A-plus

In the present report we will discuss about the future prospects of Nouveau Health. Nouveau Health is a non-for-profit health care facility which took over the management of Krona Community hospital in March 2006. In May 2007 Nouveau proposed to expand the existing facility, the new facility will have 74 acute care beds, four observation rooms, four surgical operating rooms, one C-section room, 24-hour emergency department, maternity center, intensive care unit and extensive support services, physical therapy and cardiac rehabilitation and all rooms will be private.

Planning

Before expanding the facility management needs to plan everything, planning is the first step in this process. Plans are very important for the success of an organization. They commit the individuals, departments, organizations, and the various resources of each to the specific actions relating to future. Effectively formed goals of the organization fit in the hierarchy so that the achievement of goals at lower levels allows the fulfillment of high-level goals. The different types of plans are:

1. Operational Plans: An operational plan can be defined as a plan that the manager uses to fulfill his or her job duties and responsibilities. All the team leaders, supervisors, and facilitators formulate operational plans to support the tactical plans.

2. Tactical Plans: A tactical plan is majorly associated with what the lower level units within each department must follow, how they must follow, and who is in charge of their activities at each level and stage. Tactics are used to generate a strategy and make it work. Such plans are usually of short time periods and narrow scopes.

3. Strategic Plans: A strategic plan basically defines the outline of the steps that are designed with the goals of the entire company as a whole, rather than with the goals of specific departments. Strategic Planning usually begins with the mission of the organization. These plans are generally for longer periods of time and strategize about where the organization wants to be in that time period.

4. Contingency Plans: A successful and capable management usually depends on how they adapt to changing conditions, how flexible they are with their plans and policies. A strong management requires keeping all its alternative options open so that the company can cater to any situation. Such plans are defined as contingency plans.

Forecasting

Once all the plans are made there is requirement of forecasting different things. Most of the companies do not realize the strategic importance of forecasting. Availability of right resources at the right time has become the essence for efficient functioning of management. In the present business environment where every organization is attempting to save costs, it is necessary that every amount of money must be saved. Forecasting is an important method to save costs as forecasting makes the organization predict about the future demand and thus helps in managing the resources efficiently.

Organizations can have a key to strategic decisions in terms of forecasting. The first decision for the organization is to understand exactly what forecasting is. The process of forecasting is not a computer based process; rather it is a management process. The second important key in terms of forecasting is to forecast for demand first and then plan for supply accordingly. The third important key in terms of forecasting is to communicate, collaborate, and cooperate as forecasting requires input from various levels of the organization. Performance should be measured and feedbacks should also be collected by the organization to make forecasting successful.

For example, the HR department can forecast about the future manpower requirements by forecasting the demand through various quantitative and qualitative techniques and then compare the forecasted demand with the supply. Further, appropriate actions can be taken for shortfall if any. Finally, the HR department would be required to evaluate the performance and then forecast for the future activities again.

Budgeting

Forecasting can be of different types out of which financial forecasting is known as budgeting. Budgeting is a wide term and it includes various types of budgets depending upon the requirement of the organization, collectively they are called as the master budget. Master budget is the summary of various plans of company. Master budget includes sales budget, purchase budget, raw material budget, labor budget, cash budget, Selling and admin budget, manufacturing overhead budget.

Budgets are always prepared on the basis of historical data and predictions of future, budgets can never be 100% accurate but management should draft the budgets on a very scientific basis so that there would be least deviations of actual data from the budgeted data. Before drafting budgets for expanded health care facility following steps should be followed:-

1) Determining the expected service revenue by predicting the number of patients that will come to the clinic for their treatment.

2) Considering the inflation and other factors such as cost incurred, desired profit etc. the amount to be charged from the patient must be determined.

3) All costs to be incurred must be determined beforehand so that they can be appropriately be recovered from the patients.

4) Cash budget must be made on the basis of all other budgets, and proper sources must be allocated for funding in case of any shortfall and also idle funds should be invested.

Budgeted Financial statements

The above is an illustration of how the budgets will be prepared for the health care organization. In the above illustration The process of budgeting starts with determining the number of patients expected for the period of budgeting, once the expected number of patients are determined the next step is to determine the amount to be charged from each patient and once price and number of patients are fixed then the next step is to determine the cost of supplies and direct labor.

Supplies and labor budget can be made by the help of estimated number of patients and other estimates such as expected percentage increase in labor cost, Supplies cost etc. once the number of patients are determined and other parameters are also fixed it is very easy to prepare supplies and labor budget. In direct labor we have included both the cost of physician and nurses

Once all the cost and revenue budgets are made the last and the most important budget which is prepared is cash budget, this is the most important budget as it helps in determining the amount of money that is required to be borrowed or invested and the time period for the same. Once all the budgets are completed it is very easy for an organization to draft its projected financial statements such as income statement and balance sheet.

As we can see that the hospital is able to maintain the minimum cash balance as required by the management, so there is no need to borrow the funds. In case the total ending balance at the end of any particular month falls below the required closing balance in that case the management has to find different alternatives to raise the money.

Organizational Structure

In order to be effective and efficient, every organization must have an organizational structure. An organizational structure is that form of structure which determines the hierarchy. The different types of organizational structures which the health care facility can use are:

1. Traditional Structure: This type of organizational structure is based on functional departments and division. Such structures tend to follow the rules and procedures of the organization. Different types of structures in this are:

· Line Structure: This type of the organizational structure is characterized by very specific line of command. All the commands and approvals come from the top to bottom in the line. This structure is more decentralized.

· Line and Staff Structure: This form of structure combines the line structure wherein the approvals and orders come from top to down along with the staff divisions for support and specialization. This form of organizational structure is more centralized.

· Functional Structure: The functional organizational structure identifies the employees according to the function they perform within the organization. The various departments may be Sales Department, Accounts and Finance Department, Product Development Department, Engineering Department etc.

2. Divisional Structure: This type of organizational structure depends upon the various divisions within the organization. Following are the types divisional structures:

· Product Structure: When the employees and the work of the organization are based on the basis of various types of products, the resulting organizational structure is known as product structure.

· Market Structure: When the employees are grouped on the basis of the different markets in which the organization sells its products, the resulting structure is known as market structure.

· Geographic Structure: There are organizations that have offices at different geographic places. When the organizational structure is based on the geographic locations, it is known as Geographic structure.

3. Matrix Structure: This type of organizational structure is a combination of the product structure and function structure. This form of organizational structure includes the best of both the structures to form an effective organizational structure. Also, the matrix structure is the most complex organizational structure.

It depends upon the management which structure they choose depending upon the requirements of the facility, type of people working etc.

Epilogue

Planning and forecasting is done in every organization whether it is a non-for-profit organization or a commercial organization. Forecasting is a complex process which includes various steps such as planning, estimating, budgeting etc. Planning and forecasting should always be based on logical and technically sound information.

Without forecasting every organization faces great trouble and sometimes also goes into loss due to the absence of forecasting. In the above report we have presented various processes which are required to be fulfilled before expanding or opening a new business.