In actuality, many health care organizations attempt to develop their performance to improve the quality of their services and to provide patients with health care services of the high quality. In this regard, it is possible to refer to the case of Dr. M.L. Dhawale Trust Hospital, which focuses on the sustainable financial development and on the steady improvement of its performance, along with the improvement of the quality of health care services being delivered to patients. In this regard, the hospital faces a number of problems caused by the lack of funding and financial resources to cover costs of the hospital. In such a situation, the hospital needs consistent improvements in the organizational development and management. In fact, the financial performance of the hospital is actually under a threat because of the widening gap between the costs of health care services and the lack of funding. In such a context, the hospital can get an opportunity to focus on the steady development, if it manages to impalement the strategy of the sustainable financing. In this regard, the hospital needs improvements not only in the field of financial performance of the hospital but also in the field of management and, more important, the hospital should find non-financial resources to save costs through optimization of its performance and use of non-finance means that still can contribute to the sustainability in the hospital’s development.
In actuality, the hospital suffers from the growing deficit of its budget. In fact, the revenues of the hospital fails to catch up with the growing costs of the hospital being spent on its maintenance and salaries paid to the staff. In this regard, Dr. Pawaskar’s recommendations to overcome the deficit are extremely important for the improvement of its financial performance. If the hospital fails to overcome the problem of the growing deficit of its budget, the hospital can slip to serious financial problems that will cause a considerable downturn in its development to the extent that the hospital may just run bankrupt being unable to maintain its performance and to cover the deficit of its budget. The deficit is extremely important because the deficit of the budget aggravates financial problems of the hospital. As the hospital suffers from the deficit of its budget, the hospital has to borrow money to cover the deficit. Alternatively, the hospital should start saving costs substantially and cut costs to eliminate the deficit of the budget.
At this point, it is worth mentioning the fact that the hospital has ample opportunities for saving costs because, at the moment, the hospital focuses on the provision of services to the poor mainly. To put it more precisely, the hospital is a charitable institution and cannot raise fees for its patients. Moreover, the target customer group of the hospital is patients from low-income families. This means that patients of the hospital are the poor and they cannot afford paying for health care services. In such a situation, the hospital attempts to deliver health care services to help the poor and to improve the public health in the local area. In this regard, the hospital can save costs simply refusing from providing services for the poor, who cannot afford paying the high price for health care services (Garvin and Artemis, 1997). However, the refusal from the provision of health care services for the poor would contradict to the mission and vision of the hospital. Consequently, the hospital needs to develop alternative ways to eliminate the deficit of its budget. In this regard, Dr. Pawaskar should focus on recommendations that allow the hospital to save costs and to maximize the effectiveness of employees’ and organizational performance.
In this regard, it is possible to suggest some recommendations that can help the hospital to save costs and to increase the effectiveness of its performance. First of all, the hospital can use outsourcing some services. There are three nursing homes in the area located near the hospital:
TIMA (Tarapur Industrial Manufacturing) Hospital—services were comparable to what was offered in MLDT Palghar;
TAPS (Tarapur Atomic Power Station) Hospital, which was not open to the general public but intended only for the employees of TAPS;
Three primary health centers and two rural hospitals in a 20-kilometre radius.
Therefore, the hospital can save costs due to outsourcing. Outsourcing will allow the hospital to share costs with other health care institutions located in the nearby area. The health care organizations mentioned above can provide patients with basic health care services before patients’ delivery to the hospital. As a result, the hospital can save costs for other health care organizations can provide health care services, which are currently provided by the hospital. In addition, patients will save their costs on the delivery as well as the hospital can save costs on the delivery too, if the hospital has to deliver patients, who cannot afford transportation expenses.
At the same time, it is important to take into consideration the fact that the hospital cannot just share the provision of its health care services with other health care organizations. Instead, the hospital should negotiate conditions of the transfer of some of its patients or health care services to other health care organizations. Therefore, other health care organizations should accept the offer of the hospital. At this point, health care organizations should be benevolent to develop their charitable health care services and to provide their health care services for poor patients. In fact, the hospital should persuade other health care organizations because their shared responsibility for the provision of health care services will ease the financial pressure on each health care organization and help the hospital to eliminate the deficit of its budget (Pogue, 2004). To persuade other health care organizations in the local area to share responsibility and financial burden of the provision of health care services for the poor, the hospital can offer other health care organizations training services for their employees as well as sharing information between health care organizations (Hazen, 2003). In such a way, the hospital can unite efforts of local health care organizations that would eliminate the deficit of its budget and, at the same time, this will improve the quality of health care services and their delivery to patients in need.
