Rationale
This report presents detailed management strategies for Latifa Hospital. The report covers the department of finance, the department of human resources, and performance indicators that would be used to evaluate the facility.
Given the growth in the healthcare sector in the UAE, it is imperative to develop a management plan for the Hospital. It is noted that the management plan will assist to make the Hospital better. It will aid the Hospital to review its financial practices, human resource processes and procedures, assess operational activities and analyze them with the aim of enhancing overall organizational efficiency and effectiveness.
The Department of Finance
The Type of Budgeting
Three types of budgeting have been considered for Latifa Hospital. They include operating budget, capital budget, and cash budget.
Operating Budget
The Hospital will assess its incomes and expenses using this budget. This budget captures expected income through different sources, anticipated expense, including general expenses and administrative costs. It is necessary for Hospital administrators to focus on a larger revenue budget relative to expense budget. This approach will result in surplus for the Hospital. The surplus will be re-invested in the capital budget.
Capital Budget
The Hospital will use this budget for intended investments in the future, including expansion. It is most likely that the Hospital will increase its asset acquisition or investment by 10% in the next fiscal year. Moreover, there are also capital plans set aside for expansion and renovation. It is imperative for Hospital administrators to evaluate operating conditions and present fiscal position of the Hospital to identify potential fiscal gaps and assistance required. Each department in the Hospital, including Obstetrics, Gynecology, Paediatric Medical, Paediatric Surgery, and Neonatology, will have a capital budget worksheet to indicate their capital budget needs. They are expected to present reasonable amount each item for consideration. For financial resource allocation, the Hospital will prioritize the most desired equipment based on need and cash availability criteria. For instance, it may consider factors such as urgency, importance, economically preferred, and generally preferred during evaluation.
The Hospital must also manage its capital requirements. It should consider purchasing facilities and equipment once the budget committee has approved expenditure. Besides, not all items should be purchased at one time.
Latifa Hospital
Capital Budget. 2017.
Cash Budget
Latifa Hospital cannot run without its cash budget. Operational expenses are the major reason for this budget. Given the nature and changes in the government budget allocations and payment from insurance, it could be difficult to determine the exact cash flow for the Hospital. It is imperative for the Hospital to assess its cash flow every month to help the administrators to determine any cash flow issues and seek for financial assistance if needed. The cash flow statement will generally help to identify the variation in the balance sheet accounts. The most important aspect is to identify how the Hospital utilizes debts. For instance, both long-term and short-term debts can better explain the relationship between expenses, losses, and equity. While generating revenues is important, the finance department should focus on prudent investment and management of available cash.
Assets
Latifa Hospital
Assets. Period March 31, 2014 and March 31, 2015.
Statement of Income Statement
Latifa Hospital
Statement of Income Statement. Period March 31, 2014 and March 31, 2015.
Accounts to Consider to Regulate Financial Activities of Latifa Hospital
Budget allocation and monitoring are vital for Latifa Hospital. Good financial management strategies for assessing resource allocation and utilization are necessary for the financial department to ensure that resources are effectively used while ensuring financial health of the Hospital. In addition, the Hospital will be able to make sound business decisions, maintain good corporate governance and accountability, and take remedial action if necessary.
The Hospital should therefore monitor and understand major drivers of its financial activities. Specifically, these are financial activities or accounts with significant impacts on its operations. Given that multiple factors influence financial activities of the Hospital, only critical accounts have been selected for monitoring to regulate financial activities. They include revenues, costs, and capital (University of Sheffield, 2016). The Hospital financial manager will be able to identify any negative trends that affect cash flow, declining profitability and rising costs. The budget and forecasts can be used to locate such trends. The financial department should monitor these accounts on a consistent basis.
Every month, the financial department should assess actual revenues against costs. The focus should be on identifying possible causes of shortfalls or underperformance, if any. It is also necessary to determine noted high turnover against targets, income against projection and review if they fit. Once the financial department has noted variations, it will be able to set subsequent budgets that are more accurate and intervene if any action is needed.
The financial department should also evaluate incurred expenses against the allocation. Consequently, the department will be able to forecast future costs in a more reliable way. Expenditures should be evaluated against fixed costs and variable costs. Further analysis should find out the reason for variations and focus on any other relevant information that could influence financial activities and fiscal health of the Hospital.
The Hospital should subject its budget to constant assessment and improvement. This is particularly the case for the Hospital because of its growth and the need to introduce new services. A revised budget will show different scenarios of income and expense forecast, allow efficient control of cash flows and focus on items to be achieved in the subsequent budgets.
Strategies to Control Financial Performance
The Hospital will use budgetary control as a strategy to control financial performance. The budget is the most effective control system for the Hospital because it accounts for resource allocation against revenues to ensure organizational fiscal health and sustainability.
