The first milestone for the project is the creation of a facility for the paper. This part of the milestone will look at the type of a facility being created; the service offered, the expectations of the facility in terms of the profitability and subsequently the financial position of the facility as a way of determining its success in the future in the healthcare delivery industry. The paper will be an opening for the milestone project. Before delving at creating of a facility, the paper will first cover the purpose or uses of budget vary for management according to large for-profit hospital and state-run hospitals as well as the use of activity-based costing (ABC) model.
Large For-Profit Hospitals vs. State-Run Hospitals
The large for-profit hospital is healthcare organizations that operate for profit and are mostly owned by private bodies. Large for-profit healthcare facilities provide both the acute and long term service to the patients, and the facilities require for such healthcare organizations require a huge amount of investments. This is because the hospitals are designed to accommodate a lot of patients and accommodate a variety of specialization. In order to ensure the facility run efficiently, it requires huge maintenances. The profits generated from running the facility goes to the shareholders. The shareholders are responsible for the improvement of the healthcare facility as well as the medical needs at the hospital.
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On the other hand, state-run hospitals are healthcare organizations usually funded by states and charitable organizations. Apart from providing care to patients, the state-run hospital also provides internship opportunities to medical students, where the students are taught how the facilities in the healthcare organization are operated as well as educated about medical and healthcare treatments. Since students take part in the provision of healthcare services, the cost required for the staff as well as the healthcare profession in state-run hospital can be minimized. However, the size of the state-run hospital is dependent on the healthcare needs of the community in a certain region.
Activity-Based Costing (ABC) Model vs. Traditional Costing Approaches
Organizations use different accounting systems to track the cost of their activities. However, the tradition costing approaches and the ABC model is the accounting systems that are used most often (Woodruff, 2019). These two methods are used for allocating indirect (overhead) costs to products. Both the traditional approach method and the ABC model can be used to estimate indirect costs related to a firm’s activities and then assign. The models then assign these costs to products based on the cost-driver rate. However, there are fundamental differences between these two accounting systems. Traditional costing is easy to use and inexpensive to implement (Wilkinson, 2013). It is also less accurate than ABC, and it normally utilizes the arbitrary average rate to assign overhead costs to products (Wilkinson, 2013). On the other hand, the ABC model cost more to use but gives greater accuracy compared to traditional costing.
One of the advantages of traditional costing is that they give accurate cost figures when the production volume is large (Woodruff, 2019). Besides, the traditional cost method is easy to implement, and thus, the healthcare organization will find difficulties in its implementation. However, it does not give managers an accurate picture of products costs. In the healthcare industry, this method can be used in facilities that offer a few different services. The ABC model was established to solve the issues of inaccuracy that arises from the traditional costing approach. The method is best suited to organizations with high overhead costs (Woodruff, 2019). The methods can be used to identify areas where expenses are being wasted. However, the method is costly to implement.
Name and Type of the Facility
The name of the facility is Pentat Elderly Home located in Livingston town in Sumter County, Alabama. The elderly facility specializes for the provision of elderly care services to the elderly not only from the city of Livingstone but also other towns within Sumter County. The facility operates as a not-for-profit facility, and therefore, it is driven by the desire to provide services to the elderly population and not making profits.
The Mission for the facility is “Giving back to the elderly through quality services,” and the Vision is “Being a leading player for the provision of elderly care.”
Background/ History of the Facility
Despite the success rate of the facility in terms of its services and patient satisfaction, the facility has only existed for three years. It was founded way back in 2016 April. The founders of the facility are siblings Mr. Bryson and Miss. Violate who struggled to get the right place to take their elderly parents in terms of the care facilities that were available. With both of them having busy schedules, there was a need to see through which they could take care of their parents. The three different elderly care facilities that they tried never worked for them because of poor quality services and the high cost of the services. The last option was for them to settle for a home nurse, which was still not an option they liked. The struggles that they faced prompted them to create such a facility, but it was still very difficult for them to do that because of financial limitations. They eventually met Mr. and Mrs. Sheldon who were both retired nurses and wanted to create something that would make them progress with providing nursing care to their patients because it was something they had done for their entire professional life.
