Business Budget Case

This Business Budget Case study discusses the financial perspective of incorporating an MRI machine in a hospital. It covers the background, proposal, risks, process, resources, and financial information. The study aims to enhance revenue and expand services while considering the needs of the patients and the hospital. The implementation plans include recruitment, purchase, setup, training, and promotion of the services.

Service Title
Business Budget Case
Student Name
Student ID
1

Table of Contents
Executive Summary....................................................................................................3
Outline........................................................................................................................ 4
Background................................................................................................................ 4
The Proposal.............................................................................................................. 4
Risks........................................................................................................................... 6
Process.......................................................................................................................7
Resources.................................................................................................................. 7
Reporting of outcomes................................................................................................7
Report outcomes........................................................................................................7
Financial Information..................................................................................................8
Implementation plans..................................................................................................8
References.................................................................................................................9
Attachment 1............................................................................................................ 11
Attachment 2............................................................................................................ 12
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Executive Summary
The hospital is enhancing its services to get in the MRI services for which it has
made a plan. The revenue earnings through it is high which would help the hospital
to expand its operations and infrastructures. The functions, processes, risks,
manpower issues along with responsibilities of each personnel is been looked after in
the modern day. This has the ability to enhance the services which was much
needed by the people of the area. Hence, it’s a social benefit for the community and
hospitals way to enhance its revenue for future care and cure service enhancements.
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Outline
The Nepean Blue Mountains Local Health District has incorporated the new MRI
machine in its set up which is being discussed from a financial perspective. The
existing facilities did not have the Local Health District (LHD) did not had a well-
structured infrastructure which could address this needs of the patients coming in.
hence the hospital invested money to get one and thus the financials of the firm is
been studied to understand if the financial decisions made were right if it has served
the most needful purpose of LHD. The last few years has seen a dramatic shift in the
number of patients which has made the needs to create more value essential for the
hospital. Without the MRI machine the hospital was suffering from patient’s
incomplete treatment and thus the satisfaction along the doctors and the patients
were growing which made the hospital to get one (Smith, Ferrari & Puczkó, 2016).
Background
The background of the business suggests that the Nepean Blue Mountains Local
Health District is the case where the MRI machines were unavailable which the
eminent need of the day was. The complete treatment was missed and thus the
hospital thought to have one. The numbers of patients’ were increasing with each
passing year and the pressure for the service was high. So to reduce the cost of the
people from the locality and to give them the needful service at the nearest location
the MRI facilities were added. The Local health Departments are to be made
competent to give them the edge it needs for services. The health services are
beneficial to the area as the people get it with ease and the cost of travelling to the
other districts was reduced. Hence the cost of the MRI was justified when the
benefits are counted (Deitrich & Hilfiger, 2017).
The LHD has taken special steps to include this in the system as the demands was
high and the convenience of the locals were also a great reason. The implementation
was on no profit no loss basis which gives the business its needful attributes that it
may use for the long run to aid the locals to avail this benefit in the vicinity.
The Proposal
The case of the hospital suggests that the capacities of the hospital has to be
increased as the current space is out of date to the capacity that the demand for
patients have from the hospital. Hence the increase in the space for the
enhancement of the services is needed. Thus the business had to make plans to
include the medical sales along with MRI generated sales revenue to enhance its
capacities.
Aims
The aim of the LHC is to enhance its revenue on medicine sales and enhance the
services so that the revenue is increased by the business so that it can fund the new
expansion plans that it has. Further, the kind of pressure that it has on the current
staffs can’t be enhanced without recruitment of new people to manage. Thus how the
business handles this recruitment drive is what is necessity for expansion. The idea
is to keep it cost free and the breakeven should be such that the income would
support the expenses (Wirtz & Zeithaml, 2018).
Benefits
 Efficiency gains
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 The gains in the proposals of the hospital includes the patient’s safety and security, better
treatment facilities addition, expand to make space for the ever increasing people in the
LHD. The cost for the new infrastructure is supposed to come from the sales which needs
to increase.
 Potential savings/increased costs
 The hospital would increase its expenses due to the added infrastructure cost it
has to bear. the business plans to generate sales revenue and the MRI machine
use revenues to be funding the new construction site (Tidd & Bessant, 2018). So
the potential cost of the project can be enhanced with the MRI machine use
where there is a chance of earning 39 million in 1 year which should pay for the
expansion.
 Term of proposal
The contract term here is done here in weekly, hourly basis for the employees
while the proposal for the profits is made for a year. The term of the proposal
suggests that the expenses are lower when compared with the time scale of 6
months that is been suggested for the new project to be over.
 Rebates/revenue potential
The revenue is to be enhanced significantly once the MRI machine has been
added. The machine would need strained staffs to handle the operations but it
has the capacity to enhance the capacity of the hospital which would be
supported by the revenue generated by the MRI machine. The new technology is
supposed to add revenue which the business would use for its expansion apart
from its medicine sales (Dafny, Ho & Lee, 2019).
