When one becomes a CEO of a hospital or any organization,
he/she faces high expectations and pressure from all stakeholders. Everyone is
keen to see an improvement on the level of output or profitability in relation
to the change in an organizational leadership. Therefore, the new CEO needs to
have a good understanding of the organizational operations and performance.
This understanding is essential in developing a winning strategy for
organizational success.
SWOT Analysis
The new CEO needs to carry out an assessment of the
hospital’s strengths, weaknesses, opportunities, and threats. The SWOT elements
of situational analysis provide an insight on the current state of affairs of
the hospital. The CEO can use the SWOT information to capitalize on the
hospital’s strengths and minimize the weaknesses.
Analysis of Trends
There is need for assessment of the hospitals’ trends in two
perspectives; financial and operational. A financial trend analysis involves the study
and comparison of financial performance of the hospital over several financial
years. The number of financial periods suitable for assessment depends on the
size of the organization, and the level of variance of financial information
between financial periods. Operational trend analysis captures information on
the performance level of hospital services and operations over several periods.
This may involve the determination of a peak and a low season for various
hospital services.
Financial ratios
Most organizations use financial ratios to measure their
performance. Hospitals are not an exemption. Financial ratios on profitability,
gearing, liquidity, among others, may be useful offer important information on
the hospital’s current performance.
Margin performance audits
A departmental assessment of costs and contribution margin
for all the cash generating departments is essential. This assessment helps in
identification of cash-cows, cost-effective departments, and profitability
potential of cash generating units.
Performance audit
It is necessary for the CEO to carry out a comprehensive
analysis of the hospital’s performance. In terms of costs, there is need for
assessment of preference costs, overhead costs, support service costs, and
purchase service contracts. Performance audits also extend to the hospital’s
human resource and facilities. The reporting ratio in human resource and efficiency
of facilities need consideration.
Analysis of Contracts
The hospital’s contracts for products and services need a
review. The review provides information on the contract terms, costs, and
rationale for the choice of a vendor. Other critical issues for consideration
include commercial pricing, bundling, revenue splitting, capitation, and
underperforming contracts.
Revenue capture
A review of points of service collections is important in
determination of efficiency and effectiveness in revenue collection. This may
include analysis of denials and underpayments.
Moral obligation
The CEO needs to assess the hospital’s involvement in corporate
social responsibility and practice of ethical behavior. There is need for
determination of the value of the hospital’s services by comparing quality and
pricing issues.
Once a CEO has done all these tasks, he/she has power and
authority to raise the hospital’s performance and productivity.
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