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Introduction
Background information
The United States government is committed to ensuring that its citizens receive quality healthcare services. To be effective, the US government has divided its healthcare system into three levels. These include the federal, state, and local levels (Niles, 20011, p.11). Each of these levels plays a unique role. For example, it is the federal government’s role to provide the necessary funds and regulatory mechanisms. For example, the federal government sets the amount of money to be allocated to the various levels in the national budget. The state-level also provides funding and also offers healthcare programs as directed by the federal government. On the other hand, it is the role of the local government to ensure that the funds allocated to various city councils are well utilized (Niles, 2011, p.11).
According to Morgenroth and Gerald (2006, p.278), there is a rapid increment in healthcare expenditure, especially in developed countries. As one of the cities councils in the developed countries, Marietta city council is committed to providing optimal healthcare services to its population. This is in line with the local government’s policy of improving the resident’s quality of life by offering diverse healthcare services such as those aimed at improving individuals’ mental, physical and social wellbeing.
Currently, the city is experiencing rapid change arising from a high growth rate and a rise in its population. Statistics of a census conducted in 2000 indicated that the city had a population of 58, 478. These changes present a challenge to the city council in its quest to offer efficient quality healthcare. One of the challenges relates to increasing in healthcare expenditure. Morgenroth and Gerald (2006, p.279) think that increase in healthcare expenditure is not a direct indicator of an improvement in the health status of the intended parties. However, the basis upon an increase in healthcare expenditure can be explained is on the effectiveness with which the funds are allocated.
To support the needs of the city, the council should be effective in its capital decision-making process. This will ensure that it invests finances effectively. To achieve this, the city council should develop a capital budget to take into account all the necessary capital expenditures. The expenditure plan should be aimed at meeting the changing needs of the city. To achieve this, the city council should incorporate several elements which include capital requirements and operational requirements. According to Niles (2011, p.12), city councils around the world are required to develop capital and operating budgets. The budget illustrates how the council intends to spend a certain amount of money allocated for the provision of specific services. In addition to the capital and operating budget, the city council of Marietta should also consider subsidizing non-profit organizations. Further, it is also important for the city council to consider giving economic incentives to investors interested in providing healthcare services to investors interested in venturing into the city.
Aim
This report is a proposal on how the city council of Marietta should allocate its fund in its budget to support the healthcare needs of the city. This is achieved by identifying the core requirements.
Scope
The report has taken into account several capital requirements and operational requirements which the city council should consider in improving its healthcare provision to the city residents. Some of the capital requirements considered in the report include medical clinics, developing the city’s infrastructure such as water treatment and sewerage systems, wastewater collection and treatment, garbage collection facilities, and paramedic services. The report has also taken into account various operating costs that the council will be required to cater for. Some of these costs include labor, medical and nonmedical supplies, professional fees and insurance. The report also gives a proposal on how the $100 should be allocated to account for the capital and operational requirements. Finally, a conclusion and recommendations are given based on the requirements identified.
Capital requirements
According to Cleverly and Cameron (2007, p.397), capital expenditure is a key component in a local government’s effort to provide quality healthcare. Cleverly and Cameron further posit that capital expenditure forms one of the costs that city councils incur to attain their objectives despite the resource constraint. This makes it important for capital investment decision-makers to conduct a comprehensive cost-benefit analysis. Every project has unique benefits. Therefore, in the process of evaluating projects, decision-makers should weigh the specific benefits in order priority and compare them with the associated costs. In selecting the project to invest in, the city council should select the project with the least cost.
Capital expenditure refers to investment of resources such as finances to a particular project which is aimed at providing benefits to identified parties for a reasonably long period for example 5 years. City councils should identify and take into account the various and most important capital expenditures projects to invest in.
After effective identification, the projects should be evaluated by taking into account several elements. These include the type of resources to be invested, the duration within which the investment should be undertaken, the benefits associated with the project, and the amount of money required. To be effective in determining whether the identified capital project is acceptable, the city council should incorporate the concept of Net Present Value (NPV). To provide efficient healthcare services, the city council of Marietta should allocate a substantial amount of money in its capital budget.
