New Department for Obesity - Proposal, Benefits, Risks and Process

This report proposes the opening of a new department for the treatment of obesity, outlining the benefits, risks, and process involved. The aim is to provide specialised services at cheaper prices and increase revenue for the hospital. The report also highlights the financial risks and mitigation plans.

Running head: NEW DEPARTMENT FOR OBESITY
New Department for Obesity
Name of the Student:
Name of the University:
Authors Note:

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NEW DEPARTMENT FOR OBESITY
Contents
Executive Summary.......................................................................................................2
Outline............................................................................................................................3
Background....................................................................................................................3
The Proposal...................................................................................................................4
Aims...........................................................................................................................4
Benefits......................................................................................................................4
Risks...............................................................................................................................8
Process..........................................................................................................................11
Resources.....................................................................................................................12
Reporting of outcomes.................................................................................................12
The reports will be presented to the management of the hospital on weekly basis.
..............................................................................................................................12
Financial Information...................................................................................................12
References....................................................................................................................14
Attachment 1................................................................................................................17
Attachment 2................................................................................................................17
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NEW DEPARTMENT FOR OBESITY
Executive Summary
In the present report an effort is being is made in respect of ensuring that the benefits
and the costs related to the proposal being made are clearly outlined. It is found that
there are several costs related with the application and the commencement of the
proposed department that is concerned with the provision of services and advises
related to obesity. But the hospital will be able to recover the same due to increased
patient footprint registered by it in the future.
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Outline
In the present report an effort is being made to describe the proposal of
opening a new department that is concerned with the treatment of obesity. Local
health district must ensure that requisite financial and advisory support is provided to
the hospital in this regard (Murray et al., 2017).
Background
In the recent times it is observed that the number of obese patients have
increased dramatically. The doctors are seeing obese patients by scores in the hospital.
Even children are coming up with chronic or acute obese conditions. For the purpose
of addressing the issue of ever increasing obesity in the patients, it is necessary that a
dedicated and specialised approach is being taken towards it. In pursuance of it the
hospital is contemplating to open up a department that will solely treat the patients
suffering from obesity. This would require the hiring of the services of specialists of
the field and it will ensure that the patients receive timely and most appropriate care
as is expected by them from the hospital (Schäferhoff et al., 2015). For the purpose of
smooth functioning and commissioning of the new department the hospital will have
to incur some expenditure in this respect. The expenditure of the company will
included the services of the hired nurses, the fees that is paid to the dieticians the
various sorts of consumables like glucometer strips etc. but the same will be
recovered in a short period of time due to the fact that number of patients that are
coming in the hospital with the complaint of diabetes are increasing rapidly (Wright et
al., 2017).
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NEW DEPARTMENT FOR OBESITY
The Proposal
In the present case a proposal is being made in respect of opening a new
obesity department within the hospital. For the purpose of successful integration of
the same it is required that in respect of the costs that are being incurred in respect of
its initiation must be recovered from corresponding revenue from the patients of the
hospital (Cashin et al., 2017). .
Aims
The main aim of the proposal is to ensure that the services that are provided to
the patients suffering from obesity becomes specialised and it is ensured that a
particular department of the hospital is engaged in the provisions of these services
(Fan & Savedoff. 2014). The aim is to provide specialised services at cheaper prices.
This will ensure that the hospital is able to break-even in a very short period of time.
The rolling out of a completely new department solely addressing the issue of obesity
will ensure that the efficiency of the entity in managing the services that is provided
to the patients in relation to obesity (Evans & Pablos-Méndez, 2016).
The hospital will also be able to increase the revenue that is generated by it from the
fees collected from the patients. This will be achieved by providing quality services
and products to the patients at a price that is reasonable and affordable (Lu et al.,
2016).
Benefits
 Efficiency gains
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The most important efficiency gains that are achieved by the entity through the
implementation of this proposal are that the quality of the service that is provided to
the patients will improve many times. The hospital will be able to manage its
resources better in terms of utilising the benefits of the human resource that is
available with it (Liaropoulos & Goranitis, 2015). The doctors who are specialised in
the treatment of obesity will be transferred to the right department and the associated
and corresponding costs to be incurred in respect of the treatment could be better
allocated to the department concerned (Kutzin & Sparkes, 2016).
This means if the hospital choses to allocate the overhead incurred by it for a
specified period of time depending on the type of the treatment that has been provided
to the customers and the equipment and consumables used for it, then in case of the
allocation of the overhead incurred in respect of the treatment of the obese patients,
the efficiency associated with it will improve.