The partnership yielded Pentat Elderly Home which started on a rented facility at the suburbs of Livingston town where Mr. and Mrs. Sheldon played as the only caregivers in the home. The home started with a capacity of just four beds, and the patients were required to pay only for the cost of services and daily needs of the patients’ and also buy the special equipment that would be needed. On the other hand, Mr. Bryson and Miss. Violate worked as strategists for the home looking for nursing volunteers that would work in the facility and also donor funding to expand the capacity of the home in terms of the facilities, equipment, trained staff mainly nurses and the size of the facility. By the start of 2016, the facility had managed to get donors and partnered with other healthcare facilities around the country to expand its services.
At the beginning of 2019, the facility had shifted to a bigger location which a two-floor is building having the capacity of 20 beds for the elderly and also having all the needed facilities and equipment necessary for the provision of elderly care. The facility also has a total of five nurses who work there permanently and are paid wages and another five volunteering nurses who are paid a stipend.
Description of the Services offered
Pentat Elderly Home operates based on two services, which are inpatient care and homecare. The facility allows for the provision of elderly care within the home where 24-hour services will be provided to the patients. There are nurses always on rotation, and therefore, patients receiving care within the facility are provided with the needed care. On the other hand, the facility also offers home care services for the elderly but only for patients located within the town of Livingston. These services were initiated in 2018 when the facility managed to get a car from one of the donors. Three nurses provide daily visits to the patients where each patent is visited twice every week unless there is an emergency.
Being a not for profit organization, the payment of the services offered are mainly designed to meet the cost of operations and care offered to the patient with no desire for a profit. The operating as a not-for-profit has made it difficult for the facility to have qualified physicians as part of the staff for providing treatment and recommending medication for the patients and that is why in case of emergencies, the patients are usually taken to a nearby healthcare facility, and this has been a leading drawback to the facility.
Financial Situation of Pentat Elderly Home
Despite the success story of the facility, the financial position of the facility has not been stable because it mainly depends on donors and personal contribution from the founders. The inability to have sufficient funding has made the facility to lack a proper marketing strategy aimed towards making the facility known to many people. As a result, therefore, three beds are not occupied despite the number of needy elderly population. In addition to this, the financial hurdles the home faces has been the leading reason that it cannot operate as a complete care facility for the elderly because of the facilities for treatment and diagnosing diseases are expensive including a laboratory and other related equipment and a trained doctor.
The operations of the facility have ended up stagnating for weeks because of the lack of full-time nurses needed for the provision of continued care. This is because there are instances where the operational cost becomes more than the income received, leading to some of the expenses, such as wages being difficult to meet. As a result, therefore, the permanent nurses end up being subjected to go for leaves living the facility with no reliable caregiver. Currently, the facility operates on a deficit of $25,000, which needed to be met by the end of the second quarter of the 2019/20 financial year.
Conclusion
Despite the financial challenges, Pentat Elderly Home has continued to be successful in terms of the quality of services offered. The facility intends to increase its presence in terms of branding and also increase its financial strengths through partnering with other donors in the future. The goal is to ensure that the facility will be able to become not just a home but treatment care for the elderly that offers hospice services too.
References
Wilkinson, J. (2013). Activity-base costing vs. traditional costing. [Online]. Retrieved from: https://strategiccfo.com/activity-based-costing-abc-vs-traditional-costing/ . Accessed 17 th June 2019.
Woodruff, J. (2019). Traditional costing vs. Activity-base costing. [Online]. Retrieved from: https://smallbusiness.chron.com/traditional-costing-vs-activitybased-costing-33724.html . Accessed 17 th June 2019.
