Proposal Evaluation: Jirvanna Healthcare

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This report will evaluate a recommended proposal: the introduction of a nursing triage line into Jirvanna Healthcare`s system. The report will evaluate the proposal from the standpoints of its projected financial, operational, and budgetary dimensions. This thorough analysis will ultimately determine the proposal`s viability.

Part One: Financial Analysis

Investment decisions in hospital contexts need to be evaluated from a multidimensional perspective. This includes the initial costs of the recommended technology or strategy, the attendant costs of implementing the solution into a hospital`s system, and the indirect costs associated with the program`s maintenance and periodic upkeep (Wernz, Zhang, & Phusavat, 2014). In this context, Jirvanna Healthcare nursing administrators seek to implement a centralized triage nurse line within the hospital`s system. This section of the report addresses the financial aspects of the plan and will determine if it represents a cost-effective solution.

The first task associated with this process includes the sub-task of interpreting Jirvanna Healthcare`s current and projected rates of cash flow. Presently, the hospital ledgers indicate that its current expenditures exceed its capacity for revenue. Figures associated with the former variable are estimated at $25.3 million, whereas its current revenue rates are $24,200,949: an estimated loss of $1.1 million. The nonfinancial variables associated with these figures likely pertain to core inefficiencies within the hospital`s system. Despite the specific variables influencing these outcomes, however, it is clear that the system requires an overhaul of its present operations (Burkhardt & Wheeler, 2013). 

Projections for the proposal`s impact, at the level of Jirvana’s net cash flows, can be summarized according to the following.  Zero year net cash flow figures are estimated at $1.2 million; the same estimates for year one equal an approximated $1.5 million. Cash flow estimates for years two and three can be rounded to two equal amounts of $1.59 million respectively. The same figures for years 4 and 5 indicate a lower figure in year four, $1.2 million, and subsequent increase in year 5: $1.8 million. These estimates take three primary variables into account. First, they assume that the first year`s processes will include an additional cost of $30,000 that will be albescent in subsequent years. Secondly, the same figures also assume that the hospital will payoff outlying debts associated with the project by the fourth year. These qualitative aspects might account for the growth in net cash flow across the two periods, and for the specific increase noted in year five.

The estimated net present value for the five years following the triage line`s implementation can also be summarized according to the following. First zero estimates are approximated at $9.09 thousand; first-year figures are likewise estimated at $7.36 thousand. The numbers associated with years two and three remain steady at $6.98 thousand. In year four, the figures increase to $9.45 thousand and culminate in year five at $6.17. In total, this creates a net present value of $39.05 thousand for the five-year period. Despite core fluctuations in the present net value of cash flows, in brief, we can tentatively estimate that adding the triage line will add longer-term value to the hospital`s operation, particularly at the four-year period after the firm pays off the debts related to the program`s integration (Buelow,  Rosacker & Zuckweller, 2012). 

We can apply these same figures to an analysis of the hospital`s lucidity, particularly during the zero years of the plan`s post-implementation. During this period, the organization will function at an estimated daily cost of $61,482: a figure that combines its current daily costs alongside the estimated daily costs related to adding the proposed triage line. Its asset ratio will also increase to an estimated $61,598. These figures, collectively, note a marginal asset to debt ratio of 2 to 1. Notably, however, these figures are likely to improve over the 5 year period, after the firm has paid off the aggregate debts associated with the proposed implementation. A subsequent Dupont analysis also illustrates that a gradual reduction in corporate debt, following the fourth year following the plan`s implementation, combined with a gradual increase in total net revenue and operating profit margins, indicate a positive net return following the proposal`s incorporation. At the same time, however, it will be imperative for the hospital to realize a tangible increase in the numbers of patients treated—in addition to subsequent growth in the revenue deriving from these increases—to ensure that actual outcomes reasonably align with these objectives.

Based on these summary assessments, we can make the following recommendations and subsequent observations. First, this proposal appears to be eventually cost-effective. While it will result in a marginal increase of debt and costs—particularly in the areas of salary and the reimbursement of new professional services—it will also eventually help reduce the costs associated with the organization`s current model. The program`s cost-effectiveness, in this respect, also takes into account the fact that the hospital`s current operations tend to result in negative profit margins (Fuchs, 2017). 

Secondly, we advise that the organization applies this recommendation alongside a tangible plan for realistically increasing the numbers of patients created as a result of its implementation. One of the tangible markers associated with the ROI of an investment plan includes the identification of positive actual outcomes, meaning that an investment in terms of technological or operation innovation needs to result in actualized results. In this instance, the hospital would need to achieve an improved patient ratio or each of its major departments in order to prove viable for the projected five years. Similarly, outcomes across this same period would also need to witness a reduction in the amount and number of individuals presently over budget. 

A final recommendation for this proposal would be to ensure that the hospital carefully monitors developments across the projected, five-year period. One of the variables indicating that the proposal would represent a viable solution relates to the relatively low costs associated with ending the model if it proves to be unprofitable. Estimated net present values for the five years specifically indicate that the hospital could manage this cost, particularly if it did so it is early post-initiation period. Accordingly, if early monitoring reveals that the program yields significantly lower rates of cost reduction, or fails to achieve correspondingly higher numbers of patients treated, these outcomes might suggest the need for the program`s early termination.

