executed business plan, the most common avenue to establishing a medical office has been to select a location and start solo practice.  

Given the initial cost of opening an office in today’s competitive climate, this may not be the most practical method to pursue.

Fortunately, as we have seen, there are other options available to the healthcare provider, which include the following:

  • Purchase the practice of a retiring practitioner.
  • Associate with a group practice with an option to purchase partnership interest.
  • Merge with a similar, multi-discipline or another practice.
  • Franchise or multi-level market a medical business start-up.
  • Become a salaried employee of an established delivery system (VA, MCO, HMO, Indian Healthcare military, or prison system, etc.).

Nevertheless, the success of most every aspect of the above models may-be increased by creating a strategic-operating plan that considers some of the many features below.

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11 thoughts on “Chapter 04: Strategic Operations



    Jude was the COO of a suburban acute care hospital in Las Vegas. As he was driving home across town, he was caught in a traffic jam. He stared blankly at the advertisement on the back of a taxicab in front of him. The ad was a picture of one of the chorus lines in a typical show in Sin City.

    For some reason, the ad reminded him of a management team meeting that had taken place at the hospital earlier that day.
    During the meeting, the CFO had complained that the hospital needed to improve its financial performance. When he asked for suggestions, Jude commented that many hospitals in the Las Vegas Valley were attempting to improve supply chain management by ordering pre-packed surgical packs (surgi-packs) for the operating room. A vendor had offered to provide surgi-packs customized to suit the wishes of each surgeon.

    The CEO was puzzled. He wanted to know how customized surgi-packs could save money. He was under the impression that customization added costs. The CFO was more sanguine about the suggestion. He thought that it might reduce inventory levels and thus improve asset turnover ratios slightly. However, he felt that the biggest problems in the operating room were labor costs. He wanted to know if the surgi-packs would help reduce labor costs. The Chief of Nursing Operations was not optimistic at all. She said that her major concern was how the surgi-packs would affect the quality of patient care. On that point, the CFO added that he thought that revenue generation was also a problem. He felt that real or perceived quality problems connected with the operating room had adversely affected the revenue generation of the hospital.

    Jude responded that customization was not costly if the information technology was up-to-date. The proper software could provide customization with little or no additional cost. Jude added that the surgi-packs would likely decrease inventory levels. This would reduce the financing cost of inventory and possibly some holding costs as well.

    In financial terms, the lowering of inventory levels would increase current asset turnover and return on assets. Further, the reduction of assets would increase the equity multiplier and increase return on equity. With regard to labor costs, the surgi-packs would provide a savings because the surgi-packs would be assembled by unskilled labor at the vendor, and not by nurses in the operating room.

    However, Jude was unable to answer the concerns about quality and patient care.

    Suddenly and belatedly, Jude realized in the traffic jam what he should have said to the Chief of Nursing Operations and the CFO with regard to quality.

    First, he should have told the CNO that the surgi-packs would improve patient care because nurses in the operating room would have more time for patient care if they did not have to assemble to surgi-packs.

    Second, Jude realized that he should have argued that the surgi-packs might also alter the performance of the surgeons. If the surgeons had the opportunity to plan and establish their surgery profiles with the vendor it might save time and reduce ordering errors.


    How should Jude prioritize the following in order to improve operations:

    – Information technology issues?
    – Financial issues?
    – Patient care issues?
    – Communications issues?
    – Management issues?
    – Quality issues?

    Using the framework reflected in this chapter, consider what changes the hospital might implement to ensure that the hospital regularly makes good decisions on such issues as surgi-packs?

    Any thoughts on this sample case model after reading this chapter in the BMP 3.0?

  2. On Improved Operating Efficiency

    Medical offices, clinics and hospitals spend millions of dollars on solutions to shave minutes off of procedures. Most solutions like RISs, PACs, eMRs are designed to improve workflow enabling quicker diagnostic turnaround time that focuses on improving efficiency “post procedure”. But, limited tools are available to help technologists, nurses, transport, physicians and even patients more effectively navigate through the pre-procedure “chaos” characterized by most healthcare entities.

    Moreover, investment in “pre-procedure” tools and solutions has been limited, resulting in a sub-optimal use of expensive capital resources. On-Cue™ is a software solution that claims to enable clinics and hospitals to reclaim un-used operating capacity by reclaiming un-used operating capacity.

    Rachel Pentin-Maki; RN, MHA

  3. On Medical Website Login Authentication Technology

    Medical records are important documents to protect from identity thieves. If a hacker gets a patient’s medical records, they get the key to that person’s personal kingdom—insurance information, financial information, and access to very private matters that can affect job status, eligibility for mortgages—the implications are enormous.

