Question

You are the Administrator of the Radiology Department responsible for the day to day operation as well as developing the capital budget. Your capital budget for fiscal year 2015(July 1, 2014 to June 30, 2015)is $1 million. You have received two capital requests. One from the Medical Director of Mammography requesting a new state of the art digital mammogram machine at the cost of $800,000. This department has won awards for its outreach to poor and low income women who otherwise would not have access to mammograms. The second request is from the Medical Director of the MRI Department requesting a state of the art open MRI eliminating fears patients have going into the MRI tube. The cost of the new MRI is $800,000. Both machines run faster, produce clearer films , meet all safety / radiation emission standards and can get the patient in and out faster resulting in enhanced patient satisfaction.

1. Identify the problem/issues you face? Be specific and direct in outlining the issues/problems.

2. Referring to the Chapter on Managing Costs and Revenues what method will you use to base your decision?

3. What additional data/information will you need before making the decision ?

4. What challenge do you face once a decision is made? Will you have to explain or justify your decision to the Medical Directors of the departments?

5. In your discussion refer to the text, quote directly from the text to substantiate , expand your discussion and to demonstrate your understanding of the concepts/strategies described especially in Chapter 11 and 13. Include concepts learned in Leadership and Motivation -- what leadership or motivation strategy will you use to most effectively manage this real life situation? Be specific.

6. What is your final decision?

Answer 1

1. Identify the problem/issues you face? Be specific and direct in outlining the issues/problems.

- Two requests have been sent in for new equipment, both of which would enhance the working of the hospital. However, due to the budget for the 2015 being set at $1 million only one of the requests can be approved. Both Medical directors are making valid requests but as the Administrator of the Radiology Department, it is your job to pick the best alternative for the hospital which in this case is one that provides the most value to patients and to the hospital.

The first alternative is the department that has won awards for providing mammograms to women who could not otherwise afford it. This implies that the service of providing mammograms is something the hospital is able to provide consistently right now with no issues noted. There is no urgent need for an upgrade specified and so we can assume that the same equipment can continue to be used in the future.

This service is a high visibility one that, due to the award, will be something that internal and external interested parties will keep an eye on. Getting a new state-of-the-art mammogram will ensure more/better press for the hospital making it more valued in the medical circles.

The second alternative to invest in a new MRI machine is one that will address the fears and requirements of the patients. Getting an MRI is scary and the new machine will help alleviate this stress from patients who have to get one. This equipment is also currently functioning and not in need of any urgent replacement, just an upgrade.

There could be some good press to be had from upgrading the equipment once it is in use, to showcase the hospital's dedication to its patients but this cannot be banked upon.

The decision that lies before the administrator is one that needs him/her to compare the benefits of each acquisition and take into account what the impact of buying or not buying the equipment might be in the long run.

2. Referring to the Chapter on Managing Costs and Revenues what method will you use to base your decision?

- No book/chapter information available to answer this

3. What additional data/information will you need before making the decision ?

- It would be relevant to try and find out how many people use each type of equipment currently.

Are either of the machines running to capacity right now affecting patient treatment times?

Will either piece of equipment last say another year/two, assuming that new capital for the budget will only be received a year/two from now?

Is there a back-up available in case of failure of either machine during the year? (where there will be no more budget to replace it)

What is the value to be gained for patients if either machine is chosen - other than faster processing? Is there another aspect that patients will appreciate as much/more?

4. What challenge do you face once a decision is made? Will you have to explain or justify your decision to the Medical Directors of the departments?

- Once a decision is made or possibly even before, it will have to be discussed with both directors to understand the impact of buying or not buying the equipment. It will help to understand which department can weather the impact of not buying the equipment more as well as, determine which department will get a greater value out of buying.

- Capital decisions usually require justification to a higher authority as well, so the administrator will need to have a succinct rationale as to why that particular piece of equipment was chosen for acquisition in this year (as well as why the other was not).

- Understandably both directors will argue for their departments, however it is crucial that the administrator take a more holistic view of the decision and its impact. Apart from the departments, is there any impact to the hospital, its image, patient treatment, customer satisfaction etc.   

5. In your discussion refer to the text, quote directly from the text to substantiate , expand your discussion and to demonstrate your understanding of the concepts/strategies described especially in Chapter 11 and 13. Include concepts learned in Leadership and Motivation -- what leadership or motivation strategy will you use to most effectively manage this real life situation? Be specific.

- No book/chapter information available to answer this.

6. What is your final decision?

- The best choice in this case is to buy the new MRI machine for the MRI department. This equipment will not only be faster to enable quicker patient treatment, but also help allay the fears of the patients while getting the treatment. This two-fold benefit should be the reason to opt for the MRI machine instead of the mammogram machine. The mammogram equipment is currently already functioning as it should and replacing it will only make the activity faster for patients and bring in no other benefit/value. The administrator should choose the best value with regards to the patients, in keeping with the medical credo of helping people. Better press for the hospital, more visibility or awards should not be a key factor in decision making.