Business Case for New Economic Opportunity

  Financial and hospital productivity risks 

Healthcare costs are constantly rising, putting the organization under pressure to meet the increasing financial demands. The healthcare management has the challenge of dealing with the rising financial needs while at the same time ensuring that the quality and productivity of the hospital is not compromised. The organization can also be exposed to the risk of dealing with regulatory standards and meeting legal and ethical obligations. Noncompliance with the regulatory standards and ethical issues can lead to disruption of the normal operations of the hospital, leading to poor quality service delivery and patients’ safety issues. These noncompliance issues can get a firm into problems with the legal authorities causing substantial fines and litigations. Hospital safety and patients satisfaction is another risk that a firm will have to deal with in a hospital setting. Given that healthcare facility operates on a 24/7 basis, the threats of theft, infant abductions and violence are likely to arise. The need to offer quality services to customers and build the reputation of the hospital is equally an issue of concern. Patients require quality and satisfactory service delivery. The hospital management has a challenge to meet these requirements. Increased quality means more resources has to be used subjecting the organization to more threats. 

The risks of meeting regulatory standards and legal obligations can be solved by carefully implementing all the required standards as stated in the law. Ethical and environmental issues such as pollution can be controlled by putting up appropriate mechanisms to manage wastes. These can be achieved by putting appropriate dumping points of the wastes which should be removed on a regular basis. The safety of the hospital can be enhanced by creating a 24 hour secure environment through employment of security team to protect the health facility. The patients’ satisfaction can be achieved through survey to get an understanding of the quality of services the patients require and make necessary improvements. 

Opportunities 

The organization can utilize the opportunities by providing quality treatment for the lifetime diseases to win the confidence of patients. Given that lifetime diseases are causing so many deaths, hiring specialist in these particular diseases will be a good opportunity to fill the gap that exists in treating such diseases. The organization can also utilize the cost reduction opportunity it has to improve the quality of its service delivery to patients. The creation of patients’ awareness by the collaborating partners is a marketing opportunity for the organization to gain and retain more customers by giving them the best services. 

Cost-Benefit Analysis 

There exist several benefits that arise from this initiative programs. The industry is not yet flooded with many firms yet the demand for the services is high. Such an opportunity will help generate more revenue. With the medical health care practitioner recommending patients to the local fitness facility and the physical facility trainees recommending patients to health facilities, there has been an increase in the supply thus meaning reduced costs ( Ruttan & Thirtle, 2014 ). This cost reduction and increased supply is a benefit to the firm. Through this initiative, there has been an increase in patients’ awareness making a majority of them to seek the healthcare services thus increase the demand which helps generate more revenue for the organization. It gives the organization the opportunity to reduce readmission costs which forms a more significant percentage of the charges. Lifetime diseases provide a more significant percentage of the readmission costs, and by collaborating, the organization can offer defensive mechanisms advice to the patients to reduce reoccurrence of the diseases. By working together, the organization is able to share resources with other participants thus minimizes on its use of the resources. Working together towards helping the community to fight lifetime diseases will create more awareness of the products and services of the organization thus increase the revenues. 

The various costs that will be incurred in this initiative include labor costs because a competent staff is needed to offer services to the patients. The organization will still incur readmission costs though at a reduced rate. Other costs will include electricity costs, transport costs and costs of materials. The estimated costs and revenues can be summarized as below for the next five years. 

Costs: labor $50400 

Readmission costs $44100 

Electricity $25200 

Transport $25200 

Materials $44100 

Total costs (5years) $189000 

Estimated revenue (5years) $50400 

According to Fama and French (2016), an economically viable project is one in which the future value of the present revenues is more than the future value of the present costs. 

Net profit/loss = total revenue-total costs 

The data above shows the total cost of the project for five years to be $189000. The total equivalent revenue generated is $50400. According to Fama and French (2016) , a profit is equal to total revenue minus total costs. 

Profit = revenue – costs 

Profits = ($50400-$189000) = $(138600) 

This project is not worth undertaking because, in the five year period, it yields a loss of $138600. This information is presented in the template in figure 1.1. in the appendix. 

Costs control 

The various costs that need to be controlled to gain economic benefits include labor costs, readmission costs, and the cost of the materials. These were the main areas where majority of the expenses are usually incurred. Minimizing costs will improve on the revenue generation and thus more profits. 

The cost of the materials can be controlled by selecting reliable suppliers who supply quality at an affordable price. Creating good relationship with the suppliers will lead to trust in business and reduced costs of materials. It will ensure that the organization continues to offer variety to its customers at a reduced price rate. Instead of building own facility, it can be economical to rent or lease and pay the leases fees in instalments. Operating within the government regulations will help avoid litigations and lawsuits that will further increase the overall costs of the program. The cost of labor can be managed by outsourcing specific services that could rather be expensive to hire an expert. The scenario can help control labor costs which seem high at the end of five years. With collaboration, readmission costs can be significantly reduced giving the organization a cost advantage over competitors. 

Other than the fact that it has no quantitative advantage, this business initiative has qualitative advantages. It will help the society in preventing the spread and the reoccurrence of lifetime diseases. The project thus has the qualitative but not quantitative benefits. 

References 

Arena, R., Guazzi, M., Lianov, L., Whitsel, L., Berra, K., Lavie, C. J., ... & Myers, J. (2015). Healthy lifestyle interventions to combat no communicable disease—a novel nonhierarchical connectivity model for key stakeholders: a policy statement from the American Heart Association, European Society of Cardiology, European Association for Cardiovascular Prevention and Rehabilitation, and American College of Preventive Medicine.  European heart journal ,  36 (31), 2097-2109. 

Eckel, R. H., Jakicic, J. M., Ard, J. D., De Jesus, J. M., Miller, N. H., Hubbard, V. S., ... & Nonas, C. A. (2014). 2013 AHA/ACC guideline on lifestyle management to reduce cardiovascular risk: a report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines.  Journal of the American College of Cardiology ,  63 (25 Part B), 2960-2984. 

Fama, E. F., & French, K. R. (2016). Commodity futures prices: Some evidence on forecast power, premiums, and the theory of storage. In  The World Scientific Handbook of Futures Markets  (pp. 79-102). 

Gershon, A. S., Warner, L., Cascagnette, P., Victor, J. C., & To, T. (2011). Lifetime risk of developing chronic obstructive pulmonary disease: a longitudinal population study.  The Lancet ,  378 (9795), 991-996. 

Ruttan, V., & Thirtle, C. (2014).  The role of demand and supply in the generation and diffusion of technical change (Vol. 21). Routledge.