Considerations with Resource Allocation and Risk in Health Services Organizations
Consider the following scenario:
Champion Healthcare is an HSO that serves a large network of hospitals, research laboratories, and clinics across various regions. Recently, the board of directors of Champion Healthcare has requested that all network health facilities develop patient portal technology to enhance patient engagement. As a health care administrator at one of the network hospitals, you have been called in to a stakeholder meeting to provide information on what technology is currently in use at your hospital. The agenda also includes learning about the aims of the newly designed patient portal technology so that you may implement the next steps to roll out the technology at your hospital.
Physicians and health care professionals who deliver health care directly are to promote this patient portal technology not only as a way to integrate electronic health records but also to allow patients the opportunity to engage in informed health decision making. Similarly, regional clinics and research laboratories are to use the patient portal technology to integrate assessments, lab results, and other tests used for diagnoses to corroborate physician and patient information. The board of directors has recommended that the patient portal technology be planned, designed, and tested over the next 12 months. You have been asked to determine the feasibility of using this patient portal technology at your hospital. You are also to engage with your teams to ensure that physicians and patients are fully informed on how to access and use the new technology.
For this Assignment, reflect on the scenario presented, and consider the financial and risk consequences associated with implementation of the patient portal technology. Consider what actions you as a current or future health care administrator should keep in mind when planning for resource allocation on a new project. Think about potential risks for both your staff and patients as they concern operations for the HSO.
For the break-even analysis portion of this Assignment, assume that the patient portal will generate revenue of $20 per patient in co-payments and will require a fixed cost of $50,000 for the initial investment and variable cost of $5 per patient for on-going maintenance.
The Assignment (4–6 pages):
- Describe how you would assess the financial and risk consequences associated with the patient portal technology decision.
- Calculate the breakeven and explain the results of the analysis.
- Explain what investment recommendation(s) you would propose as a current or future health care administrator for the allocation decision. Be specific and provide examples.
Expert Solution Preview
The presented scenario focuses on a healthcare system that intends to develop a patient portal technology to improve patient engagement and integrate electronic health records. The board of directors has recommended planning, designing, and testing the patient portal technology over the next twelve months. As a healthcare administrator, it is necessary to assess the financial and risk consequences associated with the decision, calculate the break-even analysis, and provide investment recommendations for the allocation decision.
1. Describe how you would assess the financial and risk consequences associated with the patient portal technology decision.
As a healthcare administrator, it is crucial to assess the financial and risk consequences associated with the patient portal technology decision. A cost-benefit analysis can be conducted to compare the costs and potential benefits of implementing the patient portal technology. The costs associated with the decision include fixed costs for the initial investment and variable costs for ongoing maintenance. The expected benefits may include reduced administrative costs, improved patient engagement, and increased revenue from co-payments.
A risk analysis can also be conducted to identify potential risks associated with the patient portal technology decision. The risks may include data breaches, system failures, and difficulty in implementation. A contingency plan can be developed to mitigate the identified risks and ensure that patient safety and data security are not compromised.
2. Calculate the break-even and explain the results of the analysis.
Assuming that the patient portal technology generates $20 per patient in co-payments and requires a fixed cost of $50,000 for the initial investment and variable cost of $5 per patient for ongoing maintenance, the break-even point can be calculated as follows:
Break-even point = Fixed cost / (Revenue per patient – Variable cost per patient)
Break-even point = $50,000 / ($20 – $5)
Break-even point = 3,333.33 patients
This means that if the patient portal technology is used by at least 3,333.33 patients, the revenue generated from co-payments will cover the fixed and variable costs associated with the implementation and maintenance of the patient portal technology.
3. Explain what investment recommendation(s) you would propose as a current or future health care administrator for the allocation decision. Be specific and provide examples.
As a current or future healthcare administrator, it is recommended to conduct a cost-benefit analysis and risk analysis before making any investment decisions. The cost-benefit analysis should consider the potential benefits of improved patient engagement, increased revenue from co-payments, and reduced administrative costs, while the risk analysis should address potential risks associated with the implementation and maintenance of the patient portal technology.
Based on the break-even analysis, it is recommended to implement the patient portal technology if the expected number of patients who will use the portal is greater than 3,333.33. However, it is important to ensure that patient safety and data security are not compromised during the implementation and use of the patient portal technology. Therefore, necessary measures should be taken to mitigate the identified risks, including the development of a contingency plan and ensuring that staff and patients are informed about the use of the new technology.