Program Overview, Location and Services
This is the implementation plan for the proposed new Diabetic Treatment Center at St Anne Hospital. The proposed economic initiative is the expansion of the existing hospital wing to accommodate a new diabetes center to provide comprehensive diabetes care and education. The success of a health economic project can be measured by the realized ability of a healthcare facility to improve care delivery and in reducing the health quality over the long-term. By introducing a diabetes unit, the hospital will realize economic benefits including an expanded revenue stream from the diabetes wing, since more and more diabetic patients will b getting their radiotherapy services from the facility instead of going to other hospitals. It is expected that with time, the investment in the diabetes unit will enhance the hospital performance by increasing income volume and meeting the required quality of care that is much required by the patients (Kruk et al., 2018). The expansion of the diabetes unit will also be crucial in promoting diabetic care, significantly reducing the diabetic burden.
St. Anne Hospital, is a non-profit community clinical facility, with interest in developing a new wing for diabetes treatment center (DTC). The new diabetes wing will offer comprehensive care and education for the diabetic patients. The project has been proposed out of the neighborhood call for health needs assessment that indicated high demand for diabetes care in the hospital location community. As presented in the assessment, the population constitutes the Hispanics and the majority at 50%, followed by Caucasians at 25% and African Americans at 12%. More than half of the population has been projected to live under the poverty level. This is a business plan for developing the Diabetes Treatment Center for St. Anne’s Hospital.
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Operating Model
Through investing in the expansion of the diabetes wing, the clients will have an opportunity to enjoy the main benefits of care delivery, including safety, effectiveness, efficiency, and patient-centeredness that override disparities in care delivery. The medical clients will also have increased access to high-quality diabetes services in a much faster way for better preventive care and emergency support ( Kruk et al., 2018). The facility will be in a position to distribute health care resources to the patients that were initially felt left out because of untimely and comprehensive diabetes services. Additionally, the quality of care will improve since lengths of stay and delays towards on-site palliative care will be minimized. Again, patients will have the chance to access timely treatment that will help in lowering the admission rates for patients with emergency needs.
Market Profile
The stakeholders are a vital part of this initiative. To have better client experience and best clinical outcomes in a care setting that requires some level of urgency, shareholders could be significant in informing the implementation process of expansion of the diabetes wing in the hospital. The critical stakeholders in this economic initiative include the government, the hospital management, local authorities, the nurses, the physicians, the patients, and the staff members are internal and external stakeholders that need to bring their input to the debate for consideration and implementation. These stakeholders would be very critical for the success of the project implementation in terms of bringing-in their input at the initial stages of decision-making ( Armstrong, 2000 ).
The vision of the healthcare facility is to provide quality healthcare to all patients at an affordable rate. The institution's vision is based on four major pillars, including fast delivery, quality healthcare, healthcare effectiveness and patient-centered services. This plan will be delivered based on these core pillars. It will also be made open to the stakeholders that the diabetes wing will be expanded through the inclusion of different views from the stakeholders, respecting the regularities in place and based on the four pillars. The staff members are therefore expected to keep the hospital vision alive while implementing the new wing and the systems.
Patients are the primary stakeholders in any healthcare facility or expansion. If the facility could expand and provide better diabetes services to the local community in a faster and timely manner, then the hospital will be in a position to attract repeat clients and more patients from neighboring counties, and these promises to make the hospital profitable and be sustainable in healthcare delivery. The intention is, therefore, to engage the patients in every stage of expansion, and through community engagement to get feedback for different aspects of the initiative.
Demand Forecast
The concept of supply and demand is the key trigger that influences an economic initiative of any intended project. In the healthcare setting, the concept is crucial in identifying care gaps and acting upon determined gaps to enhance the quality of care delivery (Kruk et al., 2018). In this connection, the gathered economic and demographic data suggests the supply for the proposed initiative is the oncologists. In this case, the oncologists are the suppliers since they will be offering diabetes services including diabetic therapy and treatment. On the other hand, the demand will be the consumers of the diabetes services. The patients (consumers) need the diabetes unit to get treatment and improve their quality of life. However, there is a possibility that the cost of access to diabetes services rising, a factor that may hamper the affordability of such services. Again, the existing knowledge gap concerning diabetic treatment options is likely to impede future investments in diabetic therapy. Investing in the oncologist department is a crucial step towards saving up on future treatment costs and lowering the chances of insufficiently treated diabetic cases that has an immense economic impact in the long run.
Financial Analysis
The proposed budget reflects on the forecasted revenues and expenses that the expanded diabetes wing for the hospital will expect in the five years after it is entirely constructed by the end of November 2020. The budget covers human resources costs, expenses incurred and other costs involved in implementing the project for the period March to November 2020.
