Dr Miroo Carpenter’s Eye Practice - Case of "Setting Up Service Business"

Dr Miroo Carpenter’s Eye Practice

Written By Prof S K Palekar for class discussion in elective course on Service Management for PGEMP

The old, established and wealthy families in Mumbai considered Dr Miroo Carpenter as being a descendent of a long line of  distinguished eye doctors in Mumbai. Miroo once said;

“ever since I remember - the family discussed, lived and revolved around only one profession of treating eyes. Right from the beginning, I never even entertained any other thoughts except of becoming an eye doctor.”

At a young age of 26, Miroo entered his father’s practice that was run from a small two room clinic in a congested location of Charni Road in South Mumbai. Now 46, he was well established in the practice as well as in the society. He was a District Governor of the Rotary Club, on the advisory panel of an educational institute and associated with several charities which did good work. There was hardly any conference in India on the subject of eye surgery which did not feature Dr Miroo Carpenter as a speaker or a panelist.

At 46, he was a well-to-do doctor and worth about Rs 50 Millions - with investments in deposits, shares and also in a farmhouse at Alibaug outside Mumbai for spending the occasional weekend when he had the time. But he has been wondering recently about the fact that he was at the midpoint of his career and what he should do in the next 20 years. He said;

“I have seen some colleagues of mine – who were not even as good as me in college – have now become worth Rs 500 Millions because they took a plunge in starting out on their own.  Some started polyclinics and rented them out, some started nursing homes, some had invested in latest diagnostic equipment and pathological labs. The way I see it, they  combined their  skills and contacts with  borrowed money  and, as their businesses succeeded,  they paid back the loans and became the owners themselves. Their businesses – as going concerns – are worth the kind of money I stated earlier. I am now wondering whether I too should not liquidate my investments and put the money into what I am  good at – treating eyes.”

Sometimes he thought he should  take his clinic to very rich localities like Altamount Road or Malabar Hill and increase his rates – but would his traditional clientele come there and pay those rates ? Or he will need to look for new clients – and how was he to get new clients?  Sometimes he thought he should go for a partnership with other doctors but then he was in doubt - what did he  not have that the partners would bring in?  Sometimes he also would consider specialty areas like  diabetic blindness  whose number was increasing. Or to focus on eye problems of  the old age. Longevity was increasing in India due to the advances in medicines and treatments and more and more people were being afflicted with eye problems that came with the old age : weakening color vision, inflexibility in the ocular lens, cataract removal, retina displacement etc. He was also not sure whether it should a clinic, diagnostic service, surgery or a nursing home.

He needs to show a financial project report ( P&L and Balance Sheet) of his proposed business. How can he work out these ?