New South Wales LHD Obesity Department Business Case Analysis

This report presents a business case for the establishment of a new obesity department within an unnamed Local Health District (LHD) in New South Wales. The proposal addresses the growing issue of obesity and aims to provide efficient and professional services to patients. The report includes an in...Read More

[New South Wales]
Local Health District
[Department of Obesity]
Business Case
May 2017
Unnamed LHD Business Case version 2 30/08/2024 pg. 1

Contact details (key contact)
Department: Department of obesity
Name: Rickey
Position: Head of the department
Telephone N/A
Email: [e-mail]
Unnamed LHD Business Case version 2 30/08/2024 pg. 2

Contents
CONTACT DETAILS (KEY CONTACT)------------------------------------------------------------------------2
INTRODUCTION------------------------------------------------------------------------------------------------------4
THE PROPOSAL-----------------------------------------------------------------------------------------------------4
RISKS--------------------------------------------------------------------------------------------------------------------6
PROCESS--------------------------------------------------------------------------------------------------------------7
RESOURCES----------------------------------------------------------------------------------------------------------8
RESOURCE DETAILS----------------------------------------------------------------------------------------------8
REPORTING OF OUTCOMES------------------------------------------------------------------------------------8
FINANCIAL INFORMATION---------------------------------------------------------------------------------------8
OPTIONS--------------------------------------------------------------------------------------------------------------10
INTELLECTUAL PROPERTY-----------------------------------------------------------------------------------10
OTHER IMPLICATIONS------------------------------------------------------------------------------------------10
IMPLEMENTATION PROCESS---------------------------------------------------------------------------------10
IMPLEMENTATION PLAN---------------------------------------------------------------------------------------11
SUPPORTING DOCUMENTATION----------------------------------------------------------------------------13
SIGN OFF BY EXECUTIVE--------------------------------------------------------------------------------------13
References------------------------------------------------------------------------------------------------------------- 17
Unnamed LHD Business Case version 2 30/08/2024 pg. 3

Introduction
Outline
The report focuses on the budget and financial factors of the new department of the hospital
which is related to the obesity. local health district of the Sydney market has been approved that this
department would help the community and the local resident to improve their overall level in the society.
the advanced technology would be used in the business in order to assure the process and the meeting
of the goal of the business.
Background
As studied, in the recent times, along with the change in the lifestyle, people are facing obesity
issues. A report explains that the number of people who are suffering from the obesity case in improving
day by day. Due to which, the demand of such department a services have been improved in the
hospital industry. Currently, it has been studied that if the new department of obesity would be
introduced by the business than it would incur huge cost to the hospital because of the new equipment,
new hiring and other equipment related to the obesity disease. On the basis of the calculations and the
study in the market, it has been studied that the total associated cost with the project would be
$782,534.40. The contract of the new department would be of 1 year only at the initial level. If the
department would be able to meet the BEP level than the hospital management would make further
decision to make the investment or not in the business (Kroneman et al, 2016).
In order to commencement of the new department in the business, it is important to set up a new
management committee and hire professional people who could manage all the activities of the
business. The different aspect would occur different outcome in the business and thus it become
important for the business to measure all the factors and make the decision accordingly. the local health
district has also assured that these changes and the commencement of the new department would help
the business to improve at better level and the footfalls of the patient would also be improved.
The Proposal
The business proposal of the new obesity department in the business is as follows:
Aims
The main aim of the new department of obesity is to offer the efficient and professional services
to the patient in lower prices so that the market share of the hospital could be improved along with the
higher revenue in the market. It explains that the hospital is engaged to offer better services to its
patients in order to assure the higher revenue and better market share in the area. the better equipment
would be bought by the hospital in order to assure better treatment of the patient in the hospital.
At initial level, the capital cost of the hospital would be higher but market research explains that
the patient number are huge in the market who are suffering from the obesity issues and thus the
hospital would be able to recover the capita cost in lesser time ad it would help the business to reach
Unnamed LHD Business Case version 2 30/08/2024 pg. 4

