Health Financial Management

The paper focuses over a business plan. This business plan explains about a pathology lab which will be started in the hospital only. Commencement of a new business of “pathology lab” in hospital premises would reduce the additional expenses of the lab as well as it would help the hospital to improve the overall profit position of the Hospital. The laboratory services would offer various services to local residents in Nepean Blue Mountains Local Health District area.

Running Head: Health Financial Management
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Project Report: Health Financial Management

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Contents
Executive summary..........................................................................................................3
Outline..............................................................................................................................3
Background.......................................................................................................................3
The proposal.....................................................................................................................4
Aims..............................................................................................................................4
Benefits.........................................................................................................................5
Risks.................................................................................................................................6
Process..............................................................................................................................8
Resources..........................................................................................................................8
Reporting of outcome.......................................................................................................9
Financial information........................................................................................................9
References.......................................................................................................................11
Attachment 1...................................................................................................................12
Attachment 2...................................................................................................................13

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Executive summary:
The paper focuses over a business plan. This business plan explains about a pathology
lab which will be started in the hospital only. Commencement of a new business of
“pathology lab” in hospital premises would reduce the additional expenses of the lab as well
as it would help the hospital to improve the overall profit position of the Hospital. The
laboratory services would offer various services to local residents in Nepean Blue Mountains
Local Health District area. Pathology lab’s main aim is to ensure the patient to get high
quality services and resolve all the issues in no time. It also focuses to improve the
profitability level of the hospital at better level. The products and the services offered by the
lab must be in such a way that patient’s issue could be resolved and they don’t have to go
other place to resolve the issues. It would improve the overall footfall in the hospital.
Outline:
The report mainly depicts about all the financial and non financial aspects of the new
business plan. Mainly, the associated cost with the new business, revenue generated from the
business, various expenses and licensing and permitting for pathology lab has been studied.
The pathology lab would be commenced in such a way that the solution of all king of chronic
disease could be resolved to the local residents of area. Risk associated with the various
stakeholders, legal aspects and the financial changes in the business plan has been studied in
the report.
Background:
Pathology lab’s success depends on the total number of patient of the hospital. The
study explains that there is large number of patients and hence, the scope and the number of
patients for pathology lab are higher. The feasibility study also explains that there is no
pathology lab nearby and it becomes tough for the patient to go far for lab testing and
cheeking the reports. Pathology lab in hospital itself would reduce the patient’s time as well
as it would assist the hospital to improve the overall profitability level in NEPEAN BLUE
MOUNTAINS LOCAL HEALTH market.
The population feasibility test explains that in near future the demand of the
pathology lab would be improved as the population growth rate is higher. Along with that, it
has been studied that disease rate is increasing heavily in the market and hence, the demand

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of pathology lab would also be higher (Schäferhoff et al, 2015). It is required for the hospital
to set p an advanced pathology lab in order to offer the advanced services to the patient. The
study explains that there is no advanced pathology lab nearby and hence, the commencement
of this lab would help the hospital to meet the target. The hospital management has tools that
it is an need of hour for the hospital to commence a pathology lab inside which would not
only help the patient of the company to get all the services from one place but it would also
help the hospital to get higher return. Hospital is suggested to take few appropriate action and
initiative in the market to manage and improve the position and goodwill in the market.
In order to diagnosis, therapies and prognosis, it is important for the doctors to check
the lab reports and make appropriate decision accordingly. If the lab would be established in
hospital premises only, it would reduce the time of doctors to treat the patient on time.
Currently, it becomes important for the patient to get reports of all the disease before getting
it diagnosed and hence, the planning of pathology lab is quite beneficial for the business
(Pinto, Masaki & Harimurti, 2016).
On the basis of overall market feasibility and study, it has been found that the
commencement of pathology lab would not only reduce the diagnosis and treatment time of
the business but it would also assist the hospital to improve the overall performance and of
the business. It is measured that the demand of pathology lab would be higher and the
equipment study explains that it would offer the quality services to the patient of the
pathology lab.
The proposal:
In the report, the business plan is mainly proposed to commence a new and advanced
pathology lab in the hospital. This would be commenced to convene the requirement of the
patient and get better the overall earnings of the hospital. The new business of pathology lab
would not only reduce the overall cost of the hospital but it would also get better the earnings
of the business in long term. Increment in the total revenue and reduction in total expenses of
the business would reduce the overall expenses of the organization and improve the
profitability level of hospital.
Aims:
Pathology lab is mainly commenced to offer quality services and reports to the
patient. An advanced report would be provided to the patient on time so that there extra time

