Introduction
Delivery of quality care within healthcare institutions has become challenging because of factors such as Provider Payment Reforms, Governmental Regulations, and the increasing cost of technology. In addition to the above healthcare delivery challenges, information technology and Patient Privacy challenges remain a concern for healthcare providers. According to Soltanisehat et al. (2020), healthcare providers face challenges related to information technology because they are required to meet HIPAA compliance and HIT certification requirements.
HIPAA Compliance entails protecting electronic Protected Health Information (ePHI). HIT Certification ensures proper EHR interoperability, including standards for technology configurations and application programming interfaces (API). To address these challenges associated with healthcare delivery, hospitals have adopted the Strategic Business Units (SBUs) approach to improve the quality of care through clinical integration.
The corresponding impact of Provider Payment Reforms on today’s healthcare environment is that third-party payers are reducing reimbursements and changing their payment models to control healthcare costs. Einav et al. (2022) argued that these changes affect healthcare providers and hospitals, as they result in a reduction in revenues and, consequently, a decrease in payments. In addition, the impact of Governmental Regulations on today’s healthcare environment is that they create stringent requirements for hospitals and doctors to follow, which is challenging for providers because they are already dealing with issues concerning information technology and patient privacy, and other factors such as provider payment reforms (Einav et al., 2022). Furthermore, the increasing cost of technology is having a significant impact on today’s healthcare environment.
Impact of Forces
Healthcare service and delivery opportunities exist due to Provider Payment Reforms; therefore, there is a need for healthcare organizations to innovate and provide value-added services. According to Agarwal et al. (2020), healthcare organization leaders must innovate to provide value-added services. Payers are now rewarding those who provide real value in cost efficiencies through system reforms as “efficient care” models.
The opportunity that exists due to governmental regulations is that healthcare organizations will be required to provide better and more efficient services. These government agencies are imposing limits on what healthcare organizations can and cannot do regarding services and enforcing onerous requirements that must be met. Healthcare leaders should ensure that the organization provides better services while reducing costs. Because of the increased technology cost, the opportunity includes implementing new resources such as EMRs (Agarwal et al., 2020). Leaders should understand that the implementation of EMRs has increased drastically over the last few years due to the need for patient safety, doctor efficiency, and government regulations.
Additionally, the challenge with these new technologies is that they require a significant upfront cost to implement, as well as programming and maintenance costs. The challenge with provider payment reforms is that they have led to a decrease in physician payments, resulting in many physicians leaving the profession (Agarwal et al., 2020). Leaders should be aware that this has added stress to remaining physicians, causing many to consider leaving the profession.
The challenge with Governmental Regulations is that these new regulations have led to changes in how physicians are paid for their services (Agarwal et al., 2020). For instance, healthcare organization leaders should ensure that minimum standards are in place for protecting the privacy of individually identifiable health information and implement federal criminal penalties for willful violations. The challenge here is that it may help to protect patient records from being stolen, but it also keeps physicians from using their clinical judgment when dealing with a patient.
Opportunities
The opportunities for the HCA Healthcare organization, based on analysis of central forces, impacts, and opportunities provided, include a need for healthcare organizations to increase their value-added services. This organization is poised to do this. According to Hunter et al. (2021), this can be achieved by providing services not offered by any other healthcare organization, thereby avoiding duplication of services and increasing patient satisfaction.
Another opportunity is that incentives and rewards are available to providers who make changes to their systems, as they are being recognized for being efficient and offering value-added services. This can be achieved by finding new ways to utilize technology to provide more value to both patients and physicians, thereby reducing costs and increasing overall efficiency (Parr et al., 2021). Lastly, the introduction of new technologies has created a paradigm shift in how healthcare providers deliver care. These opportunities align with the broader perspective of healthcare, enabling the organization to expand and enhance its value-added services to meet reimbursement requirements.
Proposal
The challenge within the HCA Healthcare organization is that paper billing could be more efficient, especially for those physicians who work in multiple offices and, therefore, cannot use PBMs. Implementing these systems would be expensive and labor-intensive; therefore, the organization has decided to maintain its current billing process for physicians. As a result, the change I will implement in the HCA Healthcare organization includes introducing an EMR across all locations to enhance efficiencies and improve physician satisfaction. It will help attract new physicians to the HCA Healthcare organization and increase physician efficiency.
Another challenge within the HCA Healthcare organization is that physicians need to be able to access patient information 24/7, as many of their patients are uninsured. Consequently, the change I plan to implement at HCA Healthcare is the integration of artificial intelligence (AI) technologies, allowing physicians and patients to store, view, and transmit patient information over the internet. It will enhance patient care by enabling physicians to access the data as needed. It will reduce costs since physicians would only visit their offices occasionally.
Financial and Budgetary Considerations
Financial Statements
The financial statements I will utilize in making my proposal are the income and cash flow statements. Since an income statement is used by businesses to monitor profit by taking into account revenue, losses, and expenses to determine whether the organization is turning a profit or not, I will use an income statement to analyze the profit by considering both revenue and expenses.
On the other hand, the cash flow statement is used to analyze the sources and uses of cash. I will use the cash flow statement to analyze the net change in cash. After reviewing the income statement to assess profitability, I will examine the cash flow statement to determine whether the organization has sufficient capital to sustain its operations. Additionally, the income and cash flow statements are both essential financial statements that I can use to determine if there is sufficient capital to make changes that improve processes within the organization. I will do this by examining the amount of money it has and the amount it invests, then using the net income to determine the change in stock.
