Financial Management: Hong Kong Hospital Authority


 


Executive Summary


            The main goal of this paper is to conduct business case analysis on the proposed approach of HA to reduce the cost of hospital fee by the government, specifically for those patients who are suffering from cellulites who need intravenous antibiotic everyday.  In this regard, the discussion involves the analysis of the potentials of this new financial management approach using different techniques such as Stakeholder’s analysis, PESTLE analysis and Forced Field Analysis. In terms of financial aspects, this report has been able to use Cost Benefit Analysis of the said venture. Further, this case also provides some important details on this can be done through various options. 


The analysis have found out that with the objective of the hospital to reduce the hospital fee for patients with cellulites they must be able to know what option to use and that is by collaborating with other agencies to help them shoulder the cost or assist them.


 


Introduction


            A business analysis is an essential tool to enable the company to evaluate the viability of starting a new management venture. It gives essential information required to make the critical decision of whether to go forward with the new approach or not. The main goal of the analysis is to ensure that the institution is on the right track.  The aim of this analysis is to make sure that the firm will be able to identify or not to proceed with a project and to identify any important risks associated with the project. The feasibility of this new organisational venture can be ascertained in line with the technical aspects, economic aspects or both. On one hand, a business case approach is documented with a report that shows the entire ramifications of the project. It is a preliminary analysis conducted before real work of a project begins to ensure the likelihood of the project’s success. Such type of study enables the institution in finding alternative solutions to a certain issue and presents recommendation on the best alternative (Shaw, 2001).


In establishing a new project, one of the most essential business aspects that should be considered is the financial capabilities of the organization. In this particular report, being able to recognize the needs of Hospital Authority of Hong Kong to meet the needs and improve the hospital environment by reducing the burden of costs shouldered by the government in terms of caring with patients having cellulites, the HA is trying to do it by considering various options. The following are the considered options.


o   Seek the cooperation of the patient and let them attend AED once daily until the session is finished


o   Encourage the patients to avail private hospitals service and let them should the cost of their treatment.


o   Engaging with other institution which will help patients and governments in reducing the cost that their allocate for patients with cellulites.


 


In this regard, the third option which is s by seeking the help of other institutions who will should half or even the entire fee of the patient with this sickness is being chosen. In this regard, the goal of this study is to provide a clear financial project plan for the proposed options in solving the issue of cost reduction. This report will provide a discussion will include the analysis of the current environment of HK in terms of health and social contexts and to provide ways on how this service would be pursued in terms of financial aspects.


 


Overview of the Service


            The case was about the financial analysis for considering various options on how to reduce the cost of the hospital feel for patients with cellulites. .  It can be said that this is one of the growing problems among individuals in HK. In Hong Kong, hospitals has been able to realized the need for reducing the cost of hospital fee for these patients, they are still having problems on which approach to use that will be beneficial for the patient and the government and hospital.


Basically, the reduced cost of hospital fee that government is allocated with these patients will be a big help for the government because the finances that they will save from this will benefit other patients.  The service will be implemented in the hospitals in Hong Kong Hospital Authority.


           


Analysis of the Proposed Service Extension


            In the proposed reduction of cost for hospital fee, it is important to analyze the market environment of the said service portfolio to determine the potentials of the proposed service. In this regard, the market environment will be analyzed using some tools like stakeholder’s analysis, PESTLE analysis and Force Field analysis.


           


            Stakeholder analysis


            In order to have an effective implementation of the new approach used by HA to reduce the cost provided with the patient having cellulites   it is essential to analyze the stakeholders who will be active or involved in this project. The main goal of this analysis is to identify who among the stakeholders will have high and interest on the problem, which will have the authority to influence others for the new approach used by HA to reduce the cost provided with the patient having cellulites. Further, this stakeholder analysis also aims on identifying who are the subjects, players, bystanders and actors involved in the new approach used by HA to reduce the cost provided with the patient having cellulites. The stakeholder analysis will be discussed using the stakeholders’ grid.