Medical clinics
According to Ginzberg, Davis and Ostow (1999, p.1), city councils should put more effort into improving primary healthcare within their respective cities. One of the ways through which they should achieve this is by establishing medical clinics. The clinics should serve as a support mechanism for the hospitals within the cities.
Considering the rate at which the city is growing and the increase in population, there is a high probability that the city council’s medical facilities will be strained in their effort to provide medical care. As a result, there is a high chance that they may not have the adequate capacity to deal with the high population. This will be worsened by the fact that the current health centers are concentrated in one location within the city. Lack of alternative public healthcare facilities may result in the current healthcare facilities being overcrowded. For example, the current health care centers may not have adequate beds.
To improve the health and wellbeing of the city residents, the city council should incorporate the primary healthcare model. According to Willis, Reynolds, and Helen (2009, p.34), the model refers to a community-based healthcare delivery service. There is a wide range of primary health care models which a healthcare facility can adopt. Some of these models include youth and women’s health services. According to this model, attaining health and wellbeing objectives is only possible if other aspects that contribute towards the achievement of these objectives are taken into considering. Some of these aspects relate to economic, environmental and social issues (Crinchton, 1997, p.89).
To deal with this possible situation, the city council of Marietta should increase the number of medical clinics in the city. One of the ways through which the council can achieve this is by leasing a building in which it will set up the clinic. This will aid in addressing future healthcare needs by eliminating congestion. To achieve this, a substantial amount of money should be allocated to fund the project. The various requirements of the projects should be evaluated so as to allocate the funds more effectively. For example, a certain amount should be set aside leasing the facility within which the medical clinic will be set up. The council should consider leasing as one of the most appropriate alternatives. This arises from the fact that putting up a building from scratch can be expensive to the council. The council’s budget for the year amounts to $ 100 million. This might not be enough to cover other capital expenditure and operating costs.
Leasing is one of the methods that the council can use to finance its capital expenditure. Leasing is a contract whereby the lessee is required to pay a periodic fee to the lessor for a given period such as 5 years (Helfert, 2001, p. 347). In a lease contract, a private party rents a certain facility to a public authority for a certain period. The public authority is responsible for all the capital expenditure.
The lease contract provides the investor with two provisions which include a capital lease or an operating lease (Commonwealth Secretariat, 2004, p.32). An operating lease entails using the specific leased asset for a predetermined period which is usually less than the asset’s physical life. The leased asset reverts back to the lessor after the lease term expires. In a capital lease arrangement, the asset is eventually transferred to the lessee. As a result, it is considered to be a long-term method of financing the acquisition of certain assets such as buildings. The lease obligation is similar to debt in that it is fixed. In addition, the payment of the lease is modeled in such a way that the lessor recovers the value of the asset (Helfert, 2001, p. 347). In most cases long-term lease contracts cover a long duration of time. This makes a lease become a part of the council’s financial structure. Because the city council will provide its services to the city residents for an indefinite period, the council should consider entering into a capital lease. To determine whether the lease is acceptable, the city council should conduct a Net Present Value analysis.
The city council should equip the facilities leased with all the necessary clinical equipment. The three categories of clinical equipment which should be available within the facility include surgical instruments, health accessories, and medical equipment (Patil, 2008, p.6). The surgical instruments include the various instruments that are used in the process of conducting a surgery. Examples of these instruments include scalpels, scissors, tissue forceps, hemostatic forceps, proctoscope, bunt and sharp curate, towel clip, swab holding forceps and moynihan’s forceps. On the other hand, the medical equipment should include diagnostic equipment and therapeutic equipment. In the process of acquiring the equipment, the city council should ensure that they meet the public health regulations. The city council should also equip its medical facility with office equipment such as computers, desks, chairs and tables.
Developing the city’s infrastructure
Water treatment and sewerage systems
In its capital budgeting, the city council should also consider investing a certain amount of money to improve the infrastructure within the city. The key priorities which the council should consider include the city’s water treatment and sewerage systems. This will enable the city council to be effective in catering to the residents’ healthcare considering the growth in its population. For example, investing in these capital projects will enable the city council to be effective in providing services such as efficient water systems to residential, commercial and institutional customers. In addition, the council will be able to meet its objective which entails ensuring the provision of water that meets the set quality standards. It will also be possible for the city council to ensure a constant supply of water by increasing the pressure in its water treatment plants. Investing in new technology within the council’s water treatment plant will ensure that water is available to all individuals within the city thus promoting the health of citizens.
