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Hospital Financial Recovery Plan

The hospital is facing a $12 million operating loss due to high operating expenses and low operating revenue. Key challenges include high HR costs and factors such as inflation and competition affecting revenue. Proposed solutions focus on cost optimization and revenue growth strategies, aiming to reduce expenses by 15-20% and increase revenue by 10-15%.

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31 views6 pages

Hospital Financial Recovery Plan

The hospital is facing a $12 million operating loss due to high operating expenses and low operating revenue. Key challenges include high HR costs and factors such as inflation and competition affecting revenue. Proposed solutions focus on cost optimization and revenue growth strategies, aiming to reduce expenses by 15-20% and increase revenue by 10-15%.

Uploaded by

f20221307
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Root Cause Analysis for Operating Loss in a 350-Bed Hospital

Prepared for 180 Degrees Consulting, BITS Goa


Executive Summary
Problem Statement:

- The hospital faces a $12 million operating loss due to Operating Expenses > Operating Revenue.

- Formula: Operating Profit = Operating Revenue - Operating Expenses.

Key Challenges:

- HR costs account for 50% of expenses, but layoffs are ruled out as the hospital is a key employer.

Root Causes:

1. High Operating Expenses: Inflation, unused equipment, maintenance costs, delayed

reimbursements.

2. Low Operating Revenue: No increase in patient volumes, competition, lack of modern services,

weak retention.

Proposed Solutions:

- Cost Optimization: Renewable energy, inventory management, reimbursement automation.

- Revenue Growth: High-demand services, telemedicine, loyalty programs, targeted marketing.

Expected Outcomes:

- Financial: Reduce expenses by 15-20%, increase revenue by 10-15%.

- Operational: Optimize non-HR expenses while maintaining staffing stability.

- Strategic: Enhance resource utilization and strengthen patient retention.


Root Cause Analysis
Root Cause Categories:

1. High Operating Expenses:

- Inflation.

- Unused equipment (post-pandemic effects).

- High maintenance costs.

- Delayed reimbursements.

- Inefficient medical supplies.

2. Low Operating Revenue:

- No increase in patient volumes.

- Rising competition.

- Lack of high-demand services.

- Weak patient retention strategies.


Solutions for Operating Expenses
1. Optimize Maintenance:

- Shift to renewable energy (e.g., solar).

- Conduct preventive maintenance.

2. Streamline Medical Supplies:

- Centralized inventory management.

- Negotiate supplier discounts and reduce wastage.

3. Address Reimbursement Delays:

- Automate billing systems.

- Assign dedicated teams to follow up on claims.


Solutions for Revenue Growth
1. Membership Cards and Loyalty Programs:

- Encourage repeat visits with exclusive benefits.

2. Telemedicine:

- Expand online consultation services.

3. High-Demand Services:

- Introduce cosmetic surgery, fertility treatments, and wellness programs.

4. Referrals and Marketing:

- Build referral networks with smaller clinics.

- Launch targeted marketing campaigns.


Expected Outcomes
1. Financial Impact:

- Reduce expenses by 15-20%.

- Increase revenue by 10-15%.

2. Operational Impact:

- Improved resource utilization.

- Faster reimbursement cycles.

3. Strategic Impact:

- Strengthened market position.

- Enhanced patient retention and loyalty.

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