 


Figure 1


Stakeholder Grid


 


 


HIGH     INTEREST   Patients with cataract, most especially older patients

 


 


 


 

Health care providers, community or local government and federal government


Non-government organization, volunteer groups, media,


Educational organization


 


   

Relatives


Parents


Youth


 


 


 


 



 


Community or local healthcare providers,


Department of health and federal government


International Institution


  LOW   POWER/INFLUENCE HIGH

 


 


In this proposed service extensions the potential stakeholders include the hospital administration, community health organizations, HK government, the cataract patients, funders and HK government health regulators and policy makers. Accordingly, various stakeholders have varying amounts and kinds of power, and those with the greatest influence shape a strategy from a number of specific decisions (Shafritz & Ott, 2001). Stakeholders are given the outmost authority in any business setting, like in this case the implementation of the new service for the new approach used by HA to reduce the cost provided with the patient having cellulites. Their power and importance is beginning to gain slighter advantage when compared to an organization’s management team. Stakeholders provide a diverse influence to both kinds of organizations and they guide the people in the organization so that the goals will be met.


In this regard, the stakeholders for this proposed service extension can be considered as significant for the decision making of pursuing new service of the new approach used by HA to reduce the cost provided with the patient having cellulites in one of the hospitals in Hong Kong Hospital Authority. According to Johnston & Clark (2001), product and service design involves translating stakeholder needs into service requirements, formulating quality goals and cost target, documenting specifications, refining existing products and services, and developing new ones as well.  With these, stakeholder analysis, the hospital management can be able to modify the new approach used by HA to reduce the cost provided with the patient having cellulites to meet the needs and demands of the stakeholders and most especially the patients.


 


            PESTLE Analysis


            The environment for the new approach used by HA to reduce the cost provided with the patient having cellulites is also analyzed through the use of PESTLE analysis.


 


Political


The new approach used by HA to reduce the cost provided with the patient having cellulites will not get any good reputation, trust and success if it will not be aware of what is happening in the political sector Hong Kong, especially in line with the health policies by the Department of Health and Hospital Authority. The hospital should guarantee that sure they are aware of the political situation of the country and the company has its position with regards to political issues and that the management of the hospital who will implement the said services should be prepared for any problems concerning the political sector (Brundtland, 2001).


The government or organizational jurisdictions or responsibilities involved includes department of health (Caulfield & Liu, 2006), local and national government and their international linkages who are supporting the notion of having quality living. The responsibility of the government is to establish an organization which focuses on the new approach used by HA to reduce the cost provided with the patient having cellulites management about the new approach used by HA to reduce the cost provided with the patient having cellulites. In addition, the government is responsible in providing financial support to the hospital that will pursue that said health project. The government should make a new policy that engage in enabling hospital authority that will disseminate information about the problem.


 


Economic


Throughout the years, it can be said that one of the problems of HK health authority is with regards to their financial stability. With the reformations made by the HK government, it can be said that the country’s economic stature is doing well that’s why they try to improve their services to give the best healthcare services that meets the needs of their patients. It is not only the economic situation of the hospital that should be taken note of but also the economy of the country, the hospital management should be able to check first the economic status of the country they are operating in before making decisions because making decisions during a difficult time on the economy of another country may cause catastrophe for the company.


The role of the government in regulating health care providers will be limited to ensuring that providers and payers do not engage in anticompetitive practices and that the safety of patients is protected (Casebeer and Hannah, 1998). This means that the government tries its best to reduce the healthcare costs at all levels for the consumer’s benefits.


 


Social


The hospital management that proposes the implementation of the new service for the patients with cataract makes sure that the service they offer and will be accepted by the general public. The hospital management restricts and does not authorize the implementation of new services which they know will cause outbursts or complains from different group in the society. The hospital management makes sure that they have a very good relationship with different sector in the society.


 


Technological


As part of the new service that will be implemented in one of the hospitals in HK, the management offered new innovations in the technological sector and introduced new concepts with regards to the new approach used by HA to reduce the cost provided with the patient having cellulites.  Since technology rapidly changes the company makes sure they are updated to what is happening and they can adjust to these changes. The company makes sure that the services they have are updated with regards to technology and if new technologies emerge they can compete with this kind of service.


