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The Dr. Efran and Bagedo General Hospital, being a private establishment and also a non-profit organisation utilizes its funds in the day to day running of the organisation. Of these funds, the doctors usually pay a certain amount for the use of the hospital’s consulting rooms and there are also funds from the little percentage of the total cost of treatment that is usually charged on patients.
The hospital also has a variety of members who contribute to a health fund. The hospital charges service providers such as those offering radiology and dialysis services, the car park operators and the coffee shops for operating in the hospital.
The most important source of revenue for the hospital is the health funds, which is mainly made of payments from the vast majority of the patients. This is done through per day payments or case based payments depending on the services rendered to a particular patient. The health fund agreements are usually negotiated from time to time and this is meant to increase the revenue that the hospital receives from the fund.
The main hospital expenses includes: salaries paid to the staff; payments for support services such as cleaning; and the procurement of patient’s food, equipment and other utilities. The main expense of the organisation is staffing which consumes about 70 percent of the revenue allocation, which also includes agency staff.
The hospital is not meant to make any profits from its operations. The aim of the hospital is to provide quality health care services to its patients who are mainly drawn from the nearby community. It also provides research and training facilities to health and medical students as well as researchers.
Since it is not a profit making organisation any funds collected are reintegrated into the hospital which then subsidises its services and also offers some services free especially to the poor in society.
The major health services provided by the Dr. Efran and Bagedo General Hospital are: pathology and radiology; orthopaedics; gynaecology and obstetrics; renal dialysis; cardiac surgery, vascular and angiography services; lung and respiratory medicine; neurosurgery; emergency medical services; intensive care units and neonatal intensive care unit and finally, outpatient clinics.
I am aware of the costs of the services provided by the hospital and I believe it is imperative that the staff be aware of the costs of the services they provide so as to be more informative to the patient.
Since the payments made by the patient to the hospital are through their own funds or from the health insurance claims, it helps them plan their treatment in advance and manage their expenses.
The Dr. Efran and Bagedo General Hospital has a documentation system policy though this is done for official purposes only. The only information that the hospital management is keen on implementing is the hospital’s cash inflows since this impact directly on their credibility as managers.
However, it is imperative that the staff should document the information collected on procedures performed, patient diagnosis and stay patterns and implement the deductions given. This is meant to ensure that they provide their patients with quality services since they can have follow up records of their health status.
There is, however, a general reluctance especially by the clinical staff to adopt proper documentation which can be attributed to how they were originally trained, where there is more concern on their diagnosis rather than medical histories of patients which could be of particular importance.
The sale of the Mersey hospital to the commonwealth by the Tasmanian government was so low since the exchange of ownership was not meant to be a gift, but rather a sale and to accommodate this technicality, the purchase price of $1 was set.
In selling the hospital, the government wanted to allow the adoption of the commonwealth system of healthcare management first with the hospital as a pilot program before incorporating it to the other hospitals in Tasmania (Wynne, 2005).
Though others may argue that the government lost in healthcare funding, it is still receiving its entitlements as well as increased funding from the commonwealth for all its other health care operations, which indicates that the deal was of great advantage to the Tasmanian government and the people of Tasmania in general.
At Dr. Efran and Bagedo General Hospital, the main fixed overheads for the hospital are: employee salaries and benefits; building maintenance; interest expenses; capital expenditures property tax; and insurance.
The main variable overheads in the hospital include: overtime wages; diagnostic services; patient care supplies; agency expenses; delivery costs; medications/drug therapy; utilities; therapy supplies; and food as well as housekeeping services.
If 10% of the operating costs at Dr. Efran and Bagedo General Hospital were to be saved, this would mainly be drawn from the agency staff and the payment of overtime staff, which is usually expensive.
However, this would not influence the hospital negatively if it is coupled with the hiring of permanent staff that will be integrated into the staff schedules to achieve maximum output per employee. This should also incorporate provisions for emergency services, which, if included, should be limited to particular times so as not to have staff on standby idling.
At Dr. Efran and Bagedo General Hospital, the budgeting responsibility is given to the accounts department where the department establishes several cost centres and cost drivers. However, basing my analysis on what has been learnt in this course, there are some deficiencies that are notable in the way budgeting is done at Dr. Efran and Bagedo General Hospital.
Currently, it is hard to establish the real cost of a specific service as the hospital does not use the activity based costing method. Instead, things are valued in a wholesome manner where one cannot know which services are overpriced and which services are underpriced. Thus, it becomes hard for effective valuation of services in this hospital.
Dr. Efran and Bagedo General Hospital do buy expensive equipments. This calls for effective capital budgeting approaches. To ensure that the hospital makes sound investment decisions, the hospital have established a competent cost and investment control department that utilizes various tools of capital budgeting.
One of the main tools used by the hospital as part of its capital budgeting is the net present value as well as the analysis of the economic life of any machinery or other investments that the hospital decides to venture into. This enables the hospital to be well equipped with what is relevant as opposed to irrelevant material.
The concept of capital budgeting in hospitals seems to have taken root as it was evidenced in the class discussion that most organizations are taking this issue with the gravity it deserves.
There is a general tendency for hospital to move from the traditional funding where the issue of cost associated with a specific service was not important. Currently, the case mix funding method being adopted lays a lot of emphasis on the number and the type of patients that a hospital serves.
Therefore, the case mix method that emphasizes the product costing is important as it helps in the pricing of services to ensure that no service is offered at a loss to the hospital. The method is also important as it helps to show the adequate profit margins to ensure that hospitals do not make unethical profits at the expense of the customers.
This is useful in the management and in the soliciting of funds, which is an important aspect in modern private hospitals as the rising cost of healthcare provision has ensured that the profitability of such hospitals reduce tremendously.
It is worth noting that this course has been extremely helpful. There are many aspects that I have learned from the course. Of the most importance is the need to adopt a case mix or product costing model in the managerial activities of the hospital as this model ensures that every service offered by the company is done with cost consciousness.
Although I work in a non-profit making hospital, the concept of product costing is important as it ensures that all the aspects of costs associated with a specific service are covered.
The course will prove valuable in the quest to make Dr. Efran and Bagedo General Hospital a place where customers pay a discount for the services provided, while all other aspects such as depreciation of equipment as well as lapsing of economic life of various hospital assets are covered by other means of funding.
This means that the course will ensure that I possess the required skills to formulate service based payment policies that ensures that Dr. Efran and Bagedo General Hospital funding is sustainable not only in the short run, but also in the short run to ensure that the customers receive quality services.
Reference
Wynne, Michael. 2005. Health scope: The Mersey Hospital Story. Web.
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