Nepean Blue Mountains LHD: Business Budget Case for Hospital Project

This report presents a comprehensive business budget case for the Nepean Hospital Redevelopment project, focusing on financial planning and cost management within the Nepean Blue Mountains Local Health District. The executive summary outlines the project's aims, which include providing advanced healthcare facilities to meet the needs of a growing population in Sydney. The report details the project's outline, background, proposal, associated risks, processes, resource allocation, and financial information. The proposal aims to address healthcare demands through hospital redevelopment, emphasizing efficiency gains through technology and infrastructure improvements. Detailed risk assessments, process timelines, and resource requirements are provided, along with a systematic plan for reporting outcomes and financial projections. The report emphasizes the importance of effective communication, risk mitigation, and adherence to regulatory standards to ensure the project's success. The financial section provides detailed information on the budget and financial strategies, including contingency plans, for the project's successful implementation and long-term sustainability.

Service Title
Business Budget Case
Student Name
Student ID
1

Contents
Executive Summary....................................................................................................3
Outline........................................................................................................................ 4
Background................................................................................................................ 4
The Proposal.............................................................................................................. 4
Risks........................................................................................................................... 5
Process.......................................................................................................................5
Resources.................................................................................................................. 5
Reporting of outcomes................................................................................................5
Financial Information..................................................................................................5
Attachment 1.............................................................................................................. 5
Attachment 2.............................................................................................................. 5
2

Executive Summary
The current study specifically deals with the presentation of the business case and
asses the prominent costs cutting and financial accounting techniques used. Apart
from that, the study deals with the systematic assessment of the leading cost-cutting
techniques. Nepean Mountains Hospital is one of the busiest hospitals in the Penrith
region. However, one of the principal aims of the study is to provide advanced
healthcare facilities to cater to the requirements of the current population. Towards
the end of the study, a comprehensive financial statement is provided to enable an
in-depth understanding. The study deals with the systematic assessment of the
background and outline of the business case as the entire research is based on the
chosen case study. However, the selected case study deals with the redevelopment
plan of the Nepean Mountain Hospitals to cater to the requirement of the growing
population in Sydney.
3

Outline
The study deals in providing specific details regarding the redevelopment program at
Nepean Blue Mountains Local Health District. The business case seeks to provide
contemporary, advanced and community-based health care aims in the surrounding
areas of Penrith in Australia. Apart from that, the secondary targets, of the business
case is to strengthen the position of the hospital as the leading health institution for
research and referral aids all over New South Wales (Eljiz et al., 2019). However, the
project is further divided into three stages that lead to the systematic assessment of
the predetermined goals and objectives of the project. A detailed outline of the
processes involved in the two phases is provided below:
Stage 1: This stage aims in fulfilling the upcoming and the current requirements of
the increasing population at Nepean Mountains. Apart from that, the current
population surges in Penrith and its surrounding areas require immediate attention in
terms of providing sustainable medical aids.
Stage 2: The second stage is involved in providing additional support to the ageing
population by planning exclusive and advanced healthcare treatments and diagnosis
techniques.
Background
Nepean hospital is located in Penrith, Sydney and is one of the prominent and
busiest healthcare institutions in one of the fastest growing urban setting in Australia.
Due to the prevalence of skilled trade and commerce opportunities and other options,
there has been a substantial increase in the population of Sydney over the past 20
years. Therefore, to cater to the requirements of the growing community in Sydney,
the Nepean hospital has been allotted a sum of AUD 1 billion to undertake
redevelopment facilities. For the success and effective control of the processes of the
proposed project, it is divided into two individual stages.
Additionally, Stage 1 of the project is funded by a lump sum amount of AUS 550
million of the total allocated funds for the Nepean Hospital Redevelopment.
Furthermore, the stage includes the construction of a brand new healthcare aid
block. Apart from that, it also deals with the construction of 12 new operating theatres
(Partel 2015). Moreover, the Stage 2 of the Nepean Hospital Redevelopment plan is
funded with an additional investment of AUD 450 million that will critically seek in the
further development of other better facilities to provide the aid of the ageing
population. Apart from that, the demographic population of Sydney is majorly
dominated by old people therefore, there is a current surge in the prominence of
myriad health ailments.
The Proposal
The proposal deals explicitly in catering to various healthcare requirements of the
growing population in Sydney and therefore, seeks for the redevelopment of the
Nepean hospital.
Aims
 The primary aim of the proposal is to look into the healthcare requirements of the
growing population
 To increases the excellence of management in providing better and advanced
healthcare facilities
 To increase the efficiency of the doctors and physician in treating a particular disease
with the help of advanced diagnostic tools
4