 


Legal


            In any country there are laws that need to be followed. These laws restrict or allow any action to be done. The laws make sure that the people do what is right and just. It prevents any arguments or differences. The hospital management makes sure that it follows the different laws and provisions provided by Department of health of Hong Kong and the Hospital Authority.  In addition, the hospital management also makes sure that the different healthcare laws are followed in any actions and activities they made.


 


Environmental


The world is starting to be more conscious of building a better future for the people. Every possible way to ensure a better future is used. Different organizations are doing things to ensure that the future will be a bright one. The hospital management makes sure that the services that would be given will cause minimal problems to the environment.


 


Force Field Analysis


            Aside from the stakeholder and Pestle analysis, this business report will also include Force Field Analysis (See Appendix 1). FFA is a useful approach for analyzing all the forces for and against a certain decision (MacDuffie & Depoy, 2004). In this regard, force field analysis is a specialized approach of weighing the cons and pros. The following figure presents the Forced Field analysis for the proposed service extensions about the new approach used by HA to reduce the cost provided with the patient having cellulites.


 


Figure 2


Forced Field Analysis


 


Forces against Change


Score


Cost problem


2


Inability to meet the needs of the patients


 


 


 


 


1


Inability to provide quality service.


1


Forces for Change


Score


The needs of the healthcare providers for having the new approach used by HA to reduce the cost provided with the patient having cellulites that will help government in the cost problems


3


The need of individuals with cellulites in HK to avail services which is cheaper or free.


2


Enables Patient’s to have a quality living.


3


           


 


 


 


 


 


 


 


 


 


 


 


 


 



 


Having a total of 8 for the forces for change and just 4 for forces against the implementation of the new service, there is a favouring score of 8:4 for implementing the new approach used by HA to reduce the cost provided with the patient having cellulites.


 


Feasibility Analysis of the Service


            There are various ways on identifying the feasibility of the implementation for the new approach used by HA to reduce the cost provided with the patient having cellulites in one of the Hong Kong HA. In this regard, this financial analysis would use the Cost-benefit analysis. Cost-Benefit models require a well-informed respondent or group to provide subjective information regarding characteristics of the project under consideration. Such methods typically avoid conventional economic data (Hanley, Ryan & Wright, 2003), such as projected sales, profit margins, and costs, but rely more on subjective assessments of strategic variables, such as fit with corporate objectives, competitive advantage, and market attractiveness. Included in this category are checklists and their extension, scoring models (Cooper 1993, p.170). Cost benefit techniques rely on the subjective inputs of characteristics that are likely to be known. Cost benefit techniques recognize the lack of concrete financial data at earlier stages of the project and the fact that financial analysis is likely to yield unreliable results. Because of limited information and because only a tentative commitment is required during the early stages of the project, benefit methods are the most logical evaluation tool. In Cost benefit analysis, all costs and benefits are measured and compared in monetary terms (Smith, 2003).


            The Cost benefit analysis for the implementation of the new service in HK hospital is shown below.


           


The new approach used by HA to reduce the cost provided with the patient having cellulites Needs


Costs


Other management approach cost and fund raising approach to collaborate with potential organisations


HK .2 million


New hospital care approach for the new approach used by HA to reduce the cost provided with the patient having cellulites.


HK 0, 000


Other Costs


HK 0, 000


Total Costs


HK1.9 million



Benefits:


·         Ability to alleviate reduce the costs of the patients with cellulites to lessen the burden faced by the government with hospital fee/ , 000/ year


·         Expanding and extending better community relations/0 000/ year



  • Improved efficiency and reliability of the services extended to patients: estimate: .7 million/ year

  • Improved patient service and retention: estimate: 0,000 / year

  • More ability to manage hospitals sales effort: 0,000 / year


Total Benefit: HK .22 million /year



Payback time: .8 million / .22 million = 1.7 of a year = approx. 20 months


 


The payback time is commonly known as the break even point of the analysis. It is said that it is important than the overall benefit of a service can deliver. As anticipated, the estimates of the benefit given by the new service can be noted as quite subjective. In spite of this, the management of the hospitals in cooperation with the Hospital Authority is very likely to pursue the implementation, given the short payback period.


