Maintaining financial health of a hospital

Dr Param Hans Mishra, Medical Superintendent, Indian Spinal Injuries Centre, outlines strategies to generate good revenue in a hospital and make it financially sustainable

It is daunting task for all CEOs and CFOs to generate and increase revenue with efficient services. However, good revenue generation and financial health of institutions give enough leverage to start new facilities, opt for better technology, recruit of better manpower, marketing etc. It is also a part of many CEOs, CFOs appraisal. Many hospitals pay their employees with minimum guarantee and shares are linked to their performance.

There may be many ways of increasing the revenue but following are the ways of maintain the health of any hospital in good shape without indulging in any kind of unethical practices:-

Manpower planning-Be lean and mean

With increasing cost of manpower, 30-40 per cent of revenue goes into it. Manpower planning is also called as human resource planning and consists of putting the right kind and right number of people in the right place at right time, doing the right things i.e. for which they are suited. Human resource planning has an important place in the arena of corporatisation.

It has to be a systems approach and is to be carried out through a set procedure. Many organisations tend to get influenced by referrals for promotions and appoint very senior people for each post without adequate focus on middle level management who are actually the working hands of the organisation. Senior people are usually retired or past their prime. They do not have the same zeal to work hard yet come at a high cost. Hence, we should be careful in appointing seniors, especially in areas which require lots of dynamism. In fact, HR and Management should focus on appointing more working hands to provide good services. If the experience of seniors is so vital and indispensable for the organisation, they should be appointed on minimum guarantee or fees for service basis. If they are good enough, they will earn enough. Manpower should be trained to multitask than one person just doing only one kind of work. Then they can be utilised for many works in case of any crisis or if any employee leaves the job.

The procedure for employment is as follows:

• Analysing the current manpower inventory
• Making future manpower forecasts
• Developing employment programmes
• Design training programmes
• Easing off redundant manpower

Need for manpower planning

Manpower planning is a two-phased process because it not only analyses the current human resources but also makes manpower forecasts and thereby draw employment programmes. Manpower planning is advantageous to firm in the following manner:

• Shortages and surpluses can be identified so that quick action can be taken wherever required.
• All the recruitment and selection programmes are based on manpower planning.
• It also helps to reduce the labour cost as excess staff can be identified and thereby overstaffing can be avoided.
• It aids to identify the available talents in a concern and accordingly training programmes can be chalked out to develop those talents.
• It helps in growth and diversification of business. Through manpower planning, human resources will be readily available and they can be utilised in the best manner.
• It helps the organisation to realise the importance of manpower management which ultimately helps in the stability of a concern.

Steps in manpower planning

Analysing the current manpower inventory: Before a manager makes a forecast for manpower, the current manpower status has to be analysed wherein the following things have to be noted:

• Type of organisation
• Number of departments
• Number and quantity of such departments
• Employees in these work units

Once these factors are registered by a manager, he goes for the future forecasting.

Making future manpower forecasts: Once the factors affecting manpower forecasts are known, planning can be done for future manpower requirements in several work units. The manpower forecasting techniques commonly employed by the organisations are as follows:

• Expert forecasts: This includes informal decisions, formal expert surveys and theDelphi technique.
• Trend analysis: Manpower needs can be projected through extrapolation (projecting past trends), indexation (using base year as basis), and statistical analysis (central tendency measure).
• Work load analysis: It is dependent on the work load in a department, branch or a division, and future expansion.
• Work force analysis: Whenever production and time period has to be analysed, due allowances have to be made for getting net manpower requirement.
• Other methods: Several mathematical models, with the aid of computers, are used to forecast manpower needs like budget and planning analysis, regression and new venture analysis.
• Developing employment programmes: Once the current inventory is compared with future forecasts, the employment programmes can be framed and developed accordingly. It will which will include recruitment, selection procedures and placement plans.
• Design training programmes: These will be based on the extent of diversification, expansion plans, development programmes, etc. Training programmes would depend on the extent of improvement and advancement which would take place in technology. It is also done to improve upon the skills, capabilities and knowledge of the workers.