 Potential savings/increased costs
In the absence of dedicated obese treatment facility within the hospital, it was
losing patients who found the service provided by the hospital unsatisfactory. Though
in the starting phase the hospital will have to incur high capital expenditure for the
acquisition of the requisite equipment for conducting tests and expenditure related to
the acquisition of right human resource i.e. doctors specialised in obese treatment, the
entity will be able to recover the costs in a very short period of time (Kastor &
Mohanty, 2018). The reason for this is that the number of customers that are going to
be treated by the hospital on a daily basis will increase significantly.
The increased costs that are going to be incurred by the entity will comprise of
consumables like increased requirement for sanitising and disinfecting products,
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glucometer strips, increased purchase of medical supplies and the increased
requirement of disposable gloves (Mulenga & Ataguba, 2017). In addition to that the
entity will have to incur additional costs in respect of various amenities like electricity
charge, insurance charge, legal and professional services and expenditure in the
respect of the rent that has to be paid for the building acquired for the department.
Furthermore the entity will have to bear the depreciation amount that is going to be
charged on the equipment and the building acquired for the opening of the department
in the hospital solely concerned with the treatment of the obese patients.
 What are the expected benefits of this proposal?
Factor Benefits
Patients The patients are the prime stakeholders of the hospital who are going
to be benefitted the most. The reason for this is that, often it is seen
that the condition of the patient is serious and he requires the attention
of a specialist like a dietician. Due to the unavailability of the adequate
and proper human resource with the hospital the patient is not able to
get the attention that he expects from the doctors and the hospital as a
whole. Hence, the increased availability of specialised doctors will
ensure that the service and the care that the patients are receiving from
the hospital are improved and this ultimately results in the increased
satisfaction of the patients of the hospital.
Facility With the introduction of a completely new department in the hospital,
the facilities that are being provided by the company will improve
significantly. The reason for this is that for the provision of the better
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quality of service the hospital is ensuring that the requisite number of
specialised practitioners and the requisite amount of capital
expenditure is done in respect of the acquisition of the capital assets
required by the entity for the provision of the service and the care that
is expected by the entity.
Clinicians The benefit in respect of the clinicians would be that the application of
the knowledge possessed by them will find better application. The
reason for this is that all the patients that are presently treated by the
doctors come with various diseases and the medication and treatment
regarding the same differs widely. Due to this the clinician’s efficiency
reduces as the procedures, steps, methods and the medication that is
given to the patients vary very significantly. In case a separate
department is opened up that will be addressing the issues or diseases
related to obese patients only, the efficiency with which the treatment
and the service provided to the patients by the clinicians will improve
significantly. As the methods, steps and the medication used for the
treatment of the patients become more standardised the skill and the
efficiency of the clinicians addressing the same issue will improve
significantly. This will also result in the saving of the losses that are
caused due to the mistakes and the inefficiency shown by the
clinicians.
Other One of the other benefits that are received by the hospital with the
commencement of the proposed separate department for the obese
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patient is that the reputation of the hospital will significantly improve
in the present market. This would result in the increase in the market
share of the hospital and increase the number of the patients that are
being treated by it every day. With the increase in the number of
patients the hospital will be able to recover the increased costs that it
has incurred in respect of the acquisition of the capital assets and the
adequate human resource required for the provision of the services that
is expected by the patients from the hospital. This will help
management of the hospital to feel the encouragement of the
introducing new departments within the hospital and increase the
number of patients and the corresponding revenue earned by it further.
Risks
Risk Issue Severity Impact Mitigation Plan Notes
Financial risk The financial
risk that is
involved with
the proposed
opening of the
new
The direct
implication
will be that
the
expansion
and addition
The hospital will
have to ensure
that the service
that is provided
to the customer
is very good and
The company
will have to
manage the
risk associated
with the
project and the
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Risk Issue Severity Impact Mitigation Plan Notes
department
solely
concerned with
the treatment of
obese patients
is very high.
The reason for
the same is that
huge amount
will have to be
spent by the
hospital in
respect of
ensuring that
the requisite
service and the
care expected
by the patients
of the hospital
are provided to
them.
of the new
department
will add to
the financial
burden that
the hospital
will have to
bear. The
interest and
other
liabilities
will crop up
in respect of
the amount
that will be
arranged by
the hospital
from loans
and
borrowings.