over the BEP level soon (Evans & Pablos-Méndez, 2016). Along with that, the overall profitability level of
the business would also be improved.
Benefits
 Efficiency gains
The efficient gain of the business through commencement of the new business plan is to offer the
quality services to the patient so that they could overcome with the obesity issues and the revenue of the
business could be improved. the business plan explains that the better management of the resources
would be done by the hospital which would make it sure that the better revenues could be got by the
business.
 Potential savings/increased costs
The business plan explains that the hospital would require huge funds to commence the new
department as new equipment, space, human resources, marketing expenditure etc would be required to
set the department and treat the patient of obesity. The business could raise the funds from the external
sources as the retained earnings are profit of the business is not enough to commence the business.
Further, it has been evaluated that at initial level, the cost of the business would be higher but along with
the time, the cost would be recover by the business and the margin of safety level would be achieved.
Along with the improvement in the number of patients, the revenue of the business would be higher and
it would offset the total cost which has been incurred to commence the business (Cashin et al, 2017).
 Term of proposal
At initial level, it has been planned for the hospital management to commence the business for 1
year only. If the feedback would be positive and the company would be able to make the profits through
the new department than it would be run further otherwise it would be wind up.
 Rebates/revenue potential
The local health district has assure that 20% rebate would be given from the government to the
hospital in order to commence the business and treat the patients efficiently. Though, various terms and
conditions have been attached by the LHD with the rebate that if the nominal fees would be charged by
the hospital than only they would be able to get the rebate. the management has studied and found that
it would occur more loss to the business and hence, they decided to not to avail the rebate from the LHD
and the government.
 What are the expected benefits of this proposal?
Factor Benefits
Patients For the patients,
It would be easier to get better services at nearby area.
The services would be little cheaper and it would make it easier for the patient to get
treatment ASAP.
Facility The advanced technology and the equipment would be implemented in the department
to make sure that the better services are provided to the patients.
Clinicians The professional staff would be there in the department to treat the obesity people which
would make it easier for the patient and hospital to assure better services and higher
Unnamed LHD Business Case version 2 30/08/2024 pg. 5

revenue.
Other LHD could offer various benefits to the hospital.
The market share and the opportunity level in the hospital industry would be improved.
(Kastor & Mohanty, 2018)
Risks
List the risks (in the table) that are associated with this proposal either perceived or real
Risk Issue Severity code as
per MoH Risk
Impact Mitigation Plan Notes
Financial risk Public liability
Fraud
Commercial income
Administration
Operational budget
and financial
performance
The financial
risk would affect
the total cost
and the
investment level
in the business.
along with that,
it would affect
the total
revenue of the
business.
Better strategies and
plan could help the
hospital to mitigate
the financial risk
level in the business.
At the initial level, all
the financial factors
must be studied by
the management to
assure that the level
of financial risk is
lower in the
business.
Delegation levels Litigation
Intellectual property
Regulatory
compliances
Contract
management
The delegation
risk could affect
the business at
huge level. it
could even stop
the business
and lead to the
business
towards higher
loss.
Better advices,
strategies and plan
could help the hotel
to mitigate the
delegation risk level
in the business.
At the initial level,
advises must be
taken from the
lawyer about the
business operations
and contract.
Procurement Strategic and
operational
planning
Government
stricture and
financial
management
Economic
circumstances
Enquiries and
Procurement is
the main key for
the business.
avoidance of
procurement
could affect the
business at
internal as well
as external
level.
The professional
procurement level
and a depth
research could
reduce the
procurement level in
the business.
At the initial level,
better planning must
be done.
Unnamed LHD Business Case version 2 30/08/2024 pg. 6