The budgeted expenditure for the entire project is $2,500,000. This investment will cover all the implementation costs from the initiation stage of the project to a close stage after a successful implementation. This is a significant investment for a small hospital facility, and the investments will be recovered in three and a half years ( Poon et al., 2004 ) . This means that this project is viable since the investments are recovered within the projected five years. Profits will be experienced from the middle of the fourth year onwards, which makes it a feasible project to take. However, since this is a community-oriented project, the investment will be experienced from the word go, as patients will be walking into the facility from December 2020 and get the diabetes services offered by the hospital.
Patient Revenue
It is projected that the facility will cater to about 10 patients’ visit every day, which is about 406 patients visits every month and about 4882 patients visits in a year. Assuming an average income of $450 per patient treatment, that translates to $2,196,900 per year. Not all this money goes back to pay the loan; a significant part will be for professional services, staff salary, equipment maintenance, facility maintenance, marketing and administrative costs and other relevant expenses. We project these profits not to increase much every year because the diabetic treatment facility has a regulated capacity to handle daily. The facility is expected to be fully booked every day from the beginning because of the high demand.
Staffing Needs
The main working staff to be paid salaries include one physician earning $200,000 salary per year, two nurse practitioners earning $85,000 per year, two nurses earning $60,000 per year, a dialysis technician taking home $45,000 every year and three assistant/receptionist earning $30,000 per year. Total salaries adding up to $420,000 annually. The salaries could be increased or the staff could change, but it is assumed that these will not be significant over the five years. The staff salaries, therefore, remain the same during the period.
| Staffing Expenses | |
| Per year | |
| Physicians | $ 200,000.00 |
| Nurse Practitioners | $ 85,000.00 |
| Nurse | $ 60,000.00 |
| Dialysis Technician | $ 45,000.00 |
| Assistant/Receptionist | $ 30,000.00 |
| Total | $ 420,000.00 |
Capital Requirement
The total expected capital expenditure for this project is $2.5 million. All of this cost will be funded through a bank loan. The loan will be repaid for three and a half years. Assuming that the total loan secured will be $2.6million, with an interest of 7% per year, the total interest would be 0.182million. The hospital would be expected to return $2.782 million in monthly loan repayment is expected to be about $2.782million in 42 months, translating to $66,238 per month or $794,856 per year.
Reimbursement Model
The healthcare providers will be paid based on their salary scales. Based on the national policy and market range, the doctors, nurses, therapists and other staff will be remunerated and benefits given based on the recurring economic conditions. This means that the hospital will use value based reimbursement models ( Day, Metcalfe, & Johnson, 1992 ). This model will help the hospital match its costs to the quality given by the respect staff members.
Pro Forma, Income
Pro Forma Income Statement |
|||||
|
Yr1 |
Yr2 |
Yr3 |
Yr4 |
Yr5 |
|
| Patient Visits |
4,882 |
5,175 |
5,485 |
5,815 |
6,163 |
| Revenue Per Visit |
$450 |
$450 |
$450 |
$450 |
$450 |
| Gross Revenue | |||||
| Patient Income |
$2,196,900 |
$2,328,714 |
$2,468,437 |
$2,616,543 |
$2,773,536 |
| Gross Revenue |
$2,196,900 |
$2,328,714 |