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could be saved and proper decision could be taken by the doctors on time. The services
would be offered to the patient in lower prices because of savings in additional expenses of
the lab (Hillestad et al, 2015). It has been assured by the management that specialized staffs
are hired to run the lab so that the better reports without any error could be provided to the
patients. Currently, the main aspire of the business plan is to reach over a breakeven point. At
this point, the expenses of the business are similar to the total revenue of the company. The
pathology lab in hospital would not only reduce the additional expenses of the organization
but it would also help the hospital to get higher footfall. The management of pathology lab
could set proper strategically decision and marketing strategy to manage and run the office
smoothly.
Benefits:
The main aim of pathology lab commencement is as follows:
Efficiency gain:
Pathology lab would offer the quality and advanced reports to its patients. Quality lab
reports would help the patients to get proper and advanced reports. Along with that, it would
improve the profitability position of the business because of lesser associated cost and better
returns. It concludes that the pathology lab would help the business to get better the overall
gain (Mulenga & Ataguba, 2017).
Potential savings in the associated cost:
Further, the financial calculations over pathology lab business plan explain that the
potential savings would grow further along with thee time. The additional expenses of
hospital would be saved because of the commencement it in the hospital only. The
calculations further express that the overall operations would assist the business to save the
increased cost and the use of advance technology would save the lab time. Hence, there
would be higher cost savings by the lab.
Expected benefits of this proposal?
Further, the study has been done over the various benefits of the pathology lab which
are as follows:
Factor Benefits

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Patients The business would offer the lab services near to the patient and hence it
would save the additional time of patients.
Lab would be operated 24 hours which would make it easily accessible by the
patients and it would improve the publicity of the business plan.
Easy convenience and better quality report would help the patient to be
diagnoses at right time and take better suggestions on time (Murray, Lim &
Dieleman, 2017).
Facility Further facility level of the business has been studied an found that advanced
technology would be adopted by the lab so the services and facility offered by
the lab would be better and it would help the associated parties to get better
services and returns.
Clinicians Further, in case of clinic, it has been studied that specialized and trained staff
would be hire and the lab would be run by them to offer quality services to the
patients.
It has been assured that worth of the money would be provided to the patient
through offering them quality reports and services.
A proper training and skill session would be provided to each of the staff of
lab to improve the efficient and quality of the services (Jordahl, Olarte &
Wagner, 2017).
Other It is important for the business plan to offer advanced technology services and
efficient services to improve the footfall and revenue in the business.
A better opportunity would be got by the clinic through this business plan.
Along with that, local health district would also offer various subsidiaries and
services to the clinic to establish the pathology lab.

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Risks:
Risk Issue Severity Impact Mitigation Plan Notes
Financial risk In case of
financial risk
study, it has
been found that
financial risk is
high because
there is no
certainty about
patient flow,
huge capital
investment,
technology
advancement
etc. (Jacquin,
2014).
Financial
risk could
affect over
the profit
level of the
business and
could lead
the hospital
to losses.
Business could
plan proper
business
strategies and
risk mitigation
plan to reduce
the financial risk
such as Discount
coupons, better
services,
marketing
promotions etc.
Evaluation
over the entire
associated
financial factor
is one of the
important
aspects to
manage the
financial risk
of the
business.
Error in reports Patients are the
main revenue
genetic of the
lab. if there is
any error in the
reports, then it
would lead to
disappointment
to further,
unnecessary
prick, late
deliveries of
reports etc
could also
Reports risk
could affect
over the
pathology
business at
whole.
Proper planning
of business,
skilled staff and
technology
advancement
would reduce the
risk.
It is important
for the
business to set
friendly
relation with
the patients to
reduce the risk
level.

