First of all, we need to study the problems thoroughly and efficiently. Then we will need to isolate each of the problems that were discussed in the meeting. Once we have figured out what the problems are, we will need to analyze each problem and evaluate alternatives for each problem.
After that is done we will make recommendations with corrective actions prepared for the CEO. In this case study I have identified financial problem and I will be evaluating it. Then to solve this issue I need to break down the problem into its different elements.
When I have identified the problem, then I have to define the goals. The next step to solving our problem will be to frame alternatives. After we have framed our possible solutions we have to evaluate the impacts of our alternative solutions. Then we have to analyze the possible solutions, and after that we have to make a decision on which solution has the most positive effect on hospital. Problem: Finances For this problem I am going to follow such problem solving technique as brainstorming. First I have to identify the problem. This one is obvious.
We are having budget problems.We are experiencing rising costs per patient, and we are also experiencing a decrease in patients in our hospital. Now that we have identified our problem I will go through the critical decision making process to solve this problem. The next step is to define the goals of our problem. The goals that we need to accomplish to remedy this problem are on two different fronts. We need to reduce our fixed costs by 15% just to break even from a budget standpoint. If we do not decrease our fixed costs we cannot function as a leader in the medical profession. We also need to increase patient count.
We need to increase patient days for the year. More patients and more patient days equal more revenue for the hospital. Now that we have identified our goals for our second problem we need to evaluate the effects of our problem. Effects of the Problem The effects of our problem can be devastating if no action is taken quickly.
We still need to make sound factual decisions, but we need to act upon them in a timely manner if we are to nip the problem in the bud so to speak. If we do not increase our patients and patient days we will not be able to stay operating as a financially viable business.We are a non-profit organization, but we still have to bring in a certain amount of revenue to keep the hospital operational and the doors open for business. If we cannot increase our revenue we may have to cut doctors salaries. We may even have to reduce our workforce. Reducing the amount of doctors and nurses in our staff would cause a downward spiral of decreasing revenue.
The fewer doctors we have the less patients we can treat, which translates into less revenue for the hospital. Another possible effect of the problem could be the patient care.If we have to cut back on staff then the patients do not have a wide variety of experienced doctors that they need to make them well.
Next we are going to briefly identify causes of our problem. Following causes are apparent. Our cost per patient is rising. We are experiencing a decline in patients, which translates to a decrease in patient days.
The third cause of our problem is our fixed costs. We have a fixed cost of 28%. This means that we have to make a profit of at least 28% just to break even on every patient that we treat at our hospital. The next section is to frame possible alternatives to solve our problem.Alternatives I have intelligently decided to look into four possible solutions to our problem. As our CEO stated as a possible solution to our problem (solution #1) we may have to reduce fixed costs by 15% just to break even. Another possible solution (solution #2) is to increase our patient intake, which will increase our patient days. A third possible solution (solution #3) is to proportionally increase the costs of our service to the patient.
A fourth and final possible solution (solution #4) I have brainstormed is a combination of two other possible solutions.I think that we could reduce our fixed costs and also increase our cost of service which is passed on to the patient and the insurance companies. Now I have to evaluate all of the impacts of the alternatives I have just described. I have to look at all of the possible outcomes, good or bad of each alternative. Possible Impacts of Alternatives Solution #1 (reduce fixed costs by 15%) ? Reducing fixed costs may reduce the quality of patient care by cutting corners to save money.
? Fixed costs also include doctors and nurses salaries. We may have to lower salaries to reduce fixed costs.? People may feel that they are not getting paid what they are worth and look for another hospital to work for. Solution #2 (increase patient intake) ? Increasing patients is something we have no control over.
We do not control who gets sick or who is healthy. We can advertise how we do business in the health care industry to help potential patients decide to come to our hospital instead of other hospitals. Solution #3 (increase costs to patients and insurance companies) ? If we increase the patient care costs we can make more money and not have to compromise our fixed costs.? We will be able to negotiate increases with the insurance companies so that the increases are accepted.
? Increases may scare away potential patients. ? The insurance companies may not pay out on the proposed increases, leaving us with no increase in revenue. Solution #4 (combination of reduce fixed costs and increase costs to insurance and patients) ? We can slightly increase our costs for service and make up the rest in a slight cut in fixed costs. ? Patients may still be scared away by increase in costs to the patient.? Insurance companies may not indorse increases.
? Increases should be minimal enough that the insurance companies will agree to the now amounts for service. Now that I have analyzed all of the possible solutions, I have to make a decision on which solution has the most positive effect for our hospital. I feel that solution #4 has the greatest change of success and will handle our budgeting crisis. If we can increase costs to the patient/insurance companies and then decrease our fixed costs we will be able to keep providing our first class care to all of our patients.
I now have to explain my rationales for my proposed solution. The board will want to hear all of the facts on how I came to this decision and I will also have to back up my decision with hard numbers. Benefits of this solution: ? We can increase our costs to the insurance companies and patients; this will increase our revenue for the hospital.
? We can reduce our fixed costs to lower our overhead and reduce the amount of money we are losing. ? We can adjust the amount (percentage) we have to cut fixed costs based on how much we increase our costs to the patients. ConclusionFaith Community Hospital does have its share of internal and external problems. Each problem is not insurmountable though, and with a good plan of action it will be able to increase it’s revenue and narrow its range of responsibility. The organization must be willing to make short-term concessions and enforce processes that are new or existing. The hospital has stated that it must increase the number of new patients or narrow their range of services in order to avoid having to cut fixed costs and by using the solutions that were provided it is possible to do this.In addition, by identifying financial problems and factors caused them, hospital can how they can control what thy need to increase patient care costs and cut operating costs.
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