 What are the expected benefits of this proposal?
Factor Benefits
Patients The patients with various complains about the MRI issues not being
present in the hospital which would be useful for the patients who
previously had to travel to other parts for the same service. This
inclusion means that the patients would get the service at hometown
without the cost of travelling incurred. Hence the capacity for the
revenue of the hospital would increase while the patients get the best
of services (Durrah, Allil & Kahwaji, 2015).
Facility The facilities in the hospital along with its size is been enhanced. The
MRI facility would draw a large amount of people towards the business
of healthcare with the addition of this facility. Previously it was difficult
and hectic for people to get such services in the vicinity which this
acquisition has resolved (Nandan et al., 2015).
Clinicians The people have determined to participate for the MRI operation job
has been calculated as 8 nurses, one radiologist, 4 admin staffs
totalling 13 in number who would maintain the clinic and its activities.
These staffs would have their own rosters as decided by the
departmental head in this case the hospital superintendent. The pay
scales on weekdays and weekends are very different to encourage a
person to work on days which suits them the best.
Other The brand repute for the Nepean Blue mountain hospital has gained a
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great consumer benefits that would increase footprint in the long run.
Risks
List the risks (in the table) that are associated with this proposal either perceived or
real
Risk Issue Severity Impact Mitigation Plan Notes
Financial risk The risk in this
case is low as
the hospital
would gain a
lot of money in
the process
which would
reduce the
burdens that
the business
has and
further
improve its
income for
next plans.
The fixed cost
of the hospital
would be
rapidly repaid
due to the
earnings and
the same
earnings
would drive
the employee
salaries which
eventually
enhance the
financial
performance.
The business
may sell off its
MRI machine if
the plans are
not in the way it
should be.
Thus, the
capital invested
is risk free as
the budget
suggests due to
its capability to
earn such huge
money (Raine
et al., 2016).
The more the
inflow of
revenue the
better it is for
the hospital to
enhance its
skills and
wings to
expand.
Patients The plans
have 8 trained
nurses, 4
clerks and one
radiologist for
the job which
is suitable for
the event
since the
operations is
just being
started.
The Doctors
would suggest
from the out
patients
department for
patients who
visits with
various
ailments to
conduct MRI
scans on
them.
The plans of
treatments have
to be such that
all stakeholders
are aware and
have the
capacity to deal
with each
possible
scenario to give
the best of
services.
A
communication
channel would
ensure the
patient flow
and get the
results back to
the needful
departments
who ordered
for the service.
Procurement The risk of
procurement
can be
covered if the
brand of MRI
machine has a
service
warranty and a
guarantee of
functions of
minimum of 5
years.
With the best
inclusion of
the machinery
that has been
effectively
communicated
has made the
impact fruitful
for all
stakeholders
(Nelson &
Staggers,
2016).
The company
must look into
the services
provided and
promises of
best MRI
conducts are
guaranteed.
The quality of
staffs who
would operate
the new
machine are
very important
for the
services in the
long run.
Insurances No risk from
MRI diagnosis
The patients
who needs
such care
would get the
services
Hospital must
see that the
services of the
MRI capabilities
are used to its
Satisfaction of
the patients is
key to the
service
delivery which
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Risk Issue Severity Impact Mitigation Plan Notes
fullest and the
people are well
trained to
handle the
same.
means that the
business
would get the
service at their
doorsteps
rather than the
previous
arrangements.
Process
Action
The MRI machine would get the needful benefits to the firm in the long term for the
business and its stakeholders. So the cost of the machine has to be arranged which
also needs trained staffs to be employed so that the suppliers gets the right machine
with right price and gets the best possible value. The provision of this service would
ensure that the people and the processes are in order to get the best for the business
(Van de Vrugt et al., 2017).
Resources
The needs for the new MRI operations are:
- 8 trained nursing staffs,
- 1 Radiologist
- 4 Clerical staffs
- Films that would print the report
- Injections that is pushed before the test
- Catheter saline solutions for the patients
Reporting of outcomes
Training Details
The people who would work on the MRI machines are to be highly trained to use the
machines, the uses of the same, the safety measures, report if there is any damage
like actions. Further they are trained to get the MRI services go fine and with best
efficiency. The revenue that the business wish to generate through this machine are
huge so the business would use all its potential to draw from the MRI machines for
which they have invested (Kreif et al., 2016).
Manpower needs
The hospital would need trained nurses, clerks and Radiologists in the centre to
make the service operational for the MRI. The investments for the machine was
aimed to get the best from the people employed so that the business generates the
needful revenue (Turner et al., 2016).
Report outcomes
This report would help the business of the hospital to form a team of people to
undertake the task of implementation of the MRI services. This would include cost,
insurance, people, processes etc to ensure best working practices.