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Risk Issue Severity Impact Mitigation Plan Notes
affect the
patient trust in
the business.
Insurances The main
insurance risk
of the business
is robbery of
equipments,
staff health
issues etc in
hospital
business. It
could affect the
financial as
well as non
financial
position of the
business.
The main
impact of
insurance
risk could be
on staff and
the
economical
position.
Follow of proper
safety rules and
regulations
could mitigate
the risk level.
The proper
safety plan and
safety
equipment
must be used
in the
organization to
reduce the
insurance risk.
(Evans & Pablos-Méndez, 2016)
Process:
Action: (attachment 1)
Process plan of pathology lab has been discussed in the appendix 1. Process plan has
been prepared through considering all the factors of the business. Proper duties of
management and subordinate have been explained in process to manage the business.
Resources:
In order to establish and run proper pathology lab, it is important for the business to
use the below resources:
 Department of human resources

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 Financial assets and resources
 Proper training and skill sessions (Federal Register of Legislation, 2011)
Above are few main resources for the business.
Reporting of outcome:
In order to identify the main conclusion of the business plan, a committee of all he
heads of each department such as finance department, marketing department, human resource
department, audit department, accounting department etc has been set. According to the final
decision of each department, it is important for the business to prepare a proper financial
report in order to manage and analyze the overall financial level in the business. The financial
performance of this business plan has been studied in next head “Financial information”.
Financial information:
In case of pathology lab, a zero based budgeting report has been prepared. And in
order to do so, below items have been added into the list:
Labour cost
Utilities cost
Auditor and accounting cost
Legal and advisory cost
Training cost
Receptionist
Equipment cost
Nurses cost etc. (Grigorakis, Floros, Tsangari & Tsoukatos, 2018)
Further, in order to set the contingency plan of the business, breakeven position of the
business plan has been studied. The business plan explains that the current position of the
business is strong. However along with the changes into zero budgeting figures, the BEP
level would also be affected. If the changes into the labour cost and place are done then the
BEP level would be better than current position.

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Further, the BEP calculations of the business have been given in the appendix and it
has been found that the changes into the total cost by 10% would affect the BEP level of the
hospital directly (Brandao de Souza, 2009).
To conclude, this business plan is a good idea and the hospital and local health district
should approve it to improve the patient life.

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References:
Brandao de Souza, L. (2009). Trends and approaches in lean healthcare. Leadership in health
services, 22(2), 121-139.
Evans, T., &Pablos-Méndez, A. (2016). Shaping of a new era for health financing. The
Lancet, 387(10037), 2482-2484.
Federal Register of Legislation. (2011). Work Health Safety Act 2011. Australian
Government. Retrieved from: https://www.legislation.gov.au/Details/C2017C00305
Grigorakis, N., Floros, C., Tsangari, H., &Tsoukatos, E. (2018). Macroeconomic and
financing determinants of out of pocket payments in health care: evidence from
selected OECD countries. Journal of Policy Modeling. 3(2), 502-517.
Jacquin, L. (2014). A strategic approach to healthcare transformation: transforming the care
delivery model across the continuum is a prerequisite to success under value-based
payment systems. Healthcare Financial Management, 68(4), 74-80.
Jordahl, E. A., Olarte, M., & Wagner, G. N. (2017). Variable rate debt option in a changing
market. Healthcare Financial Management, 71(4), 72-75.
Hillestad, R., Bigelow, J., Bower, A., Girosi, F., Meili, R., Scoville, R., & Taylor, R. (2005).
Can electronic medical record systems transform health care? Potential health benefits,
savings, and costs. Health affairs, 24(5), 1103-1117.
Mulenga, A., &Ataguba, J. E. O. (2017). Assessing income redistributive effect of health
financing in Zambia. Social Science & Medicine, 189, 1-10.
Murray, C. J., Lim, S. S., &Dieleman, J. L. (2017). Expanding GBD collaboration—call for
experts in health financing and health systems. The Lancet, 389(10064), 18-19.
Pinto, R., Masaki, E., &Harimurti, P. (2016). Indonesia Health Financing System
Assessment.
Schäferhoff, M., Fewer, S., Kraus, J., Richter, E., Summers, L. H., Sundewall, J., ... &
Jamison, D. T. (2015). How much donor financing for health is channelled to global
versus country-specific aid functions?. The Lancet, 386(10011), 2436-2441.

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Attachment 1:
Business plan
Collaboration and approval
Local Health district (LHD)
Time
capital
Financial resources and equipment
Resources (human and physical)
Staffing Consumables Utilities
Receptionist (1staff) Gloves and spirit Building rent
Electricity Bill
Nurse Blood collection tubes and Water bill
Urince collection bottles
Needles
Lab technician (2)
Cleaner (1)
Started pathology lab
Out comes

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Attachment 2:

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