Wastewater collection and treatment
The city council should also consider investing in wastewater collection and treatment. This will entail improving the system it uses to collect wastewater from institutions, residential houses and commercial businesses within the city. Considering the potential growth of the city with regard to population, the city council should improve the wastewater collection system. By doing this, the city council will be able to meet the legislative requirements such as the state and federal environmental regulations about water, wastewater, and drainage systems. To achieve this, the city council will be required to install additional pipes which will be used to collect wastewater from their source and channel it to the wastewater treatment facilities. Because there is a high probability of the city experiencing an increase in the volume of wastewater collected, the city council should also refurbish its wastewater treatment plant. By collecting and treating the wastewater, the city council will ensure that the resultant effluent does not cause chemical or biological harm to the environment. This should be ensured by meeting the standards set by the state with regard to disposal of effluents to the environment. In addition to the sewerage system, the city council should improve the drainage system installed to collect rainwater runoff around the city. This will minimize possible hazards which may arise from such a runoff such as loss of life and also floods which can pose a health risk to the city residents.
Garbage collection equipment and trucks
The city council should also consider investing some of the money in purchasing garbage equipment and trucks. By adding more trucks, the city council will be able to improve its effectiveness in solid was collection. Using the $100 million, the council should allocate approximately $ 10 million to purchase 2 more garbage collection trucks.
The trucks purchased by the council should meet the federal requirements. For example, they should be covered to ensure that solid waste does not spill over in the course of transportation to the point of disposal. In addition, being covered will ensure that the waste does not cause an odor that might inconvenience members of the public. This will enable the city council to be effective in its garbage collection and disposal thus promoting cleanliness within the city.
Paramedic utilities
One of the roles of the city council is to ensure that it responds to disasters such as fire. To achieve this, the city has a fire department that is well equipped with firefighting equipment and personnel. The city council should also consider increasing the number of its fire department staff to be effective in dealing with fire prevention and firer operations.
It is also important for the city council to consider incorporating other support services within its fire department. One of the most important support services which should be integrated into the fire department is the emergency medical services. The council can achieve this by integrating a paramedic program within the department. This arises from the fact that most of the calls that the council will receive are not only to respond to fire but also emergency medical services.
By integrating paramedics in its operation, the council will be able to serve its citizens more effectively. However, the council has to ensure that the paramedics integrated are well trained to handle diverse medical situations. The councils should invest a substantial amount of capital in purchasing paramedic equipment necessary to offer pre-hospital services to victims. The professional paramedics within the city council’s fire department should form the critical component of the departments’ response to assessment and treatment of the victims. To cut costs, the city council should outsource some of the paramedic services from private firms which have ventured into the paramedic business. The council should enter into a contract with well-established private firms which offer paramedic services. One of the roles of the private paramedics hired should be to offer ambulance services. When hiring private paramedic firms, the firm should determine whether it has the necessary facilities such as ambulances and qualified paramedics. This is because hiring private firms means that the city council is entrusting the lives of its citizens to third parties. However,
Operating requirements
To be effective, the city council will be required to allocate a certain amount in its budget to cater to the operation of the new clinic. There are various categories of operating costs which the city council will be required to consider. These categories include fixed and variable costs. For example, the clinic will require to be supplied with nonmedical and medical supplies from time to time. The medical supplies will be a vital component for the effective operation of the various units of the clinic. The cost of these supplies is subject to change due to other factors such as inflation. These supplies should be restocked every month.
For the new clinics set up to be effective, the city council must recruit more staff. Some of the staff to be hired include the chief technicians, technicians, clinic technicians, supervisors and clerical staff. This means that the city council will incur a substantial amount of money in its effort to cater for the labor. Labor cost is one of the recurrent costs which the city councils incur (Cleverley, Song & Cleverly, 2011).
