Page 5 - CIMA MCS Workbook February 2019 - Day 1 Suggested Solutions

SUGGESTED SOLUTIONS

Larger practices have a practice manager in addition to the head of practice, who is responsible
for non‐clinical matters related to the business side of running the practice, including reception
and accounting. Presumably where a centre is too small for a practice manager, the head of
practice is responsible for these.

Some dentists within the practices are also part owners of Crowncare.

Practices must offer high quality services and a welcoming atmosphere.

Practices use the same specialised software package.

Dentists have some discretion as to prices of more complex procedures and are able to reject
patients who wish to register with them.

To determine whether the practices operate as particular types of centre, we can try and
determine the level of control they would have over each type of cost/revenue.

Costs

Crowncare pays above average salaries to its staff. This probably means that the company as a
whole wants to keep track of salaries and may not allow individual heads of practice to make
salary decisions. All the practices are in the same area of the country, within one city, so there
potentially wouldn’t be much difference between salaries paid at one practice and another –
another reason why salary decisions may be held centrally.

Similarly, the costs of consumables may be held under central control so that savings can be made
on bulk purchasing. This would also enable the group to maintain a level of quality by ensuring
only certain suppliers are used. Again, the close proximity of each practice would lessen the need
to use a wide variety of suppliers. Perhaps, though, practice heads would exert control in terms
of when and how much is ordered, to cover the specific practice needs.

Training costs are an essential spend for the group, with each dentist needing to adhere to
professional development requirements, as well as training needs for other types of staff
member. It is possible that decisions on training are done at a practice level, but this could
equally be done centrally.

It is also likely that IT spend is determined centrally, given that each practice uses the same
software.

Revenues

Most prices are standard and so the heads of practice will have little ability to influence them.
Practices can refuse to register patients, so in theory could use this as a way of boosting revenues
by mainly accepting patients who want higher priced work, such as implants.

We are not told about marketing and advertising campaigns, although V$0.5 million is budgeted
for the four‐month period ending 31 Jan 2019. Given that the practices operate in one city, it is
likely that marketing is organised centrally, although if there are, for example, newspapers or
brochures that are distributed on a local basis, individual practices may choose to advertise in
these.

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