Major Assignment - Case Study

Context Setting: The ABC Teaching Hospital

Your Tasks

1. Prepare a budget for the Division of Medicine based on the material that Ms Monee has available to her.

a. The budget does not need to be cashed flowed across the year, but it should be presented in a manner that the Director of Medicine will find easy to understand and useful.

b. It should be prepared in Excel and use appropriate formulae wherever possible. (Note: you can insert tables or graphs into a Word document as you might do for presentation purposes, but still submit the Excel spreadsheet.)

2. When Ms Monee met the Clinical Director of the Division (the Director) to discuss the sample budget, the clinical director was not happy with the reductions in activity that had been applied by Ms Monee. Based on the activity levels over the last 3 years, the clinical director believes that a 4% increase in activity is likely to occur during the next year.

a. Update the budget to reflect this change in activity

b. How does the increased activity affect the bottom line of the Division's budget?

c. Based on the changes recommended by the Director, what does this suggest about budgets created without involvement of the operational team?

3. The Central Health Department that funds all of the teaching hospitals has determined that in order to meet the budget cutbacks being enforced by the government the easiest option is to apply either a 5 or 10% reduction to the national efficient price for the forthcoming year. The hospitals will only be told what level of cut will be enforced closer to the financial year. The Finance Director has asked Ms Monee to examine the effects of both levels of funding cuts. Prepare budgets that show the consequences of such price reductions based on the activity levels used in question 2. (Hint: if you set up your spreadsheet well you should be able to handle any level of price change by only changing a single spreadsheet cell)

a. Report the consequences of the possible changes on the Division's bottom line in a summary table. Use the activity levels suggested by the Director of the Division. (Hint: the level of detail you show in the table should be useful for part b of this question.)

b. What advice regarding the budget should Ms Monee give to the Director based on this information?

4. Ms Monee believes that she can convince the Director of the Division that there are possible means to reduce costs and improve the bottom line. She believes that a reduction in the cost of stay is possible. Create a series of budget outcomes based on a reduction of stay costs of between 1% and 10% using the activity levels suggested by the Director and the original weighted inlier equivalent separation price. Also prepare the same information using a 5% reduction in national efficient price. Present the overall budget outcome for each price graphically - use a single graph.

5. The difficulty of achieving the proposed savings increases with each level of saving proposed. While the Divisional staff are unaware of what Ms Monee is proposing (and what she is proposing is possible - although she has not had experience in implementing change in a hospital), they have already experienced a number of reforms over the last five years and believe that the service is currently efficient as possible based on the changes that they have implemented and the cost of stay savings they have already achieved. The Director of the Division will have to lead much of the change process if Ms Monee's ideas are implemented. Do you believe the likely proposed savings warrant the effort required by the director to engage a reform weary staff (provide justification for your answer)? (Hint: are there other opportunities for savings may be made that are less likely to require the staff to implement significant effort? If so, show the impact using a table or graph.)

6. What might be the issues that the Director of Finance has to contend with in attempting to role this style of budget development out across the hospital (assume that the Director of the Division has found the budgeting process to be of value)? What strategies would you suggest the Director of Finance adopt to minimise the consequences of these issues?

7. Reflection: what insights have you gained regarding the budget setting process in your work place (or if you're not currently working, in a place where you have previously worked) as a consequence of undertaking this topic? (As a guide - a single A4 page with single line spacing should provide you with sufficient content for a good reflection).

2500 words

6 references.

Attachment:- Case Study.rar