Hospital Strategic Planning

Hospital Strategic Planning
Name
Institution Affiliation
Abstract
The existence of poor strategic planning in the healthcare has caused several problems in the health sector resulting in the limitation in cash flow. Some of the factors that result in the hindrance of the cash flow include the bad debt that the patients have due to the services that are done on credit, the purchase of huge stocks as well as the starting of the long-term projects that use a lot of the cash in the hospital among others. The best ways in which the bad debt can be solved is through the introduction of the health insurance coverage for the patients. On the other hand, the stock should be purchased depending on their demand. And finally, the management should ensure that appropriate budget is done so that the there is adequate cash flow in the healthcare system so that quality services are provided to the patients at the recommended time. These factors lead to satisfaction of the employees and also an increase in the number of patients to be treated.
Introduction
Strategic planning plays a major role in the activities done in the hospital especially as the cash flow is concerned. The factors that hinder cash flow include the mode of payment done by the patients, the management of books of account as well as the purchase of the stock used in the in the hospital. These problems can be solved through proper planning, appropriate budgeting and even involving the management adequately to ensure that quality services are delivered to the patients as required.

Problem definition
The main problem that exists in the hospital setting is the inadequacy of the cash flow in the system. Several factors result in the cash flow reduction and these factors include the buying of the materials that are used in the hospital, the payment of the employees in the hospital, the management of the books of account that are used in the hospital as well as the ability to understand these books of account (“The 5 main causes of cash flow problems”, 2018). The mode of payment of services offered in the hospital can also result in the limited cash flow as well as poor budget
Suggestion
I would suggest that appropriate research is done concerning the problems that are causing the hindrance of the cash flow and appropriate solution is got. The management should look into ways of maximizing the cash flow while minimizing the wastage.
Problem analysis
The payment of the employees in the hospital is one of the factors that reduce the cash flow. For instance, giving too much incentive to the employees cause interference with the budget of the hospital (Becker’s Healthcare, 2013). When the hospital gets low profit from the expenditure that they used in the buying the medical products, then the cash flow also goes down. The expenditure on the un-profiting activities also makes the cash flow in the hospital to be very low.
When the hospital management buys too much stock to be used in the hospital, then the amount of cash that can remain in circulation becomes very limited and therefore making the cash flow to be reduced. When there are huge stock and the patients to be treated are few, then the stock will take a longer time to be used, and this can cause the delay in cash flow in the hospital since the better part of the cash is held up in the stock (“The 5 main causes of cash flow problems”, 2018). And also, if the stock takes too long before they are used due to the limited patients to be treated or if the nurses and doctors to use the products are few, then the products might expire, and this makes them go into waste hence causing the loss to the hospital. The same situation applies when the management overinvests on a project that takes long-term. The long-term investments also hold a lot of cash from the firm and therefore hindering the flow of cash.
The other problem that causes the limited cash flow in the hospital is the mode of payment that most of the patients use. When the hospital allows the patients to pay on credit for the treatments, then the cash flow will reduce since the debts might take long before they are paid, and the late payment can as well interfere with the hospital’s programs. Some of the debts might go to the bad debt since some of them might not be paid at all hence becoming bad debts. Similarly, the late payment can make the employees to be demoralized thereby causing poor performance in the activities that they offer for the hospital (Ghanem, Schnoor, Heyde, Kuwatsch & Bohn, 2015). The services offered on credit also reduces the number of treatment offered to the patients in the hospital since most of the patient will not be accommodated due to the debts that the hospital is having from the already treated patients. The treatments that are done on credit also make the hospital to have limited cash to purchase more drugs and other treatment facilities hence causing the hospital to deteriorate regarding the services they offer. The debt also makes the management to either lower the number of nurses and other employees in the hospital.
