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Healthcare industry: what are the challenges in capital deployment? Can they be overcome?
May 24, 2012
Overview - Challenges in healthcare capital deployment
It is a fact that a lot of money is spent in hospitals, medical centers, laboratories etc. Besides the operational expenses, the healthcare industry also faces high capital investments in real estate and expensive technical equipment. Often the decisions are made by doctors and financial managers based on compelling reasons. The question however is not only whether to do it or not. There are competing suppliers, alternative technologies, outsourcing vs. insourcing, leasing vs. buying and more questions to address. This, in combination with too little time, a scarcity in capital and other resources, makes the decision process though.
The interest in DataPartner’s products from the healthcare industry has recently increased and keeps on increasing. Invest for Excel® software for capital budgeting and valuation has proven to be the tool that e.g. hospitals find to be the solution for their dilemmas regarding comparisons of various investment alternatives and strategic options.
Typical healthcare business planning issues that the management faces
With Invest for Excel® software, DataPartner’s healthcare customers have solved issues like:
- Investment appraisals for technical equipment like magnetic imaging devices, ultrasound machines, lasers, radiology equipment, laboratory equipment, cardiology equipment and healthcare it, electronic medical record and other healthcare IT-solutions,
- Re-building of facilities, expansion of facilities and new buildings,
- Decisions regarding health-stations and other units: opening of new unit, closing of unit, expansion of unit, renting/buying or building unit,
- Long-term business planning, impairment testing and valuation.
The checklist of good practices when analyzing investments
Good practices for investment analysis should be naturally applied in healthcare industry. Particularly in this area Invest for Excel® software can benefit its users and help resolve critical issues for taking a successful decision. Here is a checklist of some practices that our Customers and DataPartner find highly relevant:
- It is possible to make objective comparison of overall lifecycle costs of different alternatives. By involving the time factor, the solution economically optimal will be selected rather than least expensive one - especially in the short-run perspective.
- The calculations are easy to make for both financial and non-financial teams i.e. medical staff, which introduces the clarity in analyzing the choices.
- A what-if sensitivity analysis can be performed that helps to understand the risk and additional need for financing in the future.
- The process and the grounds for solution selection can be clearly documented, so that the post-audit review is fast and structured.
- The path for analyzing similar investments should be developed, so that there is no need to redo the calculations from scratch every time there is an investment need.
DataPartner is glad to introduce some of newest healthcare customers in Finland that selected the Invest for Excel® software for their investment planning:
HOSPITAL DISTRICT OF HELSINKI AND UUSIMAA
The Joint Authority for the Hospital District of Helsinki and Uusimaa (HUS) is Finland’s largest hospital district and the country’s fourth largest employer. Almost half a million patients are treated yearly at the 20 HUS hospitals. The net sales of HUS total over 1.5 billion Euros and it employs approximately 21 000 health care professionals.
Link to webpages: http://www.hus.fi/?path=59
Diacor offers the services of some 600 physicians and other health sector experts. In addition to providing comprehensive occupational healthcare services, Diacor's healthcare professionals offer their services also to private customers not associated with a particular company.
Diacor has 13 highly modern medical centres in the metropolitan area of Helsinki, and a state-of-the-art day-surgery hospital in the Ruoholahti suburb of Helsinki. Diacor has also at their disposal a top-class 3T magnetic imaging device.
Link to webpages: http://www.diacor.fi/en/home.html
CENTRAL FINLAND CENTRAL HOSPITAL
The federation of municipalities of the Central Finland Health Care District is owned by 23 municipalities located in the Central Finland region with a total population of 271.747 (31.12.2008). The health care district employs 2.763 persons (offices), of whom 290 are physicians, 1.584 nursing staff and 889 other staff. The operating expenditure in 2008 was 231,5 millions euros.
Link to website: http://www.ksshp.fi/Public/default.aspx?culture=en-US&contentlan=2&nodeid=6459
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