Benefits
 Efficiency gains
One of the prominent efficiency gains of the proposal is the implementation of heavy
machinery and diagnostic technology to reduce the costs of additional recruitment of
doctors and physician in the hospital that would retain the share of profit thereby,
reducing the percentage of costs (Dodson et al., 2018).
 Potential savings/increased costs
 Increased expenditure on advanced technology implementation
 Savings on the recruitment of additional workforce
Factor Benefits
Patients Enhanced healthcare facilities with additional accommodation
care unit
Facility Advanced facilities that would help in the effective diagnosis of
a particular health ailment
Clinicians Ensuring the needs of the population and stabilising the
condition of student that is driven by the elderly population.
To provide additional expertise of the clinicians and other
executives thereby increasing the scope
Other Expanded infrastructural facility thus contributing ton the
economic growth and development of the region
Table 1: Additional Benefits assessed by the Proposal
(Source: As created by author)
Risks
Risk Issue Severity Impact Mitigation
Plan
Notes
Financial
risks
High Equities,
Investment,
forerunning
of the
business
Assessment of
financial risks,
formulation of
effective
strategies to
minimises the
effect of the
risk, rightful
allocation of
financial
resources
Financial risk
is one of the
prominent
hazards
assessed by
the proposal.
To mitigate the
impact of the
risks an overall
capital
spending and
healthcare IT
must be
formulated.
Patients Medium Death of
patients,
Occurrence
Maintenance
of sufficient
biomedical
Extra care of
the stipulated
measures
5

of unwanted
accidents
waste
management
facilities,
Regularly
checking the
security
system
would lead to a
decrease
amount of
contingencies
in the
operating
environment
Insurances High Incurring
substantial
costs by the
organisation,
Maintaining a
stringent
Insurance
policy norms
that would
critically look
after the needs
of the patients
and helps in
recurrence of
fraudulent
activities
The
maintenance
of a
comprehensive
insurance
framework
would lead to
further cost
cutting
Table 2: Risks assessed by the Proposal
(Source: As created by author)
Financial Risks:
One of the prominent risks associated with the healthcare industry is the effective
management of investment in limited capital surroundings. Apart from that, frequently
changing legislation and business laws and the increasing demands of the patients
concerning extensive healthcare facilities require additional access to the financial
resources (Jackman 2017).
Moreover, the considerable practice of cost-cutting in a hospital leads to a pertinent
scenario of ineffective allocation of financial resources, thereby affecting the
forerunning of the business. On the other hand, access to digital innovation and
technological transformation is one of the crucial factors that determine the
functionality of the hospital. Moreover, meeting up with the compliances and health
regulations set by the regulatory bodies is also one of the prominent financial risks
assessed by the project.
Patients:
Patients are the prime customers' bases of the specified there are a series of risks
associated with the patients concerning the specified services provided by the
hospitals. Moreover, in the hospital setting patients are comparatively exposed to a
more significant threat of infection with the lack of proper sanitation and compelling
biomedical waster management techniques. Apart from that, the increase in violent
incidents in the hospital is one of the many risks assessed by the patients in the
hospital.
Insurance:
The current changes in the various healthcare legislation have created remedial
measures to backlash the insurance norms provided by the hospital for individual
gains and profits. The recurrence of such events leads to extra expenses on the
hospital and increases is cost expenditure thereby resulting in the ineffective
allocation of funds to competent activities.
6