The management of the books of account also results in the hindrance of the cash flow in the hospital. For instance when the recording of the cash flow are inaccurate, then there are several losses that will be experienced, and this will, in turn, cause cash flow limitation. In addition to the poor record keeping, the hospital may find it hard to get a loan from the financial companies, and therefore, it results in the limited cash flow in the firm (Riley, 2015). When there is backdate or pushing forward of the products that were bought or used, then the hospital may end up producing inaccurate information about their financial expenditures and this in most cases causes reduced cash flow since some of the cash cannot be accounted for by the financial department (Riley, 2015). And also the forwarding of the debts that need to be paid to a later date makes it cumbersome for the hospital to manage its activity with the limited cash that they have at hand hence the result from the cash flow inefficiency in the hospital
Possible solution
Some of the ways that can be used by the hospital management to solve the cash flow crisis are by ensuring that the finance department is focused and knows the importance of having updated books of account. The problem of poor record keeping and management of the books of account can be solved by employing qualified personnel and also an individual who is straightforward and can account for any loss that is made by the financial department. The problem of the bulk purchase can be solved by reducing the number of purchase and ensuring that the expiry dates of the products that are purchased are looked into keenly so that they don’t go into waste after a short period (Speziale, 2015). The hospital should also make sure that the available cash is used effectively on the profiting activities and they also ensure that they maintain the good relationship with the employees and the patients by paying them in time and offering quality services respectively. The hospital management should also discourage the credit payment of the services that they offer to the patients, and this will make it easier for them to have enough cash flow in circulation at a particular time. The provision of incentives to the employees should be done on rare occasions as the firm majors on profiting activities, and it should only be given to those employees that deserve the incentives. The hospital management can also ensure that there is minimum expenditure on the long-term investments that require too much cash of the organization so that they maximize on the cash flow for the daily services that are offered by the hospital to have a smooth running of the activities.
Solution implementation
Some of the ways in which the hospital strategic planning can solve the problem of the payments by the patients are through the adoption of the new payment model where the patients get registered for the health insurance coverage. This will reduce the chances of bad debt that most of the patients have (Becker’s Healthcare, 2013). The hospital management can also plan with the available cash that they have on how to pay their employees so that they minimize the delayed payments. The hospital management should also work on the project that they deal with so that the budget of the projects does not interfere with the budget of the other activities done in the hospital. When there is a good distribution of the budget, there will be quality services offered by the nurses and doctors (Speziale, 2015). The manager of the hospital should also make sure that the objectives of the hospital are accomplished by focusing on the quality of services offered by the employees and also ensuring that the patients who are treated in the hospital are satisfied with the work hence this creates a good relationship with the patients thereby making them recommend the hospital to other friends and relatives who might fall sick. The budget on the materials and stock that the hospital needs to use should also depend on the level of need of such materials, and therefore the material on high demand should be given priority than those that have limited demand to avoid wastage when the materials are kept in store.
Justification
For appropriate realization of the cash flow in the healthcare system, all the above solutions need to be implemented so that there exist a smooth running of the activities in the hospital. For instance, a proper budget will ensure that every activity in the hospital is well catered for and all the debts are well settled. The introduction of the insurance coverage will also make it easy to do away with the bad debts of the patients.
Conclusion
In conclusion, it is recommended that the hospital management to follow the strategic planning to ensure that there is adequate cash flow that in turn can lead to improvement in the quality of services they offer as well as leading to an increase in the number of patients that the hospital is attending to hence improvement in the profit realized by the hospital.
References
Becker’s Healthcare. (2013). Top Ten Strategic Initiatives for Hospitals in 2013. Beckershospitalreview.com. Retrieved 16 February 2018, from https://www.beckershospitalreview.com/strategic-planning/top-10-strategic-initiatives-for-hospitals-in-2013.html
Ghanem, M., Schnoor, J., Heyde, C., Kuwatsch, S., & Bohn, M. (2015). Management strategies in hospitals: scenario planning, 4(1), 1-7. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4604740/pdf/IPRS-04-06.pdf
Riley, J. (2015). Causes of cash flow problems | tutor2u Business. tutor2u. Retrieved 16 February 2018, from https://www.tutor2u.net/business/reference/causes-of-cash-flow-problems
Speziale, G. (2015). Strategic management of a healthcare organization: engagement, behavioral indicators, and clinical performance. European Heart Journal Supplements, 17(suppl A), A3-A7. http://dx.doi.org/10.1093/eurheartj/suv003
The five main causes of cash flow problems. (2018). Businessturnaround.net.au. Retrieved 16 February 2018, from http://www.businessturnaround.net.au/the-5-main-causes-of-cash-flow-problems