Part Two: Operator Indicator Evaluation

One of the broader issues presently impacting Jirvanna Healthcare`s broader efficiency relates to its present inability to effectively budget its operations and specific healthcare offerings within an annual fiscal year. As we have noted, its aggregate spending for key services and its estimated rates of revenue for those services are not presently aligned, even as they also present an approximated gap of $1 million annually. We conjecture that these gaps arise from specific organizational inefficiencies, including the inability of nursing personnel to effectively tend to the needs of patients. The trend towards overspending of key services may thus reflect the base level cost of these services, as well as a diminishing ability on the part of the firm to maintain viable levels of patients for those options. An assessment that identifies the potential viability of the proposed triage line requires a system of operator indicator evaluation to measure the firm`s present performance, in terms of its present cash flows, while also evaluating the proposal`s potential impact on the firm`s future operations. 

Understanding Jirvanna Healthcare`s expenditure and cash flow features require a basic understanding of its core economic and business model. In brief, the firm provides an array of medical services: features that include both intrinsic costs and that seek to derive revenue through patient usage. Presently, the firm features an imbalance in terms of its offered services and their ability to match expenditure with revenue. Certain services, such as CIRC, operate under a budget and drive a higher level of revenue than predicted. CIRC, in this context, operates under an estimated budget of $3.7 million, well below its allocated $5.5 million, even as it generates an estimated $4.2 million during the fiscal year. In other cases, however, services feature spending well beyond their budget without achieving estimated rates of revenue. The category of miscellaneous services represents a case in point. This service operates at an estimated $11 million dollars, well beyond its allocated budget of $5.5 million, while also earning an estimated $8 million. Other areas, such as mental health services, feature minimal marginal returns as the revenue is nearly equal to its expenditure. These figures also imply that assuming the proposal is successful, the 

These findings illustrate a key point related to the assessment of the organization`s offered services and its financial performance: namely, that it is imperative to critically evaluate a program`s (cost) effectiveness as well as its estimated benefit to the hospital`s patient base. A formula recommended by the University of Utah health system can help provide the firm guidance in its evaluation of existing programs (Daniels & Ransco, 2018). In this formula, program evaluators seek to combine an assessment of financial and non-financial variables. They measure these in terms of program/service cost, estimated returns, and the program`s assumed popularity or needs among key patient groups. Utilizing this formula in the context of Jirvanna`s organization would indicate that programs such as CIRC and DIGEST would represent viable programs in that cost, revenue, and estimated usage among patients all tend to be high. In some cases, however, a program`s financial efficiency—its ability to operate below budget—also coincides with lower usage among key patient groups. The organization`s GYN program would represent a case in point, as it tends to reflect both financial-based efficiencies and reduced popularity among patients. These trends, however, reflect current conditions. It will be important to evaluate later decisions on reports after the triage line`s implementation, as this program represents an effort to improve efficiencies across all departments (Ravits, Sapirstein, Pham & Doyle, 2013).

Ultimately, these findings identify the need for carefully evaluating key programs within a diverse and multidimensional system of analysis, as this approach will ultimately inform management decisions (Kuzemsky, 2015).  We can utilize the data relating to day-to-day operations and the program`s projected impact to inform management decisions in the following ways. First, we can measure the latter variables against the former as a way of predicting how the proposal might improve aggregate program efficiencies. We note, for example, that the program will cut down spending by $400,000 beginning the first year and by as much as $1 million by the fifth year. We are not certain how these trends will impact individual programs, but we can conjecture that these impacts will likely have a macro and a micro-level effect. This means, in brief, that broader level improvements will likely result in other improvements in various departments. A secondary recommendation, in this respect, would be to wait until after the proposal`s implementation to reevaluate each area of service.  We can justify this recommendation according to two main points. First, this approach will help decision makers clearly distinguish between the causative factors relating to service area inefficiencies: i.e. whether these stem from operational inefficiencies or from the program`s lack of popularity/utilization among its intended patient base. Secondly, this same approach will also be based on updated data that can better assess individual program effectiveness during the program post-implementation period. 

Part Three: Budgeting Evaluation

At one level, the decision of whether to implement the proposed nursing triage line into Jirvanna Healthcare`s system can be viewed from an operational, administrative, and patient health outcome perspective. At the same time, however, this same proposal also needs to be evaluated from the standpoint of its potential budgetary impact upon the hospital: both in terms of its ability to generate revenue, as well as its associative cost. For that reason, a budgetary evaluation can help provide an in-depth analysis of the program`s likely impact. These same findings can also help decision-makers identify specific short and longer-term strategies that can address key organizational problems before, during and post periods of the proposal`s integration.