Process
The table below provides a detailed explanation of the action plan implemented by
the proposal for the timely completion of the predetermined tasks.
FUNDIN
G
NUMBE
R
FULL
PROJECT
NAME
14523
00ERK
Nepean
Hospital
Redevelopment
PROJEC
T
MANAGE
R TECHNOLOGY DEPLOYED
ACTION
ITEM
NUMBE
R
DATE OPENED
Mr
Beker
Bond
LK
32
5
08/
03/
201
6
DESCRIPTI
ON
PR
IO
RI
TY
PAR
TY
RES
PON
SIBL
E
D
AT
E
D
U
E
DAT
E
OF
CO
MP
LET
ION
NOTES
S
T
A
T
U
S
FG
75
3
14/
07/
201
6
Expansion
of medical
oncology
Se
ver
e
Pe
ter
Alfre
d
08
/0
6/
20
17
10/0
8/20
18
Construction of new operation
theatres, upgrading the energy
department
O
P
E
N
UT
45
6
04/
08/
201
6
Demolition
of existing
infrastructur
e
Lo
w
Ro
lland
Gett
ysbu
rg
10
/0
9/
20
17
22/0
9/20
17
Demolition of unwanted structures
and creating space for the building of
new infrastructures
O
P
E
N
W
Q7
89
02/
09/
201
6
Constructi
on of multi-
storey car
park
Me
diu
m
M
alish
ka
Flore
nce
15
/0
8/
20
17
30/0
8/20
18
Discussion on the design of the
multi-storey car park and the
assessment of prominent risks that
have a bearing on the completion of
the project
O
P
E
N
Planning
for the
implementati
on of new
services
Se
ver
e
Ky
le
Lync
h
14
/0
8/
20
17
16/0
8/20
17
Gathering funds for the investment
in advanced technologic solutions
O
P
E
N
Table 3: Showing the Action Plan
(Source: As created by author)
TABLE DROPDOWN DATA
SETTINGS
7

PRIORITY STATUS
HIGH OPEN
MEDIUM OPEN
LOW OPEN
MEDIUM OPEN
Table 4: Showing the Drop Down data of the Action Plan
(Source: As created by author)
As per the provided action plan, the Project Manager Mr. Becker Bond has decided
plan in the table above the sequencing and the timeline of various lined up processes
to ensure the timely attainment of the predetermined goals and objectives. To
implemented effective control and directing the project, a team of project executives
are held responsible for the completion of a particular task. Moreover, the timeline of
various lined up tasks are set by considering the prominent factors that can lead to
further delays of the project and therefore has an grip on detoriation of the quality of
the project. The sequences of the tasks are not done in a haphazard manner to
ensure full safety of the patients and the employees working in the construction field.
Apart from that, the construction and demolition of the infrastructural structures is
initiated by ensuring prominent safety measures of the both the patients and
consumers. However, the hospital staffs has also ensued the rehabilitation of
patients that require more acre and are sensitive to heavy sounds and other
disturbances. The contract and its prominent norms were decided in 2016 and
therefore, the project manager forecast the predetermined goals of the plan would be
completed by 2019. The drop down data of the action plan for the initiation of the
project is also provided above that includes the systematic assessment of the priority
of the sequenced activities of the project along with the current status of the project.
Resources
The additional requirements that are needed in the completion of the project,
supplementary legislation is to be provided concerning the various construction
requirements specified in the contract. Apart from that, there is a severe lack of
competent contractors possessing a clear idea about the current setting of the
hospital, which would provide higher expertise to the contractors in solving the future
contingencies (Hay et al., 2017). Furthermore, additive legislation seeking to maintain
the ecological balance in the operating environment must be incorporated to explore
excellent recycling and waste disposal facility, thereby avoiding further contingencies.
An effective plan of managers to look into the progress of the project must be
provided to compare the efficacy of the operation concerning the predetermined
goals and objectives of the concern.
Reporting of outcomes
The authentication of the outcomes would be reported to the project managers, Mr
Becker Bond who is in charge of the operation team that consists of 14 project
executives and 120 employees. The corrective reporting of a project outcome is
equally essential for the success of a business as it lays the further steps for the
control and evaluation of critical risk factors that have a bearing in the successful
completion of the project. The reporting of outcomes is designed in a systematic
8