Budgeting generally focuses on future financial investments and expenses. By allocating resources to different departments and units of the Hospital, the budget ensures that every department receives a share of the organizational resources while minimizing possible wastage.
The Hospital can also rely on financial ratios to control financial performance. Financial ratios are widely applied across various industries and sectors, and they offer international standards for assessing financial health, as well as performance of a company against its peers. These ratios will assist the financial department to evaluate whether the Hospital is underperforming and facing any critical financial risk. Assessing these ratios closely and regularly would allow the Hospital to optimize efficiency and reduce waste for overall success.
The Human Resource Department
Latifa Hospital was commissioned on 1986 as Al Wasl Hospital with a bed capacity of 367 to delivery maternity and pediatric healthcare services. With about 1,300 employees, the Hospital performs between 6,700 and 7,800 deliveries annually (Dubai Health Authority, 2015).
Advertising, Recruitment, and Selection
Latifa Hospital does not directly advertise any jobs. Instead, the Dubai Health Authority takes this role. The DHA encourages both Emiratis and non-nationals to apply for vacant positions in various areas, including medical, administrative, and technical in the healthcare sector (Dubai Health Authority, 2015). The Authority encourages applicants to apply and follow-up their applications electronically. For effective external recruitment, the Authority uses job advertisement. These are mainly in newspapers and notice boards. They provide applicants with important details, such as job title, job description, remuneration, location, and application processes among others.
The Authority uses two major recruitment methods to get new employees. First, it may explore internal recruitment to advance employment of the UAE nationals under the Emiritization program or get the best talent within the organization. External recruitment generally focuses on the use of job centers, recruitment agencies and personal recommendation or word of mouth to find the right candidate.
It remains unclear how the Authority uses social media such as Twitter and LinkedIn to advertise for positions and recruit employees.
Under the Emiritization program, the UAE nationals are given the first priority during selection for government jobs. Otherwise, expatriates with the right qualifications from all over the world are encouraged to apply (Smart Dubai Government, 2016).
Salary Scaling
The UAE now faces medical staff shortage (Kapur, 2015). As such, it now focuses on hiring foreigners to meet the growing demands for healthcare services. While there is no stipulated minimum salary, it ranges from Dh3,500 to Dh16,000 with the average salary of Dh8,500 every month. Of course, these figures depend on the career level, specialization, experience, and the nature of the job. Higher pays are expected at paediatrics, and emergency room (ER), and operating room (OR) departments, particularly after 20 years of service.
Performance Appraisal
The Hospital uses performance appraisal to enhance performance management. The Hospital, just like any other public institution in the UAE, is subjected to various human appraisal systems to determine employee performance. The appraisal focuses on the adoption of IT, employee engagement, and performance by managers or supervisors to improve quality of care for patients (Kundu, 2015). Specifically, it remains unclear how Latifa Hospital conducts its human resource performance appraisal.
Dismissal or Retirement
Dismissal or retirement (retirement age of 65 years) from the work is based on the UAE labor laws. However, the Hospital may dismiss employees based on consistently poor performance or violation of policies and procedures.
Performance Indicators for the Evaluation of Latifa Hospital
Given the multiple areas of service delivery in the Hospital, its performance could be difficult to track. However, performance of the Hospital should be linked to specified objectives and goals, either administrative or clinical. The ultimate goal of the Hospital and healthcare in general is to improve health. Several key performance indicators (KPIs) have been developed to measure both healthcare delivery processes and outcomes. Clinical indicators may focus on traditional roles of the Hospital, such as treatment, diagnosis, and care among others. Administrative KPIs, on the other hand, account for HR and finance related issues among others. It is also imperative to recognize that hospitals continue to experience unprecedented change. As such, their definitions and roles continue to evolve and therefore impacting KPIs. In fact, community outreach, ambulatory care, and other care services outside the Hospital have been considered as emerging part of KPIs. Apart from inpatient and administrative KPIs, the Hospital performance may therefore have other performance indicators.
In this context, both financial and non-financial measures are considered as KPIs for Latifa Hospital. These measures will capture core business processes and practices (AchieveIt University, 2014). KPIs are vital for business intelligence, formulation of response and decision-making. In this context, KPIs will assist the Hospital to gauge those aspects of operations considered as ‘difficult-to-measure’. Factors such as leadership, service delivery, employee and customer satisfaction, development and involvement are not simple to measure.
Key performance indicators will generally reflect the Hospital strategy and its major operational processes. It is imperative to recognize that KPIs vary based on the nature of an entity and its business strategies. In some instances, some forms of KPIs may not directly contribute to the overall strategic objectives of the business. In this case, an organization may expend resources on operational procedures, which are irrelevant and redundant to its strategic objectives.