Risk Issue Severity code as
per MoH Risk
Impact Mitigation Plan Notes
ministerial
Monitoring
performance
Patients Infection control
Cleaning services
Better dietician
Obesity services
Patients are the
main
stakeholder of
the department.
the patient risk
could occur
huge loss in the
business.
A good relationship
and healthy
communication
could reduce the
patient risk in the
hospital.
The good
communication is
the only key to
reduce patient risk.
Insurances Contractor and
compliances
Workplace health
and safety
Workers
compensation and
injury management
Insurance risk
could occur
huge cost in the
business
(Kastor &
Mohanty, 2018).
Insurance would
improve the labour,
patient and
professional trust in
the business.
Insurance services
must be availed by
the hospital to
encourage the
people.
Other Waste control
Cleaning services
Air quality, noise
and radiation
Other risks
could lead to the
business
towards loss
and affect the
market share of
the business.
The better strategies
could reduce the risk
level in the business.
All the factors must
be considered
before.
Process
 Action (insert as a flow chart as attachment 1)
The process chart explains that each of the staff is responsible for his or her duty. The
responsibilities have been divided among the professionals and staff on the basis of their knowledge and
the capabilities. the entire plan and the process has been set by the top level management and the head
of department to assure the efficiency of the business. the entire process has been attached in the
attachment 1 at the end of the report.
Resources
It has been found that in order to commence the new department, below resources would be
required in the business:
Unnamed LHD Business Case version 2 30/08/2024 pg. 7

Human resource department: It is required to manage all the staff and doctors of the hospital.
Financial department: it would manage all the funds and revenues of the business.
Training programs: training programs to nurse, receptionist at periodic basis would help the business to
improve at efficient level (James, Gmeinder, Rivadeneira & Vammalle, 2018).
Resource Details
 Training and support
yes, a training is required for the staff of the department to treat the patient at better level.
 FTE requirements and costs
The staff is required to work for 8 hours in the hospital. the skilled and unskilled labour would be
offered different salary on the basis for their experience and the knowledge about the work.
Reporting of outcomes
The entire monitoring would be done by the top level management and head of department of the
business. The financial and non financial performance would be studied by them to assure the efficiency
level and the profitability level of the business. The different head of the department such as marketing,
finance, HR etc would make their own reports and send it to the head of the obesity retreatment monitor
and make the changes in the strategically level (Wright et al, 2016).
Financial Information
The financial considerations for this proposal will be required in detail
 Total net cost of this proposal shown as total net cost = total cost minus any revenue
The net cost calculations have been seen in the attachment 2. The total cost occurred in the
department is $ 782534.4 and the total income of the business is $ 782600. It epxians that the total profit
of the business is $ 65.6.
TOTAL INCOME $ 782,600.00
minus TOTAL COSTS PER YEAR $ 782,534.40
Profit / Loss $65.60
 List the Cost Centre(s)
The list of the cost centre has been attached in the attachment 2 at the end of the report.
 Source of funding
The hospital requires huge fund in order to commence the new business. and for it, the funds
would be raised from the bank loan and the financial institution by the hospital. the cost centre of the
business is favourable (Pinto, Masaki &Harimurti, 2016).
 Resource requirements (Set up)
Unnamed LHD Business Case version 2 30/08/2024 pg. 8

The set up cost of staff of the new department is $ 490,360. the template has been
attached below.
 Recurrent costs
There is no recurrent cost in the business. the entire calculations amount the cost and services
have been attached in the attachment 2.
 Identify revenue potential
the total revenue would be achieved by the business from the doctor’s fee, laboratory fee and the
pharmacy supplies, the total revenue of the business is $ 782,600 (Reich et al, 2016).
 Cost reduction
If few changes would be done in the labour prices and the place than the total cost of business
could be reduced to $ 737924 against the total revenue of $ 816,400. these changes are better for the
business.
 What are the proposed costs over the life of this proposal?
please find the spreadsheet in attachment 2.
 Offset costs and other factors
Compared the current process and costs with the new proposed process and costs in the table below -
as applicable
Current process
Existing
process step
1
Action step
2
Action step
3
Action step
4
Action step
5
Action step
6
Receptionist
salary
Market has
been observed
A receptionist
has been
recruited
$ 8 per hour
has been
offered
Deal has
been
accepted
Total
receptionist
salary has
been higher.
New process
New Process
step 1
Action
Step 2
Action
Step 3
Action
Step 4
Other steps Other steps
Receptionist
salary
Market has
been observed
A receptionist
has been
recruited
$ 0.5 per
hour reduced
rate has
been offered
Deal has
been
accepted
Total
receptionist
salary has
been
reduced.
( Liaropoulos & Goranitis, 2015)
Unnamed LHD Business Case version 2 30/08/2024 pg. 9