Viewed from the perspective of the proposal`s longer-term impact, we can utilize the five-year calculations previously mentioned to illustrate its potential effect on the firm`s finances and organizational efficiency. As previously mentioned, assessments of the firm`s profit and loss ratios need to be evaluated from the standpoint of an individual program`s cost, its ability to derive revenue, and its rate of utilization/popularity among key patient groups. In keeping with these guidelines, decision-makers have combined areas of the identified program`s cost, its rate of resource usage, and its likely financial impacts resulting from its ability to reduce inefficiencies within existing hospital services. Notably, these calculations identify the proposal`s primary value as a cost-reduction budgetary impact. Its projections can be summarized according to the following. Profit loss rates for the added program are at a projected additional cost of $703,800—the combined costs associated with the added salaries connected with the program alongside an additional building renovation cost of $30,000—for the projected $400,000 that the organization will save in year zero. Year one`s rates will result in a higher yield of gains—an estimated $800,000 in annual savings—as opposed to the program`s associative costs of $704,490. Similarly, expected savings in year two will reach an estimated $848,000 while its costs will remain at a similar rate: approximately $734,625. In year three, cost-savings rates will increase to $902,577 while also incurring estimated costs of $775,508. Year one will see another savings increase, this time to $955,512: a figure that will coincide with estimated program costs of $805,508. In year five, projected savings will be $1,013,798, alongside a projected cost of $842,407. Two key points emerge from these figures. First, projected rates of savings overbalance associative costs; secondly, program cost increases for each of these periods is expected to be lower than revenue savings. These trends, coupled with the firm`s current operational inefficiencies, indicate that the proposal will represent an important, longer-term contribution to the organization`s operations.

As previously noted, certain services presently offered by the hospital can be regarded as inefficient from expenditure and a patient/utilization perspective. Key services in this regard include Other, OB, and ENT: the three primary areas of service in which spending exceeds budgetary allocation while featuring lower numbers of client utilization. In these cases, the offered services appear to be both costly and less appealing to targeted patient groups. In other cases, services perform under budget while also generating lower numbers of patients receiving these services. These include the specific offerings of GYN and Mental Health. Patient utilization rates connected with these figures may reflect the fact that other facilities provide the same range of services under the supervision of specialized medical personnel. In each of these cases, it may be important for the hospital to identify ways of improving the service`s efficiency or of increasing the amounts of patients that receive treatment. 

The task of improving these areas of the hospital`s operation, while also improving the organization's performance in other areas, can be achieved through the following recommendations. Notably, these recommendations are premised on the belief that the proposal will bring about holistic types of changes throughout the hospital`s functions. First, it will be important for the hospital to carefully note the correlation between the program`s implementation, broader-level organizational improvements, and performance improvements within each of the hospital`s key services. Secondly, it will be important for the firm to make key judgments regarding areas of service that remain underperforming even after the program`s implementation: specifically, in the sixth month period following program implementation. In this way, decision-makers can better determine if service inefficiencies relate to broader system inefficiencies or to issues specifically stemming from the problematic—overspending, underperforming—areas of service. 

These same recommendations also help identify the two immediate decisions that the firm should approach when seeking to improve its short and longer-term performance. This includes the adoption of the proposed nursing triage line, in addition to the implementation of a multidimensional system of metrics and evaluation. The primary approach in this regard will serve to address the firm`s immediate-term needs: specifically, those variables related to its program/service inefficiencies. Secondly, the recommendation for an integrated system of metrics will also help determine if the proposal is viable, while also indicating if it will result in its projected outcomes.

Conclusion

This report`s analysis of Jirvanna Healthcare`s finances, operations, and budgetary considerations all identify key system inefficiencies. These factors result in an imbalance of spending and revenue. The report`s specific findings also indicate that the recommended proposal represents a viable and important approach.

References

Buelow, J., Rosacker, K. & Zuckweller, K. (2012). Evaluation methods for hospital projects. Hospital Topics, 88: 10-17.

Burkhardt, J. & Wheeler, J. (2013). Examining acute performance indicators for acute-care hospitals. Journal of Health Care Finance, 29(3): 1-13.

Daniels, C., & Ransco, M. (2018). How Utah defines value in value equation. University of Utah 

Health. Retrieved from: https://uofuhealth.utah.edu/accelerate/cases/how-utah-defines-value-using-the-value-equation.php.

Fuchs, G. (2017). The feasibility study and strategic planning process in healthcare. The Fox Group. Retrieved from: https://www.foxgrp.com/healthcare-Feasibility-studies/financial-feasibility-and-strategic-planning-in-healthcare/.

Kuzemsky, C. (2015). Decision-making in healthcare as a complex adaptive system. Healthcare Management Forum, 29(1): 4-7.

Ravits, A., Sapirstein, A., Pham, J., & Doyle, P. (2013). Systems approach and systems engineering applied to health care: Improving patient safety and health care delivery. John Hopkins Applied Technical Digest, 31(4): 354-365.

Wernz, C., Zhang, H., & Phusavat, K. (2014). The international study of technological investment decisions at hospitals. Industrial Management and Data Systems, 114(4): 568-562.