manner that consists of various lined up steps to minimise the noticeable effects of
the faulty derivation of results (Broom 2016). The reporting of an outcome involves
the establishment of active communication links between the lower and the upper
levels of management. Communication plays a crucial role in reporting a particular
issue therefore; to avoid further contingencies, the healthcare aid must implement a
flexible communication channel. Practical analysis of the assessment of
predetermined goals is equally important to examine the attainment of objectives
determined in advance critically. Moreover, to fulfil the structured aims of the
proposal already mentioned in the previous section of the study, it is equally
significant to recruit skilled and competent executives to look after the success of the
project. The process of controlling and directing depends on the process of
successful conveyance of the outcomes of the task to the executives.
Financial Information
Budget:
In it critically significant to predetermine the estimated costs and expenditure of a
particular project to have a clear idea about the success of the project in the long run.
The following section provides a detailed description of the annual cash budget.
Particulars 2018 2017
Cash Flows from Operating activities
Payments
Employee Related 4,500 4,200
Grants and Subsidies 500 850
Finance cost 4,500 5,000
Equivalent tax income 7,500 7,000
Other Payments 4,520 3,600
Total payments 21,520 20,650
Receipts
Appropriation 450 600
Cluster Grant revenue 10,525 14,524
Change in operating assets and liabilities 45 50
Cash Reimbursements 4,750 0
Transfer to NSW 0 0
Cash Transfers to NSW healthcare aid 0 0
Sale of Medicines 0 0
Retained taxes, fees and fines 450 750
Grants and contributors 8,500 9,500
Interest Received 465 500
Other Receipts 0 75
Total receipts 25,185 25,999
Net Cash flows from Operating activities 3,665 5,349
Cash Flows from Investing activities
Proceeds from the sales of property 450 230
Purchases of advanced diagnosis equipment 780 560
Purchase of investments 7,500 4,500
Other Investments 450 780
Net Cash flows from Investing activities 9,180 6,070
9

Net Increase/decrease in cash 5,515 721
Opening cash equivalents 254 349
Reclassification of cash equivalents 0 0
Cash transfers for Administrative reconstructing 0 0
Closing Cash and cash equivalents 5,261 372
Table 5: Showing the cash budget of the project
(Source: As created by author)
The chart above shows a detailed analysis of the prominent costs and payments to
be incurred by the project over a period of two years. However, it can be analysed
that the closing cash and cash equivalent for the second years are comparatively
low. One of the prominent reasons for the severe decrease in the cash and cash
equivalent due to the ineffective allocation of funds.
Income $18,520.0
0
Budgete
d
$60,870.0
0
Remainin
g
-$42,350.00
Categories Recommended Actual Difference
Percentag
e
Amount Percentag
e
Amount
Giving 0.00% $0 32.51% $6,020.00 -$6,020
Services 15.00% $2,778 149.57% $27,700.0
0
-$24,922
Accommodati
on
25.00% $4,630 54.54% $10,100.0
0
-$5,470
Utilities 5.00% $926 16.74% $3,100.00 -$2,174
Food 2.00% $370 4.86% $900.00 -$530
Recruitment 10.00% $1,852 8.91% $1,650.00 $202
Maintenance 18.00% $3,334 4.86% $900.00 $2,434
Medical 11.00% $2,037 24.30% $4,500.00 -$2,463
Insurance 4.00% $741 24.30% $4,500.00 -$3,759
Recreation 5.00% $926 0.00% $0.00 $926
Debts 3.00% $556 8.10% $1,500.00 -$944
98.00% $18,150 328.67% $60,870.0
0
-$42,720
Income Amount
Services Provided $12,500.00
Investment in Shares $5,000.00
Interest received $570.00
Tax Refund $450.00
$0.00
Total $18,520.00
Giving Amount
Loan $4,500.00
Refund of fees $1,520.00
$0.00
$0.00
10

$0.00
Total $6,020.00
Savings Amount
Emergency Fund $7,800.00
Provision $5,400.00
Recruitment $6,000.00
Redevelopment $8,500.00
$0.00
Total $27,700.00
Accommodation Amount
Bedding facilities $4,500.00
Accommodation for
people
$5,600.00
$0.00
$0.00
$0.00
Total $10,100.00
Utilities Amount
Electricity $540.00
MRI $750.00
CT $560.00
Internet $450.00
Advanced Diagnosis $800.00
Total $3,100.00
Food Amount
Groceries $450.00
Restaurants $450.00
$0.00
$0.00
$0.00
Total $900.00
Recruitment Amount
Recruitment of doctors $700.00
Group D staff $500.00
Maintenance/Repairs $450.00
$0.00
$0.00
Total $1,650.00
Maintenance Amount
Purchase of equipment $500.00
Formulation of strategies $400.00
$0.00
11

