Scenario:
You are a junior analyst at a 500-bed nonprofit hospital in a competitive metropolitan market. You have been asked by the CFO to work on the financial operating plan for the upcoming fiscal year. The finance department has stated that the hospital’s anticipated revenue is $60,000,000, with a 6% operating margin. The hospital administration is only allowing you to recommend up to a maximum of two projects to the CFO.
You have been asked to consider making a proposal for the following service line requests:
A new EMR system, 10-year payback with $1,000,000 outlay. The system will update current the platform to meet new regulations and, according to the vendor, provide better clinical outcomes.
Overhaul of the cardiovascular lab, rooms 2 and 3. Costs of $900,000 a room are estimated. The updates will generate a 3% return above what the hospital has historically seen due to advances in operational efficiencies.
New parking garage with an estimated cost of $3,600,000 (can be amortized over 5 years). The garage will add an additional 125 covered parking spots on the campus.
Purchase a 50-physician practice at a cost of $2,800,000. The group is also considering a similar offer at a competing hospital. The practice presently has a strong utilization in your facility.
Proposal:
In a 750-1,000 word proposal, answer the following questions:
Name and describe three components of the health care finance system that are present in the assignment.
Describe how the components you selected interact with one another and how this interaction informs your decision-making process.
Explain the steps and information you would need to make your recommendations.
Describe which two projects you would recommend and provide rationale.
Explain why you would not recommend the other two projects and provide rationale.
What if this hospital was a for-profit system, would your answer change? Why or why not?
Cite a minimum of three references to support your rationale.
Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.
This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.
You are required to submit this assignment to LopesWrite. Please refer to the directions in the Student Success Center.
This assignment assesses the following programmatic competencies:
MPA: 4.3: Analyze how components of the health care finance system interact with each other.
HCA: 3.6: Develop and apply skills necessary to manage finances, evaluate financial performance, and develop financial plans at the departmental/organization level.
MBA: 5.1: Develop financial plans to support the viability of health care organizations.
ANSWER
Health Financing System
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Write My Essay For MeHealth financing system plays a critical role in achieving universal coverage and is concerned with the raising funds to finance various projects. A sound healthcare program system should raise adequate income to ensure effective service delivery. The report provides a proposal for financing system for a 500-bed nonprofit hospital operating in a competitive metropolitan market. It outlines the financial operating plan for the hospital for the upcoming fiscal year and provides a recommendation for two projects that can help the hospital enhance its patient care.
Components of the Health Care Finance System
An effective health financing system has various components that support its operation. In order to implement an effective hospital financing system, it is crucial to identify the key competencies that ensure it is well functioning (McIntyre, Kutzin & World Health Organization, 2016). In essence, the financing strategy responds in a balanced manner to the expectations and needs of the population. The critical components include raising funds for health projects, reduction of the financial barriers, and using or allocating income in a manner that promotes equity and efficiency. The three elements are typically interrelated in various ways. Arguably, the development of the identified three critical areas is essential in determining whether health care services exist and accessible to all people. It also proves in assessing the affordability of the health services to people.
The Interaction of the Components
The interaction between the three components of the health care system is critical in determining the effectiveness of equity and efficiency of the financing system of hospitals. The relations between these elements can help the organization to achieve its primary aims and objectives in the business environment. Through raising funds, a health organization can receive revenues it needs to improve its service delivery through investment in various projects. Also, the revenues collected from multiple health care stakeholders should be allocated in a manner that promotes equity and fairness. The link between these factors of the healthcare system can be achieved through the raising of funds and allocating in various programs for improvement. The elements of a health financing system can be used to make informed decisions on how to improve its competitive edge. In essence, the management can use the information regarding the critical components of the financial system to determine the project for investment.
The Steps and Information needed to make the Recommendations
In the identification of an appropriate recommendation for the health financing system, it is essential to follow proper steps to ensure that it successfully achieve its established objectives. One of the steps is to assess the financial performance of health organization. The assessment of the performance of the hospital can give valuable information for budgeting. It can help the management determine the areas that need improvement (Uzochukwu et al., 2015). Besides, it can help the management determine the funds that it needs to finance its operation and the areas where it should target for investment. The next step is to assess the needs of the hospital. The management should identify the mission of the hospital and the appropriate strategies that it can use to accomplish its purpose. The assessment of the organizations business environment is another crucial step that should be considered when developing an appropriate financial plan for the healthcare organization (Appleford & RamaRao, 2019). This includes examining the level of competition in the region where the hospital operates. Additionally….
The Recommended Projects
For the hospital to enhance its performance, it must develop appropriate financing system to help it meets its desired objectives. One of the recommended health financing systems is the implementation of the EMR system. The EMR system is associated with various benefits that include increasing the efficiency and effectiveness management of the hospital. This can contribute to the reduction of the operating costs and improving its profitability. Although the project has a ten-year payback period with …
The other recommendation of the hospital is to overhaul the cardiovascular lab, rooms 2 and 3 at the budgeted cost of $ 900, 000 dollars. The project can increase the capacity of the hospital to handle patients, and this means that its revenue will increase with its ability to accommodate additional patients. The updates of the hospital will also generate additional ….
Reasons for Not Recommending the Other Two Projects
The other projects that include the construction of the new parking garage and to purchase 50 physician practices are not appropriate for the hospital. The two projects do not contribute to the improved performance of the healthcare …
Recommendation If the Hospital Was a For-Profit System
If the hospital was for- profit system, the financing choices would remain the same since they are essential in improving the service delivery at the hospital. This implies that there will be no changes in the recommended…
References
Appleford, G., & RamaRao, S. (2019). Health financing and family planning in the context of universal health care: Connecting the discourse in Kenya.
McIntyre, D., Kutzin, J., & World Health Organization. (2016). Health financing country diagnostic: A foundation for national strategy development (No. WHO/HIS/HGF/HFDiagnostics/16.1). World Health Organization.
Uzochukwu, B. S. C., Ughasoro, M. D., Etiaba, E., Okwuosa, C., Envuladu, E., & Onwujekwe, O. E. (2015). Health care financing in Nigeria: Implications for achieving universal health coverage. Nigerian Journal of Clinical Practice, 18(4), 437-444.
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