CreekSide Hospital Case Study
CreekSide Convalescent Hospital is a religious nonmedical health care institution that is situated on the 850 Sonoma avenue Santa Rosa in California. This facility specializes in the provision of extended-stay nursing care to seniors with different levels of disabilities within Santa Rosa, California. The hospitals primary specialty is a nursing home. The hospital has several departments ranging from clinical laboratory to house keeping services. There are several employees both specialists and non-specialists who work both full time and part-time at the facility. The facility was first approved to provide Medicare services in 1974 (Hospital-Data, 2009).
Nursing homes are institutions where persons who do not necessarily need to be in hospitals and at the same time cannot be cared for at home are housed and taken care of. This means that nursing homes are nearly structured like hospitals and utilizes the services of nursing aids and skilled nurses who attend to those admitted round the clock. The staffs are supposed to provide medical care and other forms of therapy. Because nursing homes care for a very special category of patients most of whom require 24 hours of attention, it is important that the nursing homes have in place efficient standards for their services and administration (National Institute of Health, 2010).
This hospital provides services onsite to the residents of Santa Rosa. The services include clinical laboratory services, dental care services, Dietary services, mental health services, housekeeping services, nursing services, and occupational therapy services. The other services include pharmacy services, physical therapy services, physician services, podiatry services, social work services, speech or language pathology services, therapeutic recreation specialist services, and diagnostic x-ray services. All these activities are either provided by staff onsite to residents or the social services staff onsite to the residents (Hospital-Data, 2009).
The hospital has employed quite a number of both specialists and non-specialists to offer the variety of services listed on its catalog. The employees either work on full-time terms or on part time terms for the hospital. Available statistics at the facility indicates that the full time activity professional staff employed at the facility accounts for 1.04 of the employees while the full time administrative staff account for 6.35 of the total employees. The activity professional staff category include registered nurses, certified nurse aides, dietitians, occupational therapists, occupational therapy aides, pharmacists, podiatrists, speech pathologist, and other physicians (Hospital-Data, 2009).
The success of CreekSide Convalescent Hospital is very much dependent n prudent management on the part of the hospital administration. This means that there is need for the facility to always strive to offer high quality services that are associated with public expectations. To achieve this mission of nursing homes, it would be important for the management to come up with strategic management plan that would address matters of quality in line acceptable high quality nursing care services. At the same time, it is important the activity professional staff observe professionalism in the course of their duty. Most nursing homes have been characteristically identified with the lack of information systems despite the important roles they play in ensuring specialized care. This has always meant that the general public is unable to access efficient management services including better management of chronic conditions and improved access to information that would result from the establishment of information systems. It is generally agreed that implementation of action plans involving establishment of information systems will help increase the quality of patient care and minimize incidences of medical errors (Alexander, 2008).
Though this facility has a long history in the nursing field, the fast changing administrative roles require proper coordination between the administration and the staff. There is also need to develop a clear coordination system between the numerous specialists who offer the various nursing services. Most nursing homes have been characteristically identified with the lack of information systems despite the important roles they play in ensuring specialized care. This has always meant that the general public is unable to access efficient management services including better management of chronic conditions and improved access to information that would result from the establishment of information systems. It is generally agreed that implementation of action plans involving establishment of information systems at the CreekSide Hospital will help increase the quality of patient care and minimize incidences of medical errors (Alexander, 2008).
Strategic Management
There is increasing demand from the general public for better service provision by the nursing homes. This aspect continues to exert a lot of pressure on nursing home operators not only to provide the desired services as residents enter their facilities, but that they must also modify their services to match the ever changing needs of their residents. This calls for the incorporation of a wide variety of care services that a resident can access from within the facility. Though this has always been a key concern in the management of nursing homes, majority of operators have always paid very little attention (CBS Interactive, 2010).
Nursing homes that will therefore remain adamant to 5the market forces that are determined to drive key changes in their operations, and are instead fixed to their traditional and longstanding modes of operation face greater risk of being rendered unsuitable. Strategic management calls for the ability of institution managers to steer their institutions towards growth and expansion. To achieve this, there is need on the part of the management to continuously monitor the changing landscape and come up with action plans, products and services that are able to effectively respond to the market characteristics (CBS Interactive, 2010).