    Login authentication technology is emerging as regulatory agencies push for additional security measures to ensure that only authorized individuals have access to medical practices, clinics, hospital systems and patient data. HIPAA and many state pharmacy boards are calling for strong authentication when accessing patient records or prescribing medicine through online systems. To comply, doctors, clinics, and medical practices must require more than a user name and password before allowing access to their systems. Often, these additional forms of authentication are not user-friendly. Many require users to carry a security token or other device, or restrict them to logging in from a particular computer.

    The firm offers a two-factor authentication service that provides far greater security than usernames and passwords. The service can use any phone (mobile or landline) as a second form of authentication. It can be setup in minutes and eliminates the need for tokens, smart cards or certificates. The basic service is free with advanced modules available for enterprise-wide deployments. PhoneFactor solves the identity theft problem, protects patient privacy in real-time, and is so easy to use that doctors take to it instantly.

    For example, suppose a physician needs to remotely access a patient’s hospital files from his/her private practice office. The doctor keys his user ID and password into the hospital network. His/her cell phone rings instantly, prompting him/her to confirm the login. If the doctor keys in a PIN on his phone, s/he is given access. But, if not, the IT department back at the hospital is alerted immediately, access to the network is denied, and the attack is thwarted. The patient file is not compromised.


  4. A Doctor – Accountant

    I was a board certified foot and ankle surgeon for a decade before obtaining a Master’s degree in Accountancy, with CPA accredidation and Certified Medical Planner [CMP] charter.

    Since then, I’ve logged more than a decade of additional healthcare accounting and finance experience, including a stint as CFO for a regional, multi-discipline, mental healthcare firm. I’ve helped start up medical, dental and podiatry practices. Who else would you want riding along with you as your practice gets started – or – to contribute to this important textbook?

    We help you:

    * Prepare an initial medical business plan to clarify your financial parameters and prepare for interviewing lenders.

    * Determine your start-up office capital needs.

    * Identify sources of start-up capital and backup resources if needed.

    * Evaluate and quantify your borrowing power.

    * Obtain financing and a line of credit.

    * Select the business structure that fits your needs by evaluating tax advantages, legal protection and future expansions.

    * Select the right medical accounting software.

    * Select the right medical billing software and/or eMR package.

    * Setup appropriate practice internal controls.

    * Note all required state and local licenses and permits.

    * Note your Federal Employer and Identification Number.

    * Note payroll and payroll tax filing when you bring on your first employee.

    * Identify your medical business insurance needs.

    Dr. Gary L. Bode; CPA, MSA, CMP

  5. Access Management [Check In – Admissions]

    Phreesia is an intentional misspelling of a flower (Freesia) and is a medical office access management product that replaces a physician’s traditional patient data-gathering clipboard with a free easy-to-use wireless touch-screen device called a PhreesiaPad.

    Everything else required [absent the broadband internet connection], including a wireless network, is supplied by the company.

    Check it out:

    Doctor Dan

  6. About mPay Gateway

    mPay Gateway is touted as a web based health care software credit card payment system that secures payment from patients before they leave the office.

    With the current shift to consumer-driven health care, patients are now responsible for a larger portion of their total health care payments. It is estimated that physicians receive only fifty cents of every dollar billed to patients after the patient leaves the office. This equals an industry-wide total of $300 billion lost each year to patient non-payment.

    mPay Gateway’s streamlined, proven retail payment process:

    • Secures patient payment at the time of service
    • Eliminates bad debt
    • Eliminates statements
    • Is simple and easy to implement

    So, check it out and tell us what you think.

    Ann Miller; RN, MHA

  7. Retail Medical Office Space

    If you are a physician who owns a medical office building and are interested in selling, you may be in luck, according to some industry experts.

    Real estate investors scarred by the recent volatility of other investments are looking for stable places to put their money, but there are not enough of these types of buildings to meet demand.


  8. Waiting Room Time

    The average time patients spend waiting to see a health provider is 22 minutes, and some waits stretch for hours, according to a 2009 report by Press Ganey Associates, a healthcare consulting firm that surveyed 2.4 million patients at more than 10,000 locations.

    Orthopedists have the longest waits, at 29 minutes; dermatologists the shortest, at 20.

    And, with each five minutes of waiting time, patient satisfaction sank significantly, the survey revealed.


  9. The services marketing adage “manage your patients perceptions such that they exceed prior expectatons,” applies to waiting room time.

    One trick restaurants use is expressing a 15 minute wait and then getting you a table in 5 minutes. Perhaps the service recovery paradox applies as well (where a negative incident handled well bonds the patient to you better than if no incident had ensued). I always sincerely apologized to these patients personally, which sometimes eased the frustration of a delayed appoinment.

    Gary Bode CPA

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