$2,468,437 |
$2,616,543 |
$2,773,536 |
| Subtraction from Revenue | |||||
| Contractual |
$659,070 |
$698,614 |
$740,531 |
$784,963 |
$832,061 |
| Total Deductions |
$659,070 |
$698,614 |
$740,531 |
$784,963 |
$832,061 |
| Net Patient Revenue |
$1,537,830 |
$1,630,100 |
$1,727,906 |
$1,831,580 |
$1,941,475 |
| Operating Expenses | |||||
| Salaries |
$420,000 |
$432,600 |
$445,578 |
$458,945 |
$472,714 |
| Bills and Utilities |
$208,750 |
$215,013 |
$221,463 |
$228,107 |
$234,950 |
| Housekeeping |
$20,000 |
$20,600 |
$21,218 |
$21,855 |
$22,510 |
| Maintenance |
$40,500 |
$41,715 |
$42,966 |
$44,255 |
$45,583 |
| Worker Benefits |
$105,000 |
$108,150 |
$111,395 |
$114,736 |
$118,178 |
| Phone |
$16,806 |
$17,310 |
$17,829 |
$18,364 |
$18,915 |
| Malpractice |
$50,000 |
$51,500 |
$53,045 |
$54,636 |
$56,275 |
| Depreciation |
$32,000 |
$32,960 |
$33,949 |
$34,967 |
$36,016 |
| Misc./Other |
$20,000 |
$20,600 |
$21,218 |
$21,855 |
$22,510 |
| Medical Supplies |
$65,767 |
$67,740 |
$69,772 |
$71,865 |
$74,021 |
| Non-Staffing Expenses |
$95,351 |
$98,212 |
$101,158 |
$104,193 |
$107,318 |
| Total Operating Expenses |
$1,074,174 |
$1,106,399 |
$1,139,591 |
$1,173,779 |
$1,208,992 |
| Excess of Rev |
$463,656 |
$523,701 |
$588,315 |
$657,801 |
$732,483 |
| Cummulative Income |
$463,656 |
$523,701 |
$588,315 |
$657,801 |
$732,483 |
| Net Cash from Excess Rev |
$495,656 |
$556,661 |
$622,263 |
$692,768 |
$768,499 |
| Cummulative Income Net Cash |
$495,656 |
$556,661 |
$622,263 |
$692,768 |
$768,499 |
Operating Expenses
Table: Operating Expenses
|
Operating Costs |
||
| Per year | Per Month | |
| Bills and Utilities | $ 208,750.00 | $ 17,395.83 |
| Housekeeping | $ 20,000.00 | $ 1,666.67 |
| Malpractice | $ 50,000.00 | $ 4,166.67 |
| Phone | $ 16,806.00 | $ 1,400.50 |
| Depreciation | $ 32,000.00 | $ 2,666.67 |
| Maintenance | $ 40,500.00 | $ 3,375.00 |
| Misc/ Other | $ 20,000.00 | $ 1,666.67 |
|
Supplies |
||
| Per year | Per Month | |
| Medical Supply Costs | $ 65,767.00 | $ 5,480.58 |
| Other Non-Personnel Costs | $ 95,351.00 | $ 7,945.92 |
Total Expenses
Table: Total Expenses
|
Total Costs |
|
| Per year | |
| Depreciation | $ 32,000.00 |
| Maintenance | $ 40,500.00 |
| Malpractice | $ 50,000.00 |
| Phone | $ 16,806.00 |
| Housekeeping | $ 20,000.00 |
| Bills and Utilities | $ 208,750.00 |
| Misc/ Other | $ 20,000.00 |
| Dialysis Technician | $ 45,000.00 |
| Nurse Practitioners | $ 85,000.00 |
| Nurse | $ 60,000.00 |
| Assistant/Receptionist | $ 30,000.00 |
| Physicians | $ 200,000.00 |
| TOTAL COST | $ 576,056.00 |
Net Cash Flow
Table: Monthly Cash Flow Projections
|
ST. ANNE HOSPITAL |
|||||||||||||
Cash Flow Projections |
|||||||||||||
|
Month-1 |
Month-2 |
Month-3 |
Month-4 |
Month-5 |
Month-6 |
Month-7 |
Month-8 |
Month-9 |
Month-10 |
Month-11 |
Month-12 |
Year 1 Total |
|
| Opening Cash Balance |
$0 |
($8,622,437) |
($8,523,705) |
($8,415,310) |
($8,296,670) |
($8,167,172) |
($8,229,510) |
($8,291,848) |
($8,354,186) |
($8,416,524) |
($8,478,862) |
($8,541,200) |
$0 |
| CASH IN | |||||||||||||
| Cash From Sales |
$183,075 |
$194,060 |
$205,703 |
$218,045 |
$231,128 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$1,032,011 |
| Other income |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
| TOTAL CASH IN |
$183,075 |
$194,060 |
$205,703 |
$218,045 |
$231,128 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$1,032,011 |
| CASH OUT | |||||||||||||
| Cost of Sale (COS) |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
| Staff Expenses |
$30,000 |
$30,000 |
$30,000 |
$30,000 |
$30,000 |
$30,000 |
$30,000 |
$30,000 |
$30,000 |
$30,000 |
$30,000 |
$30,000 |
$360,000 |
| Salaries: Physicians |
$16,667 |
$16,667 |