The city council should not also rule out the element of risk. As a result, it is important for it to ensure itself against unforeseen circumstances. The insurance expense is expected to be semi-variable. In addition, the city council should also allocate some money to cater for professional fees. The table below illustrates a proposal of how the city council should allocate the $ 100 million in its current year in its effort to improve healthcare services.
Conclusion and recommendations
The city council of Marietta is committed to improving the health and wellbeing of the city residents. To achieve this, the council has formulated a policy which is aimed at improving its efficiency of operation through effective spending. Every financial year, the city council allocates a substantial amount of money to cater for its operation. However, the city is experiencing rapid growth and an increase in population. This presents a challenge to the city council about its efficiency in providing effective healthcare. This is because the available infrastructure may not have the capacity to cater to the rapid growth and population increase.
To deal with this challenge, the city council needs to consider allocating some of its funds in avenues that will enhance it to attain its healthcare objective in its annual budget. The two main budget items which the city council should take into account when allocating funds in its budget include capital requirements and operating requirements. Considering the changing needs of the city, the city council needs to improve its healthcare provision. This can only be achieved by establishing an additional medical clinic to avoid overcrowding in the existing medical centers. Considering the fact building a clinic from scratch is expensive considering the current economic situation and financial resource constraints. The city council needs to consider leasing a facility within which it will set up an additional medical clinic within the city. This will play a vital role in improving the city council’s effectiveness in providing healthcare services.
The city residents’ health will also be determined by the environment in which they live. Pollution within the city such as water pollution can lead to the residents’ health being affected. To prevent the occurrence of pollution due to the growth of the city, the city council should improve its wastewater and solid waste collection. One of the ways through which it can achieve this is by improving the wastewater collection and drainage infrastructure. Growth in the city’s population may lead to the city’s sewerage and drainage systems being unable to cater to the rise in the volume of stormwater and wastewater collected from residential, commercial, and institutions. To deal with this challenge, the city council should improve the system by adding more collection pipes.
The council should also consider improving its wastewater treatment plants. This will ensure that the wastewater released into the environment does not result in any biological and chemical harm. Improving its solid waste collection mechanisms is also vital. To achieve this, the city council should increase the number of its garbage collection trucks in addition to purchasing other garbage collection equipment. The city council should also integrate paramedic services within its firefighting department to improve its efficiency in providing medical services in the event of a disaster.
To ensure that the council’s effort to provide primary healthcare is effective, the city council should allocate a certain amount in its budget to cater to the operating costs. Some of these costs include the cost of labor, cost of medical supplies, insurance, and legal fee. Most of these costs are recurrent. However, the lack of these operating requirements means that the healthcare centers set by the council will stall.
In budgeting for its capital equipment, the city council should take into account capital budgeting techniques. One of the techniques which the council should consider is the net present value. This will enable the council to determine whether the capital equipment or facility to be purchased is acceptable.
Reference List
Commonwealth Secretariat. Commonwealth public administration reform 2004. Commonwealth Secretariat: London.
Cleverley, W.O., Song, P.H., & Cleverley, J.O. (2011). Essentials of health care finance (7th ed.) Sudbury, MA: Jones & Bartlett Learning, LLC.
Cleverly, W. & Cameron, A. (2007). Essentials of healthcare finance. Sudbury, Mass: Jones and Barlett Publishers.
Crinchton, A. (1997). Healthcare; a community concern? Development in the organization of Canadian health services. Calgary; University of Calgary Press. Ginzberg, E. & Ostow, M. (1999). Local health policy in action: the municipal health services program. Totowa, N.J: Rowman and Allanheld.
Helfert, E. (2001). Financial analysis; tools and techniques; a guide for managers. Boston: McGraw-Hill.
Morgrenroth, E. & Gerald, J. (2006). Ex-ante evaluation of the investment priorities for the national development plan 2007-2013. Dublin: ESRI.
Niles, N. (2011). Basics of the US healthcare system. Sudbury, M.A: Jones and Barlett.
Patil, D. (2008). Hospital and clinical pharmacy. Sydney: Nirali Prakashan.
Willis, E., Reynolds, L. & Keleher, H. (2009). Understanding the Australian healthcare system. Sydney: Churchill Livingstone.
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