 


Strategy to gather Enough Funding to pursue the service


            In order to pursue the new approach used by HA to reduce the cost provided with the patient having cellulites in HK, the management and the healthcare professionals should be able to gather enough funding. In this regard, there are many ways that the hospital can be used to implement the said service extensions.


            One of which is through the help of the local government of Hong Kong. Local government is a large portion of the overall health care safety net in Hong Kong, providing direct-care services and funding such items as public hospitals, transportation, educational outreach, and housing subsidies (Ketchum, 2001).


Government agencies are established at the local, state or provincial, and federal levels to provide public health services. Health agencies at the state, county, or city level vary according to the need of the area. Their funds, generally from taxes, are administered by elected or appointed officials (Kozier et al, 2004).


Local health departments have responsibility for developing programs to meet the health needs of the people, providing the necessary staff and facilities to carry out these programs, continually evaluating the effectiveness of the programs, and monitoring changing needs.  State health organizations are responsible for assisting the local health departments specifically by providing funds for implementing new services needed by the public.


In addition, the hospital that will implement the said can also raise funds and financial budgets from different non-government organizations which addresses the needs for having quality living among elder patients with cellulites and other patients. The finance committee can also make some adjustments on the budget and can even seek external help from other organizations for additional funding. During the actual running of the new service, the hospital manager must make sure that proper allocation of the budget will be provided for the new service. With this, proper accounting of resources must be done, taking note of the progress of the new approach used by HA to reduce the cost provided with the patient having cellulites service and using graphs to monitor the progression of the project.


The finance committee of the said service can also seek help from different organizations; especially multinational organizations that are based in Hong Kong in helping them have enough budgets to pursue the project. Herein, the management is able to create good relationships to potential industries that would sponsor then their financial needs to pursue the project. Solicitation is another important way to gather funds from private and public individuals, groups or corporations.


 


Reference:


Brundtland G. H. (2001) Improving health systems’ performance. OECD, p. 4


 


Casebeer, A.L. and Hannah, KJ. (1998). The process of change related to health policy shift: reforming a health care system. International Journal of Public Sector Management, 11 (7): 566-582.


 


Caulfield, J. and Liu, A. (2006). Shifting Concepts of Autonomy in the Hong Kong Hospital Authority. Public Organization Review, 6 (3): 203-219.


 


 


Cooper, R.G. (1993): Winning at New Products, Accellerating the Process from Idea to Launch. Second Edition, Addison-Wesley Publishing Company.


 


Darby, M. (1998). Health care quality: From data to accountability.


 


Hanley N, Ryan M, and Wright R, (2003) “Estimating the Monetary Value of Health Care: Lessons from Environmental Economics,” Health Economics 12: 3–16


 


Johnston,R and Clark, G (2001). Service Operations Management, London: Financial Times/ Prentice Hall


 


Kozier, B. Erb, G, Berman, A. and Snyder, S. Kozier & Erb’s Fundamentals of Nursing, Concepts, Process and Practice Upper Saddle, River, NJ


 


MacDuffie and DePoy (2004). Force Field Analysis: A Model for Promoting Adolescents’ Involvement in Their Own. Health Promotional Practice 5: 306-313


 


Shafritz J. M. & Ott, J. S. (Eds.). (2001). Classics of organization theory (5th ed.).
Fort Worth, TX: Harcourt College Publishers.


 


Smith R, (2003). “Construction of the Contingent Valuation Market in Health Care: a Critical Assessment,” Health Economics (August 2003).


 


Shaw C. (2001) External assessment of health care. British Medical Journal, vol. 322, p. 851-854


 


 


Appendix


Appendix 1



 


 



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