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Financial Information
The financials of the organization in this case is needed in details.
- Total cost of this proposal shows as total net cost= total cost –revenue
For the organization this sums up to its income as per the disclosure is
$38993187.20. hence the projections show that the breakeven is reached and
the profit on the very first year is around $39 million.
- Cost Centres
The payments of staffs, medicines needed pre and post the test, the machine
value for the first year are the cost centres in this case.
- Funding source
The hospital may go for crowd funding or sourcing it from the banks as the
possibility to get both is applicable in this case where the profits and benefits are
so high.
- Recurring Cost
The cost of medicines, salaries of the staffs are the recurring charges which may
be added with the insurance premium paid for the machine.
Implementation plans
The implementation would need the recruitment, purchase, setup of the machine,
training, and promotion of the services among the people. All these would help the
business to make the project of MRI implementation successful within the given
timeline of 3 months. Thus the timeline for the plans are as below:
Actions Time line Outcome Responsibility
Selecting the best
MRI machine in the
market with best
repute for service
and after sales
support.
First 2 weeks Machine to be
bought with the
insurance and
needful warrantee
and guarantee
papers
The Purchase
manager with the
Medical
Superintendent
Recruitment and
training of staffs
First 2 months People from
various other
institutions and
trained staffs to be
brought in
The training they
have would help in
starting the best
practices in-house
from day one.
Preparing the
medicines
Continuous
throughout the
operations
The needful
indents has to be
raised and seen
that it continuous
coming
The Departmental
Radiologist
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References
Dafny, L., Ho, K. & Lee, R.S., (2019). The price effects of cross‐market mergers:
theory and evidence from the hospital industry. The RAND Journal of
Economics, 50(2), pp.286-325.
Dietrich, M. & Hilfinger, F., (2017). Business model design and entrepreneurial risk
evaluation for health service innovations. In Service Business Model
Innovation in Healthcare and Hospital Management (pp. 179-194). Springer,
Cham.
Durrah, O., Allil, K. & Kahwaji, A., (2015). Impact of service quality dimensions on
hospital image: The mediating role of patient satisfactions. International
Journal of Applied Business and Economic Research, 13(9), pp.6937-6951.
Kreif, N., Grieve, R., Hangartner, D., Turner, A. J., Nikolova, S., & Sutton, M. (2016).
Examination of the synthetic control method for evaluating health policies with
multiple treated units. Health economics, 25(12), 1514-1528.
Nandan, M., London, M., & Bent-Goodley, T. (2015). Social workers as social change
agents: Social innovation, social intrapreneurship, and social
entrepreneurship. Human Service Organizations: Management, Leadership &
Governance, 39(1), 38-56.
Nelson, R., & Staggers, N. (2016). Health Informatics-E-Book: An Interprofessional
Approach. Elsevier Health Sciences.
Raine, R., Fitzpatrick, R., Barratt, H., Bevan, G., Black, N., Boaden, R., ... & Dixon-
Woods, M. (2016). Challenges, solutions and future directions in the
evaluation of service innovations in health care and public health. Health
Services and Delivery Research, 4(16).
Smith, M.K., Ferrari, S. & Puczkó, L., (2016). Service Innovations and Experience
Creation in Spas, Wellness and Medical Tourism. In The Handbook of
Managing and Marketing Tourism Experiences (pp. 299-319). Emerald Group
Publishing Limited.
Tidd, J., & Bessant, J. R. (2018). Managing innovation: integrating technological,
market and organizational change. John Wiley & Sons.
Turner, S. J. W., Goulding, L., Denis, J. L., McDonald, R., & Fulop, N. J. (2016).
Major system change: a management and organisational research
perspective. In Raine R, Fitzpatrick R, Barratt H, Bevan G, Black N, Boaden
R, et al. Challenges, solutions and future directions in the evaluation of
service innovations in health care and public health. Health Services and
Delivery Research, 4(16), 85-104.
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Van de Vrugt, N.M., Schneider, A.J., Zonderland, M.E., Stanford, D.A. & Boucherie,
R.J., (2018). Operations research for occupancy modeling at hospital wards
and its integration into practice. In Operations Research Applications in
Health Care Management (pp. 101-137). Springer, Cham.
Wirtz, J. & Zeithaml, V., (2018). Cost-effective service excellence. Journal of the
Academy of Marketing Science, 46(1), pp.59-80.
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Attachment 1
11
Hospital
Superintendent
8 nursing Staffs 1 radiologist 4 Clerical staffs
Official Clerical
jobs like supply
and stores
management,
Revenue
collection,
transactions etc.
Head of the
department
responsible for
processes,
requisitions, report
generation,
advises to
members, roster
preparation etc
Actual
execution,
report
generation,
patient care,
handling of
patient safety
and hygiene of
the department.

Attachment 2
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