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Dr. Burns Case Study Solution

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Dr. Burns Case Study
Assignment 1
Operations Management 505
Submitted to Coach Jan Wirsam
From Lise Beland
June 21, 2013
Word Count:

Table of Contents

Background …………………………………………………………………………..1
The Technology……………………………………………………………………....2
Operations Strategy………………………………………………………. ……….. 3
Cash Flow Statements…………………………………………………………………………….4 Clinical Trial Work Design Process…………………………………………………4
Final Recommendation……………………………………………………………….5
References………………………………… …………………………………………6

Background:
Dr. Nicholas Burns, a sole practitioner dentist in a small town in Ontario, is considering the purchase of a new dental laser which allows dentists to perform certain dental treatments without anesthesia. He wondered if the benefits of the new dental laser would justify the expenditure. Dr. Burns knew he should consider whether the technological advantage offered by the new dental laser would improve his office's profitability and the possibility that a different technology may become the standard in the industry.

Issue 1: Will Waterlase become a sought after technology?

OPERATIONS STRATEGY

Analysis 1: Waterlase is a proven technology that provides the patient with a revolutionary treatment. The laser has been approved by Health Canada since 1998 and it main benefits enable better clotting and healing on soft tissues. The reduced bleeding effect will benefit patience on blood thinners. (citation). The laser had an analgesic effect on the tooth and can eliminate the need for local anesthetic. This laser can be utilized for root canals and soft tissue legions (Ivey).
Historically, the patient relied and depended on their physician for recommendation and treatment options. The internet and social media have provided the public with constant stream of health information making the patient better versed and informed on health issues as well as the latest in cutting edge technology. After reviewing the key factors in the implementation of this technology, it is important to note that there will be significant advancements in the development of this technology (the ability to cut through metal). In addition to 65% of Dr. Burn`s time is spent on restorations. Of that 65%, 50% is composite fillings and the other 50% is amalgam fillings. 70% of the amalgam fillings involve pre-existing fillings. In other words, the Waterlase can be utilized on a large number of restorations.

Recommendation 1: I would recommend that Dr. Burns ‘practice lead this innovation in the application and enhancements of this device.

Issue 2: Will the benefit justify the expenditure such as improve or at maintain profitability.

Although Waterlase states that the patient will experience a shorter procedure http://www.waterlase.com/clinical-uses.html, after analyzing Dr. Burn`s estimated times, extra time will be required to educate the patient and the total time to do the procedure increases by 25% (8.5 minutes) for each restoration.

Profit Calculation:

Restoration 1 day = 10 hours X 65% = 6.5 hrs X 2 restoration/hr = 13 rest/day
Costs Total 35 hours X 65% = 4227.50 ÷2 = $113.75/restoration ÷2 = $ 37.92/unit
Revenue per unit 109.80 ÷ 3 unit/rest = $36.60 /unit $151.72 = $50.57 ______ ---------- $130.76 (av. Rest cost) $43.58/unit (113.75) Restoration

Gross Profit 17.01/Restoration

Cash Flow Statement:

Additional revenues: 5 new patients X 12 months @$350/hour = $21,000
Estimated a 10% increase of restorations 65% to 75%
Amal = 33 hours X 2 rest = 66 rest X $110.00 = 7,260
Comp = 110 hours X 2 rest = 220 X $152.00 = 33,440
Saved Anaesthetic 1435 + 430 = 1865 + 1.80 = 3357
Minus 10% = 3,021

24021 64,721

Expenses
Additional time; lost revenues
= 1 unit/restoration
= 1,865 restoration X $43.58/unit = 81,277

Maintenance 3,000
Purchase/Yearly 21,750

Recommendation: It will not be profitable for Dr. Burn`s to invest in the technology as the expenses are over $80,000. The cost does not outweigh the benefits at this point. The 15% investment should be left in stocks as it has a better risk of receiving a consisting growth than investing in the technology because the expenses are so high.

Issue 3: Feasibility of creating a clinical trial

Analysis: In order to engage Dr. Burn`s patients in the technology and to creatively find ways to negotiate lease costs with vendor, a collaborative agreement could be develop to hold clinical trial and share key findings about the effectiveness of the product. Dr. Burn`s staff would be able to retrieve vital information to help improve the next generation of the product. A clinical trial work flow design could assist in the implementation and execution of the clinical trial.

References:

Dr. Nicholas Burns Case Study, Richard Ivey School Business, 2007,

http://www.waterlase.com/clinical-uses.html

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