Furthermore
the expense
of the
is capable to
meet their
expectation. The
reason for this is
that only by
doing this the
company will be
able to increase
the number of
patients that are
treated by it.
This will
ultimately result
in the increase in
the revenue that
is earned by the
entity with the
increase in the
revenue the
company will be
equipped to pay
off the expense
of the interest
possible
revenue that
can be
generated by
it. With the
effective
management
the hospital
will be able to
garner the best
benefits
possible for
itself.
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Risk Issue Severity Impact Mitigation Plan Notes
hospital will
increase
significantly
given the
increase in
the demand
of the
consumables
of the
company.
and other
expenses on a
timely and
regular basis.
Patients The risk that is
involved is
regarding the
adequate
number of
patients. The
risk is
moderate.
The number
of patients
will directly
influence the
revenue that
is earned by
the hospital.
The hospital
must ensure that
the service
provided to them
is of good
quality
For the
success fo the
proposal the
increase in the
number of
patients is
crucial.
Insurances The company
will have to
incur huge
insurance
expenditure in
The increase
in the
amount of
insurance
will be a
The company
must pay the
insurance
regularly and
avoid any sort of
Insurance is
very important
especially in
case of a
hospital. The
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NEW DEPARTMENT FOR OBESITY
Risk Issue Severity Impact Mitigation Plan Notes
respect of the
building
acquired on
rent and the
equipment
acquired by it.
burden on
the amount
payable by
the hospital
by its
operations.
penalty or fines. reason being
that the cost
involved is
very high.
Process
 Action (insert as a flow chart as attachment 1)
For the purpose of ascertaining the members to be nominated for the particular
proposal and effort will be made to ensure that the qualification report of all of the
doctors and the other available human resource with the company is objectively
analysed. Only the doctors and the practitioners specialising in the obesity will be
appointed for the proposal. for the implementation of the proposal an effort will be
made to at first list out the cost that are to be incurred and then fix the sources from
where the requisite funds will be arranged (Kroneman et al., 2016).
For the management of the programme the financial advisor of the hospital and the
departmental heads comprised of specialised doctors and practitioners would form a
committee that will ensure the success of the proposal and the monitoring of its
implementation (Reich et al., 2016).
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Resources
The additional requirement of the resources can be enlisted as follows:
a) Dietitian:
Specialists of the field will be required for the purpose of ensuring the delivery
of quality care and service to the patients of the hospital.
b) Registered nurse:
The requirement of the registered nurse will increase as the medication and the
treatment prescribed by the doctor will have to be carried out by them.
c) Sanitising and disinfecting products:
As the new department will have loads of patients and staff the requirement of
the sanitising and disinfecting products will also be increase.
d) Electricity, water and waste disposal:
For the purpose of running the new department these are the basic
requirements.
Reporting of outcomes
For the purpose of monitoring of the costs that are being incurred in respect of the
proposal a committee comprised of cost professionals will be hired. It will be their
responsibility to ensure that the details regarding the savings, outcomes and any
decrease in the costs of the entity is being duly reported to the management of the
hospital (James et al., 2018).
The reports will be presented to the management of the hospital on weekly basis.
Financial Information
Some of the line items that are being utilised for the purpose of preparation
of the budgets from a zero base are as follows:
a) Dietitian
b) Registered nurse.
c) Receptionist
d) Oncost
e) Expenditure in respect of sanitising and disinfecting products.
f) Expenditure for the purchase of glucometer strips.
g) The various medical supplies bought
h) Acquisition of disposable gloves.
i) Advertisement expenditure
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NEW DEPARTMENT FOR OBESITY
j) Insurance
k) Legal and professional services
For the purpose of implementation of a contingency plan an effort has been made to
prepare a revised break even analysis. In this the expenditure of the proposed
department has been reduced to $74609.60 (Kutalek et al., 2015). This reduction was
achieved by reducing expense like reducing the rent amount by selecting a cheaper
place, choosing a cheaper insurance plan, and cutting the hours spent by the staff.
Accumulation of all this reduction resulted in the savings of 10%.
For the purpose of calculation of the break-even analysis due consideration was given
for considering the various cost requirements and the utilities of the new department.
The total overall cost of the obesity care is estimated to be $740747.20 (Grigorakis et
al., 2018). The total income that is earned by the proposed department is $741000.
Thus for the profit calculation the total income must be subtracted by the total
expense that is being incurred by the entity. It is seen that the profit earned by the
entity amounted to $252.80. Hence the department has just broke even.
