Year of Publication



Martin School of Public Policy and Administration

Date Available


Executive Summary

The objective of this case study is to document the interactions between a general surgery practice group and a university medical center as the physician group establishes and seeks to expand its revenue base. The group proposes to lease or purchase a practice location where they can consult with patients and perform procedures. The practice location is near a competitive hospital, Saint Jose East. The surgeons currently have privileges at Saint Jose Hospital and request to continue the privileges.

The case study's design and methods include benchmarking and financial analysis. The results of the study are :

  • Benchmarking of operating room turnover times, hospital bed closings and clinic square footage Justify expanding the physicians practice to an offsite location
  • The expanded practice will increase patient satisfaction for the entire enterprise
  • Financial analysis of the practice justifies the expansion

○ The practice will break-even in 39 months

○ Hospital downstream revenue will increase

○ The Division of General Surgery increased its contribution to hospital revenue by 27.5% during the trial period.

From a business standpoint, both the hospital and the Division will benefit from the off-site practice. The hospital's operating rooms are over capacity and bed-shortages lead to frequent hospital closings. With the expansion, general surgeons can book overload cases and , when the hospital is closed, refer patients to Saint Jose Hospital. Additional hospital benefits include the increase in referrals from the new practice and the associate revenues.

Benefits to the Division include increased revenue, opportunities for increased patient, physic1an, and staff satisfaction, enlarged clinic capacities, expanded referral base and an outlet for admitting patients when the medical center is full.

The case study's results indicate that it will be beneficial to the medical center to allow the practice to continue and expand. Objective analysis is not necessarily the standard used to determine whether a proposal will be implemented. Decisions must align with an enterprises' vision. During this expansion, a new Executive Vice President for Health Affairs was installed when the former executive retired. The new administration's mission and vision for the Enterprise conflicted with the General Surgery's efforts. The new focus is on product lines and emphasizes the health care centers brand name. Based on the analysis and executive committee approval, the general surgeons are allowed to continue leasing a temporary location, but they are not allowed to purchase a practice site. The practice was abandoned when the off-site hospital's call requirements became overwhelming and the benefits of owning an off-site practice were denied.



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