Executive Summary
The document is a recompilation of information about the current status of a medical facility located in Bayonne, New Jersey owned by a multinational company located in the United Kingdom. Two analysts of the organization study the current status of the medical facility that is the current operations of the company, its economic performance and the trends of the business in the future. The medical facility has technology needs that are necessary for its normal operations. The considered medical facility executed its last technological overhauling in 2004, but the majority of the hospital equipment is from 1999 with a lifetime of twenty years. The organization has three years to update its technology and equipment.
The document continues with a global analysis of the business and the future trends of the medical business and the competitive advantages that the medical facility has against its direct competition in the New York and New Jersey area other hospitals in the United States of America.
■ Technology needs and potential benefits.
■ Global view and future trends of the business.
■ Competitive advantages of the business.
Introduction
A medical facility is a place where medical specialist attends people with any health failure. The medical facility, as a hospital is similar to any other company or process that requires resources in the input, it has an internal process and gives an output or result. The medical facilities, similar to corporations require a strategy to manage the resources effectively and ensure positive results. In the case of a private hospital, it is necessary to add, the net revenues of the medical facilities for the shareholders at the end of the year. The management of a medical facility needs to combine the practices for a generic corporation and a non-profit organization. It is necessary to have a positive economic behavior and to give the best service.
Status of the medical facility
The current medical facility considered for the analysis is a two-story hospital located in Bayonne, New Jersey. The name of the medical facility is Bayonne Medical Center. The institution was founded in 1888 and has 278 beds. The institution was acquired by the organization in 2008 and since then, the institution adopted the management principles of the London Headquarters. The medical facility suffered a bankruptcy process in 2008 after the subprime crisis in the United States of America. The hospital had strong ties with the AIG Insurance Company that suffered a undercapitalization process and failed to pay the medical services to all the hospital which had contracts with the insurance company. More than 40% of the medical contracts were signed with AIG. After 2008 (Gethard, 2014), the company bought the hospital and diversified the portfolio of insurance companies of the hospital. Both Mike and John work together in the acquisition and first three years of operations of the medical facility are helping it to improve sales and reduce costs to more than 40%, having the hospital positive net income two years after the new administration. Today Mike and John have concerns about the medical facility in New Jersey because the conditions previous 2008 are repeating in 2016. More than 90% of all the services of the hospital are paid by insurance companies which financial behavior is similar to AIG in 2008. The hospital has its highest cost per patient from 2013, and the number of demands on the hospital personnel increased 30% since 2014.
The medical doctor's payroll and support staff have reduced 15% since 2014, and the company had had difficulties in recruiting qualified personnel due to the competitive salaries of other private hospitals in The New York and New Jersey area. That difficult the operations and profitability of the medical facility management.
Without the specialized staff and medical doctors in certain specialties, the hospital cannot offer all the services that a hospital of a similar category can offer. For example, since January 2016 there is no orthopedic specialist in the hospital because of the cost of a new specialist and the low price of the service of the hospital.
The hospital needs to increase prices in several medical services with the goal to recruit and train new personnel for several specialties. Other hospital and medical facilities in the Port Area (New York and New Jersey) had to close or overhaul their operations to increase revenues and reduce expenses.
Technology needs and upgrades, potential benefits to the organization
The medical facility founded in 1888 had several technological updates. The last important technological update of the Hospital was in 2004 when the medical facility-acquired new equipment from General Electric Health (GE Healthcare, 2016) for the Magnetic Resonance Imaging Equipment, X-Ray imaging, and Deoxyribonucleic Acid analysis. The rest of the used equipment is before 1999 with an estimated lifetime of 20 years. That lifetime ends in 2019. The medical facility needs to update all the operation sites, laboratories, waiting for sites, incubators area, kitchen and common areas of the hospital. The high-end hospitals in the New York and New Jersey area have equipment with an acquisition time lower than five years offering great benefits in the accountability due to depreciation costs, fewer operation costs and effective results.
The maintenance costs of the existent equipment require a payroll of 10 people and more than 3,000 man-hours of contracted services. There is equipment previous to 1999 where the accessories and spare parts that are not currently the standard and require special purchase orders with delivery times longer than three months. Considering the new equipment developed by General Electric Health, Johnson & Johnson, Medtronic Inc. and Siemens AG; the new equipment requires less payroll and contracted services. According to the characteristics of the medical facility, an overhauling of the hospital will need a payroll of three people and 1,500 man-hours of contracted services. The new equipment, with certain exception, guarantees an easy adaptation to the current operators and medical doctors who are the primary users of the equipment and friendly with the patients. For example, new beds with remote height adjustment and internal refrigeration; micro cameras, non-invasive equipment; breast analysis equipment and others.