Notable differences exist between KPIs and Critical Success Factors. Critical Success Factors are considered as conditions required for success and ultimately objectives to be realized. For instance, efficient availability of triage rooms is a Critical Success Factor. KPIs and strategic plan objectives are also different. While KPIs are concerned with the overall effectiveness of organizational processes, strategic plan objectives show organizational targets to be achieved. The following KPIs have been considered for evaluating performance of Latifa Hospital.
First, Latifa Hospital should be evaluated on Outpatient Flow as a business process indicator. This performance evaluation should identify patient satisfaction, compliance, costs, and other customer management issues.
Second, Emergency Flow KPIs should look at performance in the emergency department based on response time, patient admission, patient diversion, door-to-time medical screening, costs, and satisfaction.
Third, Inpatient Flow KPIs should evaluate costs, length of stay, rates of readmission, adverse events, bed occupancy rates, mortality rates, and customer core issues.
Fourth, KPIs for Obstetrics, Gynecology, Pediatric Medical, Pediatric Surgery, and Neonatology should measure various factors, including related mortality rates, infections, costs, cancellation, and compliance.
Fifth, performance should also focus on Medications Management. These KPIs assess adverse drug events, self-reported medication errors, high-risk cases, costs, and drug monitoring compliance among others.
Sixth, Revenue Cycle KPIs should assist the Hospital to determine aggregate operating margin, accounts receivable, accounts receivable outstanding, cash receipts, insurance claims, bad debts, and others. The financial department should closely monitor key drivers, including revenues, costs, working capital and operating surplus or deficit. The KPIs should be able to identify any declines in income statements or operating surplus/deficit and project the budget appropriately.
Finally, Human Resource KPIs should assess performance on the following areas. HR Hire normally captures the rate of attrition, time to fill a vacancy, costs of hiring against the budget, male to female ratio and recruitment and interview costs. Training and development KPIs should assess time reduction during training, cost reduction, improved qualifications, skills, and performance improvement. Employee loyalty and reward KPIs should be based on the current Hospital objectives and performance. HR and finance should also have KPIs to determine overall returns of employee contributions to the Hospital.
Conclusion and Recommendation
Latifa Hospital requires a realistic budget to enhance efficiency and financial sustainability. Quality human resources are most likely to enhance efficiency, which ultimately leads to high quality care. The outcome will be reflected in the financial success of the Hospital. Budget is the most effective tool for managing financial affairs of the Hospital. Budgeting will allow the Hospital to allocate its resources effectively and identify any problems, clarify issues for improvement, and ensure that Hospital administrators and supervisions can reinforce excellence in care delivery. Meanwhile, the HR department has played a critical role in getting qualified personnel for the Hospital. The recruitment agency, the Dubai Health Authority, continues to influence human resource practices and procedures at the Hospital. Employees should take keen interests in organizational performance to ensure that patients receive quality services within the budget. At the same time, the financial department should encourage different departments and units to operate within the budget to avoid cost overrun.
The Hospital may be indirectly involved in job advertising, recruitment, and selection of employees. While the Authority carry out these functions, it is not clear how they meet specific HR needs of the Hospital.
The following recommendations therefore apply to the Hospital.
- The Hospital should conduct monthly, quarterly and yearly ratio analysis for internal purposes while using results to compare against the industry peers
- Budgeting should be consistent and prudent to eliminate waste and promote adequate distribution of resources
- Being a public organization, the Hospital should promote transparency in budgeting and financial issues
- The UAE continues to face nurse shortage and, therefore, the Hospital should develop the best pay scale to attract and retain the best talents in the region
- While Emiritization program promotes hiring of nationals, it could have negative impacts on recruitment and selection of the best expatriates
- The Dubai Health Authority should explore social media, such as Twitter, LinkedIn, and Facebook among others to improve employee recruitment and selection
- Performance appraisal should be continuous and sustained to ensure that the Hospital achieves its strategic objectives
- To avoid unwieldy experiences associated with KPIs, the Hospital should develop an effective method to track and report results appropriately
References
AchieveIt University. (2014). The Skinny on Key Performance Indicators. Web.
Dubai Health Authority. (2015). About Latifa Hospital. Web.
Kapur, S. (2015). Nurses in hot demand in Dubai: Click for salary. Emirates 24/7. Web.
Kundu, P. K. (2015). Performance Evaluation of Hospital Employees through Ongoing Appraisal Systems. International Journal of Thesis Projects and Dissertations (IJTPD), 3(2), 19-27.
Smart Dubai Government. (2016). Getting a Government Job. Web.
University of Sheffield. (2016). Financial and Budget Management Good Practice Guidance. Web.