Community Needs Assessment
This is a strategic management mechanism that gives direction on how to maximize an institutions patient mix. It will work towards giving the indication on the new products and services according to the market place needs. This call for the application of integrated information systems for purposes of data analysis to enable service providers undertake an assessment of the demand for services according to changing public needs (CBS Interactive, 2010).
Community needs assessment calls for a detailed audit for the purposes of identifying the extent of the market being served. Such an audit would ensure that relevant information on current and proposed services are captured and rated so that necessary adjustments may be made to reflect the changing market needs. This approach would ensure nursing homes remain relevant and meet their key purpose of quality services to the general public (CBS Interactive, 2010).
Information Systems
The information systems that are ideal for implementation in CreekSide Hospital are those systems that relate actual measurement of care that is provided to the home residents. The systems should support the storage of clinical data including the documentation of care delivered to each and every resident within a nursing home. The chronic cases that nursing homes handle call for the establishment of triggers and alert information systems. These should be capable of relying frequency messages from home residences to the risk management oversight. These are information systems capable of automatically sending messages to an end user as a notification of a potential patient problem so as to ensure quality risk management (Alexander, 2008).
An information system that offers prudent management of clinical data will enable the multiple service providers in the facility including physical therapists nurses, medical technicians, and physicians gain relevant access to patient information. This is important because all these professionals provide necessary treatments, education and assessments contained in the medical records. Prudent management of data would ensure that each of the stakeholders make the best possible decision about a patient (Alexander, 2008).
Implementation of action plans that involve the integration of information systems into the management of CreekSide Hospital is very important in ensuring excellence in service delivery to the general public. This is because information systems ensure decision support that facilitates efficient coordination and interaction between the multiple service providers since all the residents data are coordinated and all the sources listed. This is important in meeting the overall mission of providing quality life and quality care to the general public (Alexander, 2008).
Financial Performance Plan
Assumptions
Financial planning requires little assumptions to support the analysis. These assumptions if supported by proper evidence and argument are acceptable and valid. These assumptions help in decision making. They are also significant enough to do financial analysis. A little discrepancy in the information is also explained by these assumptions that are made in the start of making these financial statements. The assumptions are also supposed to be realistic. If this is not the case, then the investor and all the third parties related to the hospital, people who are investing in the operations of the hospital and expecting a return for their investment, will not be invest in the hospital anymore.
Creek side hospital is a not for profit organization. The assumptions made must be strong and real enough to support and satisfy the people who are giving money to the hospital to function. Some of the significant assumptions revealed from the financial data analysis are that
Depreciation
All the assets are depreciated using a straight line method. The hospital assets include the hospital beds, the equipment like blood pressure apparatus, operation tray etc. depreciation of these assets is charged using a straight line depreciation method.
Gross patient revenue
The gross patient revenue is the fees charged by the patients who are admitted for surgeries or extensive care, inpatients, and the patients who are admitted for 12 hours, outpatients. The patients who come for consultation during the OPD hours are not included in the gross revenue. The reason for this is that, these patients do not represent any significant amount of the patients coming to the hospital.
Inventory analysis
The inventory is calculated by using the FIFO method which is first in first out method. Oldest inventory items are recorded as sold first. This is relevant in a hospital environment because, inventory includes the medicines and the drugs. The expiry of these medicines is an issue, thus the hospital management follows the first in first out method to analyze the inventory.
The pension expense is taken in the financial expense since it is 20 of the employees wages. Thus for the ease of calculation it is included in the expense portion.
The eight law suits that the hospital has are not showed in the financial statements. The reason for this is that the settlement of these financial plans will not have any material impact on the current financial position of the hospital. Thus to avoid financial confusions and complexities, these adjustments are not considered.
Analysis of Financial and Operational Plan
The financial analysis for a hospital is slightly different as compared to normal organizations. The main reason for this is that the payment methods and the operations differ widely. An example for this is very simple. Working capital current assets- current liabilities is a very significant and a key indicator for the profitability of any organization. However this cannot be applied to the hospital model as the net working capital is not relevant in this case. The main problem in applying working capital to the hospital comes with the accounts receivable. Organizations usually deicide which client to serve and what credit limit to provide to which client.