Proposal Impact
My proposal will have a positive impact on the organization’s financial statements, as it will increase the current ratio. My proposal will decrease current liabilities, resulting in fewer employees due to the downsizing process I have proposed. On the other hand, my proposal will increase working capital, as I have proposed hiring more employees to replace one departing employee who is retiring. The cash balance will decrease, but inventory and accounts receivable have increased. This is because purchasing new equipment will enable physicians to more effectively monitor patients’ recovery and increase their net income.
Flexed Versus Fixed
A flexed budget is similar to the actual budget, and it is used when there is an irregular, inflexible, and unpredictable change in the need for resources. A flexed budget is sometimes called a zero-base budget because it requires managers to submit budgets without relying on past budget figures. A fixed budget is money set aside by management that will be spent over a period, with little or no deviation allowed by managers in charge of spending the recurring fixed budget allocations.
The impact of the flexed budget on my proposal is that it will lead to cost-cutting without significantly affecting the labor side, resulting in more funds being allocated. While the impact of a fixed budget is that it leads to cutting costs, there is no flexibility in spending the funds because past figures serve as a basis for new estimates. There will be no flexibility in how the recurring expenditure can be utilized. My proposal will influence the budget by enabling cost-cutting without significantly impacting labor.
Proposal Justification
Ratio Selection
The ratios I will use to support my proposal include the gross margin ratio, which measures the business’s efficiency. It indicates whether the organization’s revenue from sales exceeds its cost of goods sold and operating expenses. It is because the gross margin ratio is created to measure a business’s efficiency.
Similarly, I will also consider the profit margin ratio, which measures how much each sales dollar is worth after covering all related costs, such as materials, labor, and administrative expenses. It tells us how much we can keep as profit after all expenses have been paid, or to see whether we are making a loss or a profit at a point in time.
Ratio Result
The break-even point for this proposed solution is $1.5 million, which includes labor and equipment costs in the original budget, as well as start-up costs. For the calculation, I will multiply the number of offices by the estimated cost per office, then add $20,000 to that cost to account for start-up costs and materials not detailed in this write-up.
The gross margin ratio for the above profitability calculation is 0.05. On the other hand, the profit margin ratio for the above profit is 0.11. It means there is an 11% chance of making more money at the end of the year. Based on the result above, the viability of my proposal is that it could be profitable.
Short- and Long-Term Impact
Based on my calculations and financial statement analysis, the short-term impact of my proposal on the organization and its financials is that the organization’s revenue will increase by $30 million, resulting in a positive bottom line within three months of implementing my proposal. Over the long term, this proposal is expected to have a positive impact on the organization’s growth and performance. The increased revenue will enhance shareholder value and bolster investor confidence, ultimately leading to a higher stock price.
I plan to strategically mitigate the impact of my proposal on the company’s financials by analyzing the organization’s current and projected financial statements for the last five years. During this period, the organization increased its revenue from $10 million to $30 million in under two years. The primary reason for this organization’s failure is that it should have focused on its employees and used them as a last resort after all other possible measures had been exhausted.
Conclusion
My proposal will add value to the organization by increasing revenue by 10% while decreasing expenses by 20%. It will help the hospital stay competitive in a healthcare market that is increasingly focused on patient satisfaction and outcomes, rather than the volume of services. The proposal will also update outdated equipment, which has been a recurring issue in patient satisfaction surveys. My proposal aims to reduce waiting times, increase bed availability, and decrease infection rates resulting from the use of outdated equipment.
Justification of Proposal
My proposal is appropriate based on the financials and budgetary considerations of the CEO and the Board. The proposal benefits the organization because it will help create an organizational strategy that addresses the problems preventing the company from being competitive. The proposal will reduce costs by $1.1 million, which refers to the cost of purchasing new equipment for a company that did not previously require new equipment. The CEO and board will be able to consider this proposal as it is a strategic decision that can majorly influence costs.
References
Agarwal, R., Liao, J. M., Gupta, A., & Navathe, A. S. (2020). The Impact of Bundled Payment on Health Care Spending, Utilization, and And Quality: A Systematic Review: A systematic review of the impact on spending, utilization, and quality outcomes from three Centers for Medicare and Medicaid Services bundled payment programs. Health Affairs, 39(1), 50–57. Web.
Einav, L., Finkelstein, A., Ji, Y., & Mahoney, N. (2022). Voluntary regulation: Evidence from Medicare payment reform. The Quarterly Journal of Economics, 137(1), 565–618. Web.
Hunter, K. F., Dahlke, S., Negrin, K., Kalogirou, M. R., Fox, M., Antonio, N.,… & Wagg, A. (2019). The feasibility of implementing education on older person care to practice on medical units: Nurses’ perceptions and the influence of practice context. International Journal of Older People Nursing, 14(4), e12265. Web.
Parr, J. M., Teo, S., & Koziol‐McLain, J. (2021). A quest for quality care: Exploration of a model of leadership relationships, work engagement, and patient outcomes. Journal of Advanced Nursing, 77(1), 207-220. Web.
Soltanisehat, L., Alizadeh, R., Hao, H., & Choo, K. K. R. (2020). Technical, temporal, and spatial research challenges and opportunities in blockchain-based healthcare: A systematic literature review. IEEE Transactions on Engineering Management, 70(1), 353 – 368. Web.