It is recommended to start the technological overhauling from 2017 until 2019 with the goal to avoid interruptions in the normal operations of the hospital. The payback time of the overhauling is estimated in seven years with a lifetime of twenty-five years.
Global view and future trends
The health services have today two main trends; the first trend is the continuous increase in the demand for specific services for the more elderly population and the second trend is the offer of programmed primary attention services for the patients to attack the disease before its appearance (Szczerba, 2014).
The first trend is the increase in the demand for specialized services for the more elderly population, that is, daycare, medication administration, and geriatric services. The organization has not today in its overall strategy to enter the geriatric business, but it is necessary to geriatric services to the medical facilities, because of the requirements of the clients and the high revenue of those services. The second half of the 2010 decade represents the peak in the retirement years of the Baby Boom generation. Conservative estimations considers that the United States of America will have more than 20% of its population in retirement in the 2020 decade (Kadle, 2016); that will change the business of all the medical facilities, including Bayonne Medical Center.
The second trend in the business of medical facilities is the programmed is the offer of programmed primary attention services for the patients to attack the disease before its appearance. The primary attention services represent in costs less than 15% of the total cost of a disease treatment. That is the trend that the client goes to the doctor in a healthy state to prevent new diseases and health problems. The doctor analyses all the hormonal and genetic profile of the patient and the obtained information will help the doctor to give recommendations to the patient referred to feeding, sleep, physical activity and lifestyle. A standard primary attention cost for an adult is below the 250 USD lower than a typical surgery operation which cost is higher than 2000 USD.
Areas of impact of the business of medical facilities
■ Legal issues: The medical facilities always have the risk that they could be issued to patients and clients that are not comfortable with the received service, patient death, and other demands that the patient could be right or wrong. The costs of legal issues are very high; a standard legal issue with a client may cost to the institution a minimum of 500,000 USD in lawyers and attorneys. There is no way to avoid in 100% the legal issues from the clients and patients, but the good practices and standard procedures in the hospital will give to the organization better tools to affront a future legal issue.
■ General emergencies and epidemics: A general emergency in the city or the state caused by a virus; natural disasters as earthquakes, tsunamis, and forest fires will affect the normal operations of the medical facility reducing the revenues of the company and increasing use of supplies and the depreciation of the equipment. A state of general commotion is not favorable for the company because the hospital cannot operate in its regular basis.
■ Medical Innovations: A medical innovation is a double-edged weapon for the hospital. That is, because if the hospital acquires the related equipment's of the medical innovation and the necessary capacitation to the medical personnel, the hospital will guarantee an increase in sales; but if the hospital did not take the approach of the medical innovation, it would lose clients, and the sales will reduce.
■ Competition: Other medical institutions may compete with the hospital taking out from the company clients and forcing the company to maintain or reduce prices.
■ Medicare and government: The government of the United States of America may change the private hospital operations and the relation between the medical institutions, insurance companies, and the government.
Competitive advantages compared with other organizations
■ Clients database: The hospital has more than 35,000 clients that request services each year. The long history of the hospital helped to retain former clients and obtain new clients by reference of the existing ones.
■ Diversified insurance companies portfolio: The Company has diversified the relation with the insurance companies. The most important insurance company has less than ten percent of the portfolio of the hospital.
■ Location: The hospital is in a 2-mile radio from a police station and fire station, becoming the first option to send a patient in case of emergency.
Conclusion
The considered medical facility is the Bayonne Medical Center located in Bayonne, New Jersey. The hospital is subsidiary from a major corporation located in London, United Kingdom and two of the analyst of the organization; John and Mike, are proposing recommendations to the headquarters about different issues of the medical facility management. The most important are:
■ Status of the medical facility.
■ Technology needs and potential benefits.
■ Global view and future trends of the business.
■ Competitive advantages of the business.
Reference List
GE Healthcare. (2016). GE Healthcare Categories. Retrieved from GE Healthcare: http://www3.gehealthcare.com.pa/es-co/products/categories
Gethard, G. (2014). Falling Giant: A Case Study Of AIG. Retrieved from Investopedia: http://www.investopedia.com/articles/economics/09/american-investment-group-aig-bailout.asp
Kadle, D. (2016). Why Retirement Reality Is Finally Sinking In for Baby Boomers. Retrieved from Time: http://time.com/money/4287851/retirement-reality-boomers/
Szczerba, R. J. (2014). Tech Trends Shaping The Future Of Medicine, Part 1. Retrieved from Forbes: http://www.forbes.com/sites/robertszczerba/2014/11/23/tech-trends-shaping-the-future-of-medicine-part-1/#4e80e22480d4