However a hospital will not have this kind of an attitude. Hospital management does not decide who to serve and who not to serve. And providing credit to the patients is not the policy in a majority of the hospitals. Thus this very basic ratio, the net working capital fails to indicate the profitability of the hospital. This was a very basic example that all the ratios do not indicate the profitability of the hospital. Because a hospital has completely different operations and performance measures, that is why their profitability and financial analysis is a little different and complicated.
Identifying common financial characteristics of performance is important in evaluating a hospitals financial position. A common financial characteristic of hospital performance is one that consistently surfaces when financial ratios are statistically analyzed over time and across industries. Starting with the profitability factors, ratios like return on total assets return on investment, and total margin ratios for each year and each operating environmentstrongly depict the profitability of the hospital. The profitability ratios are extremely important and significant for the not- for- profit hospitals. The reason for this is that these ratios are the only indicators that relate to the success of the hospital. This is the only key performance indicator that is significant enough to attract people to invest in the hospital. A good ratio will help to attract more investors and thus will help improving the quality of the service provided to the patients.
Thus the most important ratio for analysis of the financial statement for a not- for- profit hospital will include the profitability ratios. This is the first and the foremost step in the analysis of the financial statements. This is also a very good indicator of the performance of the hospital.
Fixed assets efficiency is another very important factor for ratio analysis and for observing the performance of the hospital. The related ratios will include the fixed-asset turnover, fixed-asset turnover (price-level adjusted), and total asset turnover measures.
This ratio analysis of the fixed assets relate to the capacity of the hospital. While hospitals usually have mostly labor intensive with their fixed assets usually invested in the personnel, they are also capital intensive. They also invest heavily in new and advanced technology. This is done to improve the quality of the service provided to the patients. This is also done to stay in the run with the competition.
Thus it is also very relevant to calculate the return on this heavy investment. The dollar sales that the hospital is generating on this investment of the fixed assets are also a very significant factor to analyze the profitability of a hospital. Thus after the profitability analysis, the analysis of fixed assets is done. The financial structure is the third important factor. Analysis among the ratios that relate to capital structure indicates that equity financing and fixed-asset financing are strongly correlated and, thus, are meaningful for estimating a hospitals capital structure. Low values for equity financing and high values for fixed-asset financing imply more debt. This analysis is thus very important to predict the profitability of the hospital.
After analyzing the financial structure the last but not the least comes the liquidity analysis. The ratios relevant in this analysis include current ratio, days cash on hand. The days cash on hand indicates the degree of the cash to cover the daily expenditures. Hospitals with greater liquidity will have older physical plants or high average age and less debt. The ideal situation would be to have low debt, a young physical plant, and ample cash on hand. Unfortunately, the simultaneous occurrence of these three conditions is rare in hospitals these days. Thus the key indicators for analyzing the performance and the financial position of a hospital include the following factors
Profitability factors
Fixed assets efficiency
Financial structure
Liquidity analysis
Other factors that are considered during the analysis of a hospital include
The change in the number of the patients every year, taking into charge the inflation. The reason for this is that the change in the number of the patients will indicate the impact of the investment in new technology.
An analysis of the cost per patient compared to the revenue per patient will prove to be a good indicator for the financial analysis. This will help to analyze how much cost is covered by the revenue generated. This analysis will also take into account inflation.
The volume that is the amount of patients coming in is highly impacted by inflation, the quality and the level of the service provided to the individuals. Thus comparing the number of inpatients and outpatients every year will provide a good explanation about the quality, the affect of inflation and the satisfaction of the customers. These are some of the steps that are involved in measuring the performance and analyzing the financial position of the hospital relative to the industry.
Conclusion
CreekSide Hospital as a nursing facility plays a very central role in the provision of onsite nursing services to the residents of Santa Rosa, California. The magnitude with which nursing home have in the recent past gained popularity has meant that there is a very high expectation from the general public on the standards and quality of services that are being offered within the facility. This calls for the change of approach and strategy by the management so that they may pursue and implement plans that would ensure that their services meet public expectation. The key area that has for a long time been associated with poor quality services in most nursing homes has been the lack of information systems that can assist in proper coordination of their activities.
The continued success and survival of this facility should thus be a key concern to the administration, staff and the other entire stakeholder. There should be good liaison among the stakeholders, the hospital facilities should be given a major facelift, and implementation of information systems be pursued as a priority. It is from this improvement strategy approach that CreekSide Hospital can stand out to be counted among the leaders in nursing care provision.
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