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References
Cashin, C., Bloom, D., Sparkes, S., Barroy, H., Kutzin, J., O'Dougherty, S., & World
Health Organization. (2017). Aligning public financial management and
health financing: sustaining progress toward universal health coverage.
World Health Organization.
Evans, T., & Pablos-Méndez, A. (2016). Shaping of a new era for health
financing. The Lancet, 387(10037), 2482-2484.
Fan, V. Y., & Savedoff, W. D. (2014). The health financing transition: a conceptual
framework and empirical evidence. Social science & medicine, 105, 112-121.
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.
James, C., Gmeinder, M., Rivadeneira, A. M. R., & Vammalle, C. (2018). Health
financing and budgeting practices for health in South Africa. OECD Journal
on Budgeting, 17(3), 1-33.
Kastor, A., & Mohanty, S. K. (2018). Disease-specific out-of-pocket and catastrophic
health expenditure on hospitalization in India: Do Indian households face
distress health financing?. PloS one, 13(5), e0196106.
Kroneman, M., Boerma, W., Van den Berg, M., Groenewegen, P., De Jong, J., & Van
Ginneken, E. (2016). Netherlands: health system review. Health systems in
transition, 18(2), 1-240.
Kutalek, R., Wang, S., Fallah, M., Sanford Wesseh, C., & Gilbert, J. (2015). Ebola
Interventions.
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Kutzin, J., & Sparkes, S. P. (2016). Health systems strengthening, universal health
coverage, health security and resilience. Bulletin of the World Health
Organization, 94(1), 2.
Liaropoulos, L., & Goranitis, I. (2015). Health care financing and the sustainability of
health systems. International Journal for Equity in Health, 14(1), 80.
Lu, C., Mejía-Guevara, I., Hill, K., Farmer, P., Subramanian, S. V., & Binagwaho, A.
(2016). Community-based health financing and child stunting in rural
Rwanda. American journal of public health, 106(1), 49-55.
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.
Reich, M. R., Harris, J., Ikegami, N., Maeda, A., Cashin, C., Araujo, E. C., ... &
Evans, T. G. (2016). Moving towards universal health coverage: lessons from
11 country studies. The Lancet, 387(10020), 811-816.
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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Wright, J., Bhuwanee, K., Patel, F., Holtz, J., van Bastelaer, T., & Eichler, R. (2017).
Financing of universal health coverage and family planning: a multi-regional
landscape study and analysis of select West African countries: Guinea.
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Attachment 1
Process flow chart for new service
Attachment 2
Financial report – total life costs for the proposal
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A committee for the implementation and the commencement of the
proposal has to be establishedIt will comprise of financial advisors and experts
and a team of specialists doctors.
The committee will ensure the success of the
proposal.
Recognition of the financial sources of the hospital will be done
The financial advisors and the experts of the feild
will ensure the implementation of the optimal
capital structure for the hospital
All the costs associated with the sources of funds
will have to be taken into consideration.
Ascertainment of the costs inolved
The help of the experts will be taken in this reps The experts are needed to consider all the
relevant expenditure for the decsion making
process.

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NEW DEPARTMENT FOR OBESITY
consumables cost of $192,067.20, total utilities cost of $32,500.00, administration cost of $13,780.00, and a depreciation cost of $ 24,000.00. The incomes
of the obesity care are doctor fees of $390,000.00, physical examination and other lab fees of $143,000.00, and cost of medical supplies of $208,000.00.
The gross income of the obesity care is $741,000.00. Thus, the profit calculation can be understood by subtracting the expenses from the gross income
providing us with a profit of $252.80. Hence, the obesity care has just broke even in total.
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Product/Service Formula Calculation Explanatory Notes
Doctors fees $ 390,000.00
Physical examination $ 143,000.00
Medical Supplies Sold $ 208,000.00
Insert total amount here -> $ 741,000.00
Break Even Calculation
$ 741,000.00
Number of product/services x number of patients x days of
operation x weeks of operation x cost per service
1 doctor fees would be
multiplied with 10 patients 5
days operating for 52 weeks a
total at a fees of 150
Number of product/services x number of patients x days of
operation x weeks of operation x cost per service
2 Physical examination fees
would be multiplied with 10
patients 5 days operating for
52 weeks a total at a fees of
27.5
Number of product/services x number of patients x days of
operation x weeks of operation x cost per service
2 medical supplies would be
multiplied with 10 patients 5
days operating for 52 weeks a
total at a fees of 40
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