Justification of Strategic Plan for a Public Hospital
Table of Contents
According to the research, we are investigating a public hospital in Asia continent to explain Justification of Strategic Plan for a Public Hospital. We have the data of 2012 as Hospital capacity, revenue table, expenses table (separated as fixed and variable expenses) and finally net income calculation tables. (Note: related finance document is at the bottom of the article. Check attachments!)
What we are trying to do is a strategic plan and distinguish of costs and revenues to see the balance between our expenses.
Justification of Strategic Plan for a Public Hospital: Evaluating Expenses
According to the given tables (3, 3.1, 3.2) we have our expenses of hospital under the titles of Expenses, Fixed and Variable Expenses. The hospital’s 2012 data says that its total expenses are 17.316.021,86₺.
%60.33 of the total expenses are fixed expenses, and the other %39.66 is variable expenses. Fixed expenses are a major part of the total number and its generally hard to change fixed cost (or expenses) without a complete change.
In our position, salaries and bills make up most of the expenses. So, our question should be this, can we make any change in fixed cost to increase profit?
Justification of Strategic Plan for a Public Hospital: Why Strategic Plan is needed?
A strategic plan is a continuous timeline which leads organizational actions and attitudes. (Gapenski, 1999) and the only strategic goal of an organization is to create a customer, claimed by an important strategist. (J., 2011)
By looking at the past year’s given data, we have information about revenues and expenses and it’s on our hands to increase revenue and decrease expenses at the same time. If we make no change and nothing bad happens, we can keep the number of total incomes still for the next year. The number of net incomes for the hospital in 2012 is 997.748,14₺. We can imply that fixed expenses will increase in the next year by raise, inflation etc.
So, our revenues should also increase as much as the increase in expenses to not to decrease total income. We can either reflect it to the customers or we make changes in expenses.
Justification of Strategic Plan for a Public Hospital: Making change in fixed expenses
In our particular example, we have salaries, which is increasing every year depending on employee’s situation(experience). Also rent and bills are completely fixed and can’t change.
What we can say is Court expenses and Medical wastes could be variable expense at some points but these two parts are just %1.57 of the total fixed cost and it can be really dangerous to forcefully decrease them.
Especially any decrease in court expenses can cause so much bigger damage to the hospital(compensation). So, as the name suggests, it’s best for everyone to try not to decrease fixed cost if there is no big(complete) change.
Justification of Strategic Plan for a Public Hospital: Making change in variable expenses
As the name suggests, variable costs vary different parameters according to a period of time. Variable costs are also directly related with the quality of a facility. Using higher quality materials or working with more experienced people (as wage, salaries) also means giving better service and higher quality of work.
In such big facilities, even small saves make great points. So, we can start analyzing the staff. If any redundancy of employee number in any department exist, we must intervene. Also purchasing manager must be checked frequently. A major role of them is to set firm’s goals and the policies to achieve them. (Hampton, 2011)
They have a great role in finance world and also Industrial engineers are qualified people for ensuring the continuity of a process or creating one if necessary. Working with them can increase the quality of work and reduce cost at the same time by making the right decision which based on mathematical tools, stock control, quality control…(etc.) So, the main key is monitoring employees frequently.
You can find more writing like this on our blog. Do not hesitate to check it!
References
Gapenski, L. C. (1999). Healthcare Finance. AUPHA/HAP.
Hampton, J. (2011). Operating Budgets. In the AMA Handbook of Financial Risk Management (pp. 53-84). New York; Atlanta; Brussels; Chicago; Mexico City; San Francisco; Shanghai; Tokyo; Toronto; Washington, D.C.: AMACOM Division of American Management Association International. Retrieved March 1, 2020, from www.jstor.org/stable/j.ctt1d2dq7s.9
J., H. (2011). Operating Budgets. New York: AMACOM Division of American Management Association International.
ALSO YOU MUST CHECK FINANCE.xlsx file!!
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