Hospital the Facts The Community Term Paper
- Length: 8 pages
- Subject: Healthcare
- Type: Term Paper
- Paper: #69767787
Excerpt from Term Paper :
During this period, market share is normally held fixed as a core planning assumption, with the potential share gains modeled inside specific strategies after sometime in the process. The genesis of strategic business planning is to secure, and if possible enhance, the financial situation of the organization, facilitating it to continue its mission well into the coming years. Midvale must build a macro level financial model connected to its demand forecasts and based on "most likely" supposition for revenue and expense categories. Certain level of capital costs connected to infrastructure and essential equipment replacement shall have to be included in the fundamental model. Including a yardstick component at this stage will assist in the identification of opportunities for improvement and sensitivity analyses for development of assumption.
Since business planning is concentrated on future investments in clinical enterprise, it is important to delve deeper than the income statement to the balance sheet, cash now statement, debt capacity, and availability of capital needed for the planning horizon. Utilizing the help of outside rating agency metrics adds one more layer of reliability. Till the level possible, Midvale must even examine the financial performance of its clinical service lines. This analysis will underline possible operating problems and set up a basis for evaluating future investment potential. The total baseline financial model will assist the organization evaluate its anticipated future position against established performance metrics fixed by the board. (Bachrodt; Smyth, 2002) ii) Performing an Impact Analysis: - Conducting an Impact analysis comprising market testing a financial modeling will assist in ensuring that a strategy posses merit. This analysis might comprise finding out particular capital and resource needs and taking the experience of the people who have pursued identical strategies. A lot of Hospitals take their strategies believing into them in the absence of testing their financial reality of their strategic direction. In case of visionary strategies specifically that might need considerable investment, it is crucial to appreciate the associated extent of risk and reward. Organizations which apply this level of strategy assessment set up further measure of accountability for the success of the strategy. The impact analysis identifies that financial position is dynamic.
Strategies might be restricted by the present financial realities; however they can propel future financial realities. Bedrock and bridge strategies can build the future financial reality which supports the visionary strategy. Short-term initiatives with short-term financial performance targets have the potential to build the resources for long-term initiatives. A deep impact analysis gives insight from two viewpoints: feasibility and desirability. Feasibility refers to whether in the event the strategy is implemented will the organization is viable on an ongoing basis. Besides, there is also the question as to whether the plan will be viable or not. Does it depend on heroic debt issuance or reduction of costs? Desirability: Will the organization be better off compared to what is would have been under the present situation or other options. (Bachrodt; Smyth, 2002)
Dependent on the net present value and internal rate of return estimates, it is important to find out whether incremental cash flows generated by the chosen strategy is better compared to the cash flows produced by the options. The impact analysis entails building a complete set of financial projections - income statements, balance sheet and cash flow statements in case of present situation and also for the alternative strategy. The financial return linked to the incremental pre-debt cash flows generated by strategy over the baseline is gauged. At times a strategy might have a lower financial return compared to the present set up or other options. Nevertheless, the organization might continue to go with the strategy in case it is achievable and sustainable. The time span covered by the financial projections must be 10 years at the minimum, especially in case important capital expenditures are envisaged.
Even though uncertainties mount with a longer time horizon, a well developed financial projection that must be 10 years at the minimum, especially in case substantial capital expenditures are visualized. Even though fears increased with a greater time horizon, a properly developed financial projection which distinctly relates the underlying movers with financial performance gives a basis on which to gauge success and gives signs when the adjustments must be made to the strategic plan. The strategic plan and the supporting financial plan are considered to be live documents which need adjustments with the changing situation. A long-term financial plan which is linked to the strategic plan shall let Midvale to appreciate whether it is on target and the positions where there might be shortfall of being able to finance its longer term strategies. The financial plan must be refreshed as an element of strategic planning cycle. (Bachrodt; Smyth, 2002)
Detailed Implementation Strategy:
First of all, Midvale must undertake the challenge of to offer revenue earning services which persuade present as well as prospective consumers that the hospital facility is uniquely made to fulfill their requirements. It will be the need of the hour to differentiate the services offered by Midvale through product lines. This can be done through capital investment and marketing activities which create value for their brand of care. Strategic market planning is described as the process of weighing the potential of the hospital with the opportunities available in its area and subsequently finding out the manner in which to best allocate resources. It is pertinent to find out areas wherein it surpasses competitors and take benefit of those strengths. But the important point lies in choosing product lines which are able to contribute to the hospital totally instead of benefiting a single discipline or service. (Martin; Kazemek; Worthy, 1991)
The starting point will be to undertake a severe market and financial assessment of present and proposed product lines, facilitating the CFO of a hospital and other planners to take decisions on allocating resources planned to generate long-term success. Team members of strategic planning will be developing forecasts to find out in case a product line will practically support a hospital's mission and its strategic plan. One method to fuse strategic planning and financial planning is to find out the admission rate per 1,000 people by age cohort in the hospital primary service area. Through observing the present admission rate and projecting the decision in admission rate per 1,000, Midvale Hospital will be able to find out where the trend of admission are in future. Thereafter the hospital should observe at the various product lines to note in case they are rising or plummeting and examine the product line costing. This will assist Midvale find out which markets will generate the strongest financial influence. (Martin; Kazemek; Worthy, 1991)
Together with finding out target markets, Midvale's strategic planning team must look at the interests and strengths of its medical personnel. This is important because it is widely seen that hospitals plan revolving their own activities and future and lose the sight of physicians. Nevertheless, as the doctors are the gatekeepers who have the initial contact with the potential patients, it is extremely important to have knowledge regarding their historical admission rate, and their future admission rate. After Midvale has found out the product lines offering potential growth, it must delve into the demand for these services. Information regarding consumers, their health status, and usage rates can help in finding out opportunities and challenges. Information on patient discharges can be used, to project future use of services.
The patients who are more than 65 years of age receiving Medicare benefits coming under diagnosis related groups show a high correlation with a necessity for skilled nursing care. The sample size of patients those who are suitable for skilled nursing care are found out by extracting records from the database of patients by age, by doctors attending, by their period of stay, and by structure of the charge. This process of filtration finds out the total number of patients during the last year that needed skilled nursing care. Besides data is required to be gathered on patients who stay longer than normal hospital stays. A survey of social workers can be made to get more information regarding the reasons why patients exceeded normal discharge expectations. It might be such that the patients were not in acute care but rather needed help with daily routines. (Martin; Kazemek; Worthy, 1991)
Bachrodt Andrew K; Smyth Patrick J. (November, 2002) "Strategic Business Planning
Linking Strategy with Financial Reality: Linking long-term strategy with near-term financial and operational realities makes for a clearer march toward key objectives" Care Financial Management. Retrieved at http://www.findarticles.com/p/articles/mi_m3257/is_11_58/ai_n6359509. Accessed on 12 July, 2005
CAH Frequently Asked Questions" Retrieved at http://www.raconline.org/info_guides/hospitals/cahfaq.php#whatis. Accessed on 12 July, 2005
Freeman, Victoria; Walsh, Joan; Rudolf, Matthew; Slifkin, Rebecca. (3 March, 2005)
Intensive Care in Critical Access Hospitals" North Carolina Rural Health Research and Policy Analysis Center. Working Paper No. 81. Retrieved at http://www.shepscenter.unc.edu/research_programs/rural_program/WP81.pdf. Accessed on 12 July, 2005
Martin, Hutter G; Kazemek, Edward a; Worthy, Dwayne. (October, 1991) "Creating a…