In general, it studies facility design and utilisation, and information flow, with the aim of reducing costs and improving quality of a service.
It is divided into operations analysis (breaking down an operation into its component parts), process analysis (for purpose of developing a cost-effective process), and systems analysis.
Systems analysis is a broader application of the operations analysis procedure. System analysis and the design of the new system require expertise of persons trained in industrial engineering.
1. Planning for Growth and Diversification:
Strategic planning appears to be most effective in planning for growth or for diversification. Strategies for growth and diversification are as follows:
1. Extending the area of service by creating or adding a new facility
2. Provide a new service in the hospital which expands the role of the hospital
3. Create community awareness by publicizing special services, hoping it will increase the use of hospital facilities.
The above approaches serve to bring more patients to the hospital, and increase utilisation of services by those who need to be there but who would not otherwise have gone to the hospital.
Diversification may become necessary for:
i. Generating capital from non operating sources of revenue for financing replacement, expansion or enhancement of technology
ii. Surviving competition by offering a service not offered by competitors or other hospitals
iii. Improving the hospital’s long-term ability to survive. Areas of diversification may be related or unrelated to the hospital’s basic function. Investment of funds and capital, management of land and property and the like are some examples of unrelated diversification.
Enlarging the product line, or offering more comprehensive level of health care through increased services can result in following possibilities.
1. Outpatient surgery unit
2. Birth centres
3. Health maintenance organisation (HMO)
4. Commercial laboratory
5. Emergency centre
6. Ambulance service
7. Hospice, day care centre
8. Industrial medicine
9. Sports medicine programme
10. Executive fitness programme, etc.
4. Decision Making for Growth and Diversification:
1. While planning for diversification, application of marketing techniques for measuring the need for a specific product becomes necessary in the decision making process.
2. It will also require a thorough financial study of the proposed diversification effect. Evaluation of the risk return trade off among various strategies and a study of alternate sources of capital will be required.
The expense of providing the new product, projected operating results, cash flow from cost payers and third party payers, and the rate of return on investment should be worked out for a short to medium term of three to five years.
3. Pricing strategy will have to be carefully evaluated while planning, because pricing plays a vital role in the success of a new programme. The analysis takes into account the expected volume of workload, revenues, costs and cash flow.