$16,667 |
$16,667 |
$16,667 |
$16,667 |
$16,667 |
$16,667 |
$16,667 |
$16,667 |
$16,667 |
$16,667 |
$200,000 |
| Salaries: Nurse Practitioners |
$7,083 |
$7,083 |
$7,083 |
$7,083 |
$7,083 |
$7,083 |
$7,083 |
$7,083 |
$7,083 |
$7,083 |
$7,083 |
$7,083 |
$85,000 |
| Salaries: Dialysis Technician |
$3,750 |
$3,750 |
$3,750 |
$3,750 |
$3,750 |
$3,750 |
$3,750 |
$3,750 |
$3,750 |
$3,750 |
$3,750 |
$3,750 |
$45,000 |
| Salaries:Assistant Receptionist |
$2,500 |
$2,500 |
$2,500 |
$2,500 |
$2,500 |
$2,500 |
$2,500 |
$2,500 |
$2,500 |
$2,500 |
$2,500 |
$2,500 |
$30,000 |
| Equipment |
$2,500 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$2,500 |
| Equipment |
$2,500 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$2,500 |
| Building |
$8,709,551 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$8,709,551 |
| Constrution Cost |
$3,246,605 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$3,246,605 |
| Project Cost |
$5,462,946 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$5,462,946 |
| Operating Costs |
$32,338 |
$32,338 |
$32,338 |
$32,338 |
$32,338 |
$32,338 |
$32,338 |
$32,338 |
$32,338 |
$32,338 |
$32,338 |
$32,338 |
$388,056 |
| Bills and Utilities |
$17,396 |
$17,396 |
$17,396 |
$17,396 |
$17,396 |
$17,396 |
$17,396 |
$17,396 |
$17,396 |
$17,396 |
$17,396 |
$17,396 |
$208,750 |
| Maintenance |
$3,375 |
$3,375 |
$3,375 |
$3,375 |
$3,375 |
$3,375 |
$3,375 |
$3,375 |
$3,375 |
$3,375 |
$3,375 |
$3,375 |
$40,500 |
| Housekeeping |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$20,000 |
| Phone |
$1,401 |
$1,401 |
$1,401 |
$1,401 |
$1,401 |
$1,401 |
$1,401 |
$1,401 |
$1,401 |
$1,401 |
$1,401 |
$1,401 |
$16,806 |
| Depreciation |
$2,667 |
$2,667 |
$2,667 |
$2,667 |
$2,667 |
$2,667 |
$2,667 |
$2,667 |
$2,667 |
$2,667 |
$2,667 |
$2,667 |
$32,000 |
| Malpractice |
$4,167 |
$4,167 |
$4,167 |
$4,167 |
$4,167 |
$4,167 |
$4,167 |
$4,167 |
$4,167 |
$4,167 |
$4,167 |
$4,167 |
$50,000 |
| Misc/Other |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$1,667 |
$20,000 |
| Taxes |
$31,123 |
$32,990 |
$34,970 |
$37,068 |
$39,292 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$175,442 |
| Sales Tax (17%) |
$31,123 |
$32,990 |
$34,970 |
$37,068 |
$39,292 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$175,442 |
| TOTAL CASH DISBURSEMENT |
$8,805,512 |
$95,328 |
$97,308 |
$99,406 |
$101,630 |
$62,338 |
$62,338 |
$62,338 |
$62,338 |
$62,338 |
$62,338 |
$62,338 |
$9,635,549 |
| Net Cash |
($8,622,437) |
$98,731 |
$108,396 |
$118,640 |
$129,498 |
($62,338) |
($62,338) |
($62,338) |
($62,338) |
($62,338) |
($62,338) |
($62,338) |
($8,603,538) |
| Closing Cash Balance (Cummulative) |
($8,622,437) |
($8,523,705) |
($8,415,310) |
($8,296,670) |
($8,167,172) |
($8,229,510) |
($8,291,848) |
($8,354,186) |
($8,416,524) |
($8,478,862) |
($8,541,200) |
($8,603,538) |
($8,603,538) |
References
Armstrong, D. L. (2000). A community diabetes education and gardening project to improve diabetes care in a Northwest American Indian tribe. The Diabetes Educator , 26 (1), 113-120.
Day, J. L., Metcalfe, J., & Johnson, P. (1992). Benefits provided by an integrated education and clinical diabetes centre: a follow ‐ up study. Diabetic medicine , 9 (9), 855-859.
Kruk, M. E., Gage, A. D., Arsenault, C., Jordan, K., Leslie, H. H., Roder-DeWan, S., ... &English, M. (2018). High-quality health systems in the Sustainable Development Goals era: time for a revolution. The Lancet Global Health , 6 (11), e1196-e1252.
Poon, E. G., Blumenthal, D., Jaggi, T., Honour, M. M., Bates, D. W., & Kaushal, R. (2004). Overcoming barriers to adopting and implementing computerized physician order entry systems in US hospitals. Health Affairs , 23 (4), 184-190.