At the same time, Dr Pawaskar has several choices in different mix of OPD/IPD. At this point, it is possible to distinguish two major choices. On the one hand, the rise of IPD patients leads to the substantial rise of costs in the maintenance of the hospital and its facilities. The increase of the inpatient population of the hospital can become an unbearable burden for the hospital because the hospital has to spend considerable funds on the maintenance of its facilities, treatment of patients, paying salary to employees working with patients, and other costs related to IPD. Therefore, the focus on the IPD development is not the best choice in case of the hospital suffering from the growing budget deficit. Consequently, the hospital should look for better choices and options to solve its financial problems and to stimulate the sustainable development.
In contrast, the rise of OPD will lead to the decrease of costs spent by the hospital on its maintenance. The development of OPD opens better opportunities for the hospital to eliminate the deficit of its budget and to develop sustainably. The hospital should develop its OPD because it provides better opportunities for saving costs of the hospital. OPD does not need considerable financial resources compared to IPD because patients do not spend all the time in the hospital that will help the hospital to save costs because it will not need to spend substantial financial resources on the maintenance of its facilities and on patients, who, otherwise, would stay in the hospital, in its IPD. Therefore, the hospital should choose the development of OPD because this is the better option compared to the development of IPD. At any rate, OPD opens larger opportunities for its sustainable development.
The correlation between revenue per case in IPD and OPD linked to the break-even point is very important for the hospital and its choices to be made for the elimination of the deficit of its budget and sustainable development. In this regard, it is worth mentioning the fact that the hospital can save costs on OPD, whereas IPD increases the financial pressure on the hospital. Naturally, in such a situation, the hospital should focus on the development of its OPD, instead of IPD, whereas the reduction of IPD will allow the hospital to save costs.
Along with financial methods of the costs reduction and improvement of the financial performance of the hospital, it is possible to use non-financial ones, which may be not less efficient than financial ones. Non-financial cases that are important for financial sustainability and its implementation may vary consistently but the hospital should focus on the most beneficial, effective and prospective, in terms of its sustainable development.
First, the improvement of the management can enhance the performance of the hospital. The management is extremely important for the organizational performance. The effective management can save costs of the hospital and improve its performance, whereas the poor management can provoke misuse of funds, which is extremely dangerous in case of the hospital suffering from the growing deficit of its budget. In this regard, the total quality management may be particularly effective because it can improve consistently the quality of services and internal business processes within the hospital.
The improvement of the communication within the hospital can be another way to the sustainable development of the hospital through the consistent improvement of its performance and effectiveness of employees’ performance that will lead to saving costs. The hospital’s staff can save time on delivery health care services to patients. The faster health care services are delivered to patients the higher is the probability that patients will recover faster or the hospitalization will not be needed at all. Therefore, the hospital will be able to save costs since patients will not need to stay in the hospital for a long time.
The development of the close cooperation with the local community can improve the financial position of the hospital because, in such a way, the hospital can save costs and raise funds. To put it more precisely, the hospital can use the full potential of the involvement of volunteers in the provision of health care services. The hospital can offer the local population training of volunteers by the hospital staff. Education of the local population can help to prevent the development of health problems. The work of health care professionals outside the hospital can occur through the organization of patients’ examination in their villages or towns.
Thus, the aforementioned recommendations can contribute to the sustainable development of the hospital and consistent improvement of its financial performance. The focus on OPD, the development of the close cooperation between the hospital and other health care organizations in the area, and between the hospital and the local community will contribute to the sustainable development of the hospital.
Chowdhry, B. and Howe, J. (1999), Corporate Risk Management for Multinational Corporations: Financial and Operational Hedging Policies. European Finance Review, 2.
Garvin D. A. and Artemis, M. (1997, November). A Note on Knowledge Management, Harvard Business School Case Study.
Hartman, J. C., and Schafrick, I. C., 2004, “The relevant internal rate of return,” The Engineering Economist 49(2), 139-158.
Hazen, G. B., (2003), “A new perspective on multiple internal rates of return,” The Engineering Economist 48(2), 31-51.
Nitzan, Jonathan; Bichler, Shimshon (2009), Capital as Power. A Study of Order and Creorder., RIPE Series in Global Political Economy, New York and London: Routledge
Pogue, M. (2004). Investment Appraisal: A New Approach. Managerial Auditing Journal. 19(4), 565-570.