Importance of manpower planning

• Key to managerial functions: The four managerial functions, i.e., planning, organising, directing and controlling are based upon the manpower. Human resources help in the implementation of all these managerial activities. Therefore, staffing becomes key to all managerial functions.
• Efficient utilisation: Efficient management of personnel becomes an important function in the industrialised world of today. Setting of large scale enterprises requires management of large scale manpower. It can be effectively done through staffing function.
• Motivation: Staffing function not only includes putting right men on the right job, but it also comprises motivational programmes, i.e., incentive plans to be framed for further participation and employment of employees in a concern. Therefore, all types of incentive plans become an integral part of the staffing function.
• Better human relationships: A concern can stabilise itself if strong human relationships are developed. Relationships in an organisation become strong through effective control, clear communication, effective supervision and leadership. Staffing function also looks after training and development of the workforce which leads to co-operation and better human relations.
• Higher productivity: Productivity level increases when resources are utilised and supervised in the best possible manner. Higher productivity is a result of minimum wastage of time, money, efforts and energies. This is possible through proper staffing and related activities (performance appraisal, training and development, remuneration)

Manpower control and review

• Any increase in manpower should be considered by the top level of management
• On the basis of manpower plans, personnel budgets are prepared. These act as control mechanisms to keep the manpower under certain broadly defined limits.

The productivity of any organisation is usually calculated using the formula:

Productivity = Output/ Input

But a rough index of employee productivity is calculated as follows:

Employee productivity = Total production/ Total number of employees

Other measures to maintain financial health

The other steps that need to be implemented to sustain the financial health of the hospital are as follows:

Save energy: A building is more than a static entity of wood or brick. It can be a living, breathing contributor hospital’s success if you have the tools to manage it well. Schneider Electric healthcare solutions will give you these tools and help you achieve many benefits:

• Improved financial performance through advanced energy management
• Sustainable utility cost savings throughout the life cycle of your building can generate new cash and more capital on an ongoing basis. Receive as much as a 30 per cent savings in energy costs over a traditional building.
• Reduced risk of carbon taxes and penalties as energy efficiency grows more important in the future.
• The ability to fully comply with regulators and accrediting organisations throughout the life of the building.
• Using optimum sunlight, solar energy for heating, LED lights and giving a written instruction to switch off lights and A/C etc when not in use as well as keeping a vigil on misuse will go a long way in saving lots of energy.

Save energy: Nowadays it is mandatory to have effluent treatment plant/ sewage treatment plant (ETP/STP) so that the water from toilets, washroom etc. can be recycled and used in gardening, air conditioning etc. This saves lot of money on water bills. By saving water we can control the budget. Following are the ways to prevent water wastage:

• Replace leaking toilet by flapper valves if needed
• Measure your showerhead flow rates and install free showerheads
• Measure faucet flow rates and provide faucet aerators for kitchens and bathrooms
• Identify broken or mismatched sprinkler heads, high water pressure, and other common problems.
• Develop a prioritised list of how you can start using water as efficiently as possible.

Negotiate for equipment/ consumables:  Good negotiation power can save a lot of money for the hospital. Negotiations should always be done by a purchase committee to avoid any bias or unethical practices. The need to acquire equipment should, wherever possible, be identified as early as possible and a Statement of Need (SON)/ Specification of Requirement (SOR) should be prepared. Vendors should be evaluated on several criteria including objective factors such as price and warranty, and subjective data which would include past experience with the vendor and the quality of their customer service.

We should also try to avail offers and discounts offered by vendors and suppliers such as:

• free spares
• free training
• free maintenance cover
• improved specification, or lower specification at a lower price
• ex-demonstrator or refurbished equipment
• more favourable payment terms

Create a brand – Jo dikhta hai wo bikhta hai

The brand launch includes exploring the hospitals’ internal signage, brand-inspired interior décor, digital displays and website to introduce the brand to the doctors, patients, family and visitors passing through hospital each day. An integrated, mass market campaign followed with creative executions for print, television, outdoor and online advertising will also help. The hospital website should be completely redesigned and overhauled to reflect the new brand and accommodate the deep and changing content generated for the campaigns.

General revenue: By giving space for parking and outlets like gift shop, fruit shop, Café-Coffee Day, ice-cream parlour, cafeteria etc. on rental or share can improve the revenue of the hospital.

Focussed specialities: High revenue generating and high turnover specialities like oncology, joint–replacement, laparoscopic surgery, cardiology etc. should be focussed on and promoted.

Publications and conferences: These will increase the visibility of the hospital and act as advertisement. It will also increase the goodwill of the hospital.

Research: It increases the scientific value of the hospital and establishes it as a state-of-the-art centre which in turn increases footfall. Research can bring grants from outside agencies which increases the quality of research work undertaken and may add to equipment, personnel and infrastructure.

Goodwill: Free camps, telemedicine and website improve the visibility of the hospital. It also brings clinicians close to the patients. and provides information about the facilities at the hospital without much effort to the patients.

Networking: Contacts with with high officials, media, politician and stars not only give good publicity to the hospital but also brings in high paying patients.

Accreditation: JCI, NABH helps in getting international and national patients through referrals and affiliations.

Quality of work: Focus should always be placed on SOPs, logarithms and good work. Different committees like hospital infection committee, medical audit committee, mortality review committee and management review committee can help monitor performance.