$0.00
$0.00
Total $900.00
Medical Amount
Purchase of drugs $4,500.00
$0.00
$0.00
$0.00
$0.00
Total $4,500.00
Insurance Amount of
insurance facilities $4,500.00
$0.00
$0.00
$0.00
$0.00
Total $4,500.00
Recreation Amount
Vacations $0.00
Hobbies $0.00
Books/Movies $0.00
$0.00
$0.00
Total $0.00
Debts Amount
Long Term Borrowings $400.00
Debentures $500.00
Lease $600.00
$0.00
$0.00
Total $1,500.00
Table 6: Showing the Zero base Budget
(Source: As created by author)
Contingency Plan
Particulars Strategy
Assessment of labour and non labour
expenses
A clear evaluation of the various
employment and non-labour
expenses helps in reducing the cost
of healthcare aid to a considerable
level.
Eliminations of Unnecessary
Expenses
Removal of unwanted costs in the
costs structure of the company is one
of the prominent ways of reducing the
cost to a certain extent
12

Deployment of Care management
Strategy
As the ageing population
accompanies the population of
Sydney; therefore, it is significantly
essential to implement a care
management strategy. The
implementation of the care
management strategy leads to a
further decrease in the costs by
limiting the other lined up processes
and departments.
Budget Reporting Selection of an effective strategy that
seeks to measures the competent
expenses in the individual department
of the hospital department. The
evaluation specifically included a
detailed analysis of the quality and
services components that are an
active part of the objectives of the
project.
Table 7: Showing the Cost Reduction Techniques in the Project
(Source: As created by author)
Break-Even Analysis
The break-even point is the point where is there exists no profit and loss despite the
further production of the company. Moreover, it is the individual decision of the
company to operate in the current scenario. Furthermore, the break-even is
calculated in terms of two major determinants that includes sales value and output
level.
13

Figure 1: Showing the Graphical Representation of the BEP
(Source: Broom 2016)
Break Even Point Calculation
Break Even point in box= Fixed costs/ (Revenue per Unit- Variable Cost per Unit)
Revenue from Operations= 750,000
Output Level= 23,000
Total Fixed Cost=
Fixed cost per year: Amount
Manufacturing overhead 450,000
Sales and administration 500,000
Total fixed cost 950,000
Total Sales per Unit= Total revenue from sales/ no. of boxes
=750,000 / 23,000 Boxes
= 33 per boxes
Selling price per material= 150 per material
Total Variable cost per Unit
Variable cost per box: RM
Direct materials 30.50
Direct labour 17.50
Manufacturing overhead 10.50
Selling expenses 5.50
Total variable cost per box 64.00
Total variable Cost per Unit= 64 per boxes
14

Break Even point in boxes (per unit) = 950,000/ (150-60) per unit
= 10,556 units
Break-Even point in RM= Sales per Unit * Break-even points in units
Hence,
Break-Even point in RM= 150 RM per unit * 10,556 unit
= $1,583,400
15

References
Broom, M. (2016). Facilitating change and evaluating impact during a neonatal
intensive care redevelopment: A participatory action research project.
Dodson, J., Palm, M., Whitzman, C., Hamilton, C., Kellet, J., Maginn, P., & Martinus,
K. (2018). Transformational Infrastructure Projects In Australia’s Fast Growing Outer
Suburbs.
Eljiz, K., Greenfield, D., Derrett, A., & Radmore, S. (2019). Health system redesign:
Changing thoughts, values, and behaviours for the co‐production of a safety
culture. The International journal of health planning and management.
Hay, A., Zuo, J., Han, S., & Zillante, G. (2017). Lessons Learned from Managing a
Remote Construction Project in Australia. In Proceedings of the 20th International
Symposium on Advancement of Construction Management and Real Estate (pp.
939-948). Springer, Singapore.
Jackman, A. A. (2017). Putting the" RT" in redevelopment. Canadian Journal of
Respiratory Therapy, 53(2).
Partel, K., Director, A., Healthcare, A., & Hospitals Association. (2015). Toward better
implementation: Australia’s My Health Record. International Journal of Medical
Informatics, 83(12), 889-900.
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