Maastricht University School of Business and Economics Maastricht, November 7, 2012 Altrock, Felix Overkamp, Sasha Course code: EBC 4107 Course Tutor: M. Peeters
Study: Master IB Finance
Rapidly evolving health care industry transforms the way in which hospitals have to plan their financials, operations and their facility management. The way in which costs are determined, and influenced by exogenous factors, the treatment of patients, and the possibility to manage hospitals facilities have undergone significant changes. New structures and regulations in the health care industry have altered the way in which hospitals have to plan their financial figures and thus consequently influence all the operations and the way of planning facilities and the treatment of patients. Increased use of technical equipment has increased the public expectations regarding the quality, cost, and length of their hospitalization. Our study group analyzes the in- and outflow-pattern for Shouldice’s surgery patients. We focus explicitly on the minimization of costs and the maximization of profits for the recovery department. Following are the issues and recommendations for which we agreed that a reduction in the number of beds in the recovery department, an adoption of the improved inflow pattern as well as the investment into a mobile diagnosis team is appropriate. With the improved inflow pattern plus the reduction in beds plus the mobile diagnosis team Shouldice should be able to cut back an average of € 24.281 in costs per day. Furthermore, Shouldice will be able to increase the average profits they get from the recovery department and ultimately will have an increase in the average utilization of beds up to 98.6%.
Health Care Sector
The health care sector is one of the most important sectors in developed countries. A significant amount of total GDP is spent in this area. It has the constitutional role to improve human welfare and support social and economic development. In order to reach the ‘highest attainable standard of health’, universal health coverage in most countries has to be established (WHO, 2012). The transition from direct payments to prepayment for health services is an essential change in order to avoid financial hardship for clients and provide more accurate forecasts concerning the financial risk across the countries’ population. From a global perspective, it is still a long way to go regarding universal health coverage; however, developed countries positively advance towards stronger financing for health by pooling funds more effectively decreasing financial risks and use the proceeds more efficiently. Analyzing the costs of health care of the OECD countries reveals a steady growth from 1980 until 2009. The graph below shows that especially America, Norway, Switzerland and the Netherlands spend the highest amounts per capita and percentage points of GDP. Considering the total expenditures on health as percent of GDP, the Netherlands obtains the second position with 12% of GDP after America (17.4%). The OECD average is 9.5% in 2009.
Source: OECD Health Data 2011 (Nov. 2011)
Generally, it makes economic sense that the health care costs are steadily increasing since the population is growing and aging. Therefore, the number of people who need health care is rapidly increasing. Besides that, especially hospitals incur problems of inefficient organizational structures. Since a future trend in rising costs can clearly be assessed, experts of the world health organization depict ten leading sources of inefficiency from which we will address several ones here. The main blocks of concern are medicines, health care products, health workers, health care services, health system leakages and health interventions (WHO, 2012). Repeatedly, cases appear where medicines were not used in an...