Options
What are the options for this proposal? List the implications if status quo was continued followed by the
most preferred option first, followed by subsequent and less favoured options. Eg best method to
achieve a value for money outcome
Options List implications List net cost
position
Comments
Do nothing option No changes in the
doctor salary
No changes in the
registered medical
caretaker
The net cost of
doctor and
caretaker are $
2,70,400 and $
104,000.
Changes would affect the
professionals capability and
service efficiency.
Outline option most
preferred
Reduced labor rate The receptionist
salary has been
reduced.
It would not impact much on
the service level.
Outline the second best
option
Improve the laboratory
fee
The revenue has
been improved.
It will help the business to
improve the profitability level.
Outline the least
preferred option
Changes in the doctors
fee
The loyalty level
would e reduced.
People will start searching for
other options
(Lu et al, 2016)
Intellectual Property
There is no intellectual property as the business would only provide treatment on the basis of the
already available techniques.
Other implications
The business is just required to evaluate all the available options in the market for better
treatment and choose the best one for the business.
Implementation Process
Option No. Benefit Risk Comments
1. Changes
in the fee
structure
Improve the
profitability and
revenue level
Affect the total revenue and
market share
Better strategies must
be planned after
studying the market.
2. reduced Reduce the total The efficiency level would be Better strategies must
Unnamed LHD Business Case version 2 30/08/2024 pg. 10

Option No. Benefit Risk Comments
labour
rate
cost affected be planned after
studying the market.
3. Changes
in the
place
Reduce the total
cost
The area plays an important role Better strategies must
be planned after
studying the market.
4. changes
in the
facilities
Reduce the total
cost
The loyalty level and the service
level would be reduced
Better strategies must
be planned after
studying the market.
Implementation Plan
What are the steps that need to be undertaken to achieve the rollout of this business case? It needs to
include the full life cycle of the process/procurement implementation being proposed. It should also
consider whether a policy or procedure needs to be written or updated? Undertake a tender process as
applicable. Contract management plan needs to be developed as applicable
ACTION PROPOSED
DATE
PROPOSED
OUTCOME OR
COMMENT
FOLLOW-UP RESPONSIBILITY
Collaboration and
approval
1st Nov 2018 Must be discussed
with the LHD
Weekly follow up Head of the
department
Study on time, money
and resources
1st Nov 2018 Must be discussed
with the different
departmental
heads
Daily meetings
and follow up
Head of the
department
Staffing 15st Nov 2018 Must be discussed
with the HR head
Twice in week HR head
Consumables 15st Nov 2018 Must be discussed
with the doctors
and the
professionals
Twice in week Strategic department
head
Utilities 15st Nov 2018 Must be discussed
with the doctors
and the
professionals
Twice in week Strategic department
head
Commencement of
department
1st Jan 2019 Along with the
approval of
advisory
Daily Top level
management
Unnamed LHD Business Case version 2 30/08/2024 pg. 11

ACTION PROPOSED
DATE
PROPOSED
OUTCOME OR
COMMENT
FOLLOW-UP RESPONSIBILITY
committee, LHD
and other
department
Outcomes 31st Dec 2019 Must be monitored
by the top level
management
Monthly Top level
management
Unnamed LHD Business Case version 2 30/08/2024 pg. 12

Supporting documentation
Project owner:
Rickey Martin
Signature:
Rickey Martin
Date:
26 Oct 2018
Sign Off by Executive
Insert line manager:
John Fassel
Signature:
John Fassel
Date:
26 Oct 2018
General Manager /Director:
Porter Cruise
Signature:
Porter Cruise
Date:
26 Oct 2018
Director Finance Business
Information:
Banley Cole
Signature:
Banley Cole
Date:
26 Oct 2018
Chief Executive Officer
NBMLHD:
Tom Martin
Signature:
Tom Martin
Date:
26 Oct 2018
Unnamed LHD Business Case version 2 30/08/2024 pg. 13

Attachment 1
Unnamed LHD Business Case version 2 30/08/2024 pg. 14

Attachment 2
Unnamed LHD Business Case version 2 30/08/2024 pg. 15

Unnamed LHD Business Case version 2 30/08/2024 pg. 16

References:
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(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.
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.
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.
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.
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.
Unnamed LHD Business Case version 2 30/08/2024 pg. 17