The demand for quality health care globally has continued to increase, making the health care sector one of the most booming sectors in the global market. As a result, one of the key differences between the many health care facilities globally will often be differentiated using the quality of services rendered. For this reason, the hospital has identified a niche market where patients have to incur a lot of expenses due to a lack of quality services. The da Vinci Surgical System is a machine that the hospital has decided to invest in and have installed in the facility to increase its revenues through an increased number of patients visiting the hospital. As a result, the company organized and identified a team that would spearhead the feasibility study on the advantages of having a surgical robot in the facility. After the analysis, it was indicated that most people within the hospital’s vicinity tend to incur high medical expenses due to a lack of equipped health care facilities.
Acquisition of the da Vinci Surgical System will assist the medical health facility to achieve its key objective that was proposed in the one-year milestone. First, the health facility intends to give the current market presence required to support its marketing and sales goals. In addition, the product will be in line with the company’s vision and mission, where the facility continues to address and tackle health issues related to surgical repair techniques that are implemented on heart surgery.
The DaVinci Surgical System improves the commonly used surgical system that the hospital had initially installed. The robotic surgical system manufactured by an American company is designed to facilitate those complex surgeries by using a minimally invasive approach where it has to be controlled by a qualified surgeon using a console. The main advantage that the product provides to the hospital is that it will be used for prostatectomies surgeries. Statistically, the number of heart diseases has continued to increase tremendously globally. Considering the market that the hospital serves, it was deemed necessary to have a product that can be used in surgeries that involved cardiac valve repairs and gynecologic surgical procedures. Further, the product will be used in many surgical procedures such as radical prostatectomy, internal mammary artery mobilization, cardiac tissue ablation, and transoral resection of tumors that tend to appear on the upper aerodigestive tract and tumors that originate from the lung.
Due to its complexity and advancements in technology, the product was reasonably priced compared to other surgical outcomes in the market. The product was priced in line with other leading products, and a pricing chart of other leading competitors’ products has been provided below.
|ZEUS Robot Surgical System||$975,000|
|Synaptive’s Modus V||$1,520,00|
|Da Vinci Surgical System||$1,000,000|
The hospital intends to promote the da Vinci Surgical system using different tactics to assist the hospital in targeting its two central target populations: 1) patients with heart defectives and 2) Ophthalmologists performing laser surgery.
Patients with Heart Defective
The current market analysis has indicated a high number of cases of people who continue to suffer from heart diseases, which continues to be a significant issue due to the lack of advanced machines. The main factor that will promote the da Vinci Surgical System to the patient is that it displays its superiority to other existing technologies. The hospital will embark on a large-scale national advertising mechanism that will mainly be aired on television and social media.
Ophthalmologist Performing Laser Surgery
An ophthalmologist that performs refractive surgery will be the primary source of the instrument due to the high patient demand. The most critical factor in promoting the da Vinci technology will be published in highly visible and reputable medical journals and incorporate and use the medical journals. The primary aspect of these channels is that they offer free publicity.
One of the critical characteristics of the hospital is that it is located in an urban area where people can easily access the medical facilities. Therefore, the location is strategic. It increases the accessibility of healthcare to the people, and the center aims to provide surgical services at an affordable rate.
The following are the key players responsible and played a role in the implementation of the da Vinci Surgical Robot at the health care facility.
- Joe Adams – CEO: He has more than twenty years in medical and health services and was responsible for the oversight of acquiring the right surgical robot that would benefit the hospital operations.
- Frederick Jones – COO: The primary mission that Mr. Jones emphasizes is creating a hospital setting where people can access quality services at a fair price without making different visits to another hospital to pursue the same services. As a result, he advocated for purchasing a machine that would provide advanced surgical services within the hospital.
- Leaky Ricardo –VP Product Development: Mr. Ricardo, who is the product development in the hospital continues to play a massive role in the institute by provided tailor-made products and services that directly impact the lifestyle of people that visit the hospital. As a result, it played a huge role in implementing and acquiring the da Vinci Surgical System.
- Jane Edwards –VP of Marketing: Mrs. Edwards will be mainly involved in spearheading the advertising of the machine and the services that the institute will offer after the acquiring and installation of the surgical robot. In addition, she is tasked with outsourcing personnel that will train the current staff at the hospital on the functions of the da Vinci Surgical System.
- Jon Smyth –VP Finance: As the Vice President of the Finance within the institute, Mr. Smyth is tasked with overseeing the finances of the organization, and according to him, the investment in the da Vinci Surgical System will be instrumental in that it will increase the number of patients within the hospital. According to his analysis, the investment was deemed necessary, and despite the cost of the machine, the surgical robot will have more benefits overall in the long run.
The hospital has focused on the emotional and developmental wellbeing of hospitalized individuals where it has the following departments those transverses to cater to all. The da Vinci Surgical System will impact the next department, and it is estimated to increase the number of patients visiting and receiving services at the center.
- Diagnosis department and Counseling department: The department has continued to provide various services such as diagnosis and counseling of patients with genetic disorders.
- Cardiovascular Services: the department has continued to provide clinical services that are a crucial basis for diagnosing and treating genetics well as heart diseases among children.
- Gastroenterology, Herpetology & Nutrition: The department will be impacted since it has continued to provide a range of treatment of services to individuals with stomach and intestines problems but often refer the patients to other medical services for patients that require surgical services.
The hospital’s personnel are the company’s main assets, and the hospital is privileged to have more than eighty percent of its skilled and qualified personnel for their duties. In addition, the hospital has ranked its personnel into various categories and departments, and the following will be the most impacted by the installation of the surgical system.
- All hospital categories within the hospital will be impacted either directly or indirectly by the da Vinci Surgical System. For an instant, the consultant physician and the Physician will be indirectly affected by will play a role in the aftercare of patients. In contrast, Medical officers (M.O) and Surgeons will be directly impacted as they will have to handle the machine on an almost daily basis.
- In addition, the paramedic staff, such as the Nurses and the operation thither assistant, will have input into the machine’s functions and will have to work with doctors in the surgical process.
The hospital equipment throughout the hospital has an established routine work discipline and personnel designations.
Overall the current staff and workload are adequate to cater and provide services to the patients that report to the health care center. As a result, we do not intend to hire more permanent staff, but this can constantly be reviewed when the demand for patients increases to avoid nurse and medical officer fatigues. However, the most resort avenue that the organization intends to achieve is to contract labor on a contract basis to assist in other surgical procedures around the hospital. Therefore, one aspect that the hospital deemed necessary was to provide training to the current staff to be conversant with the operations and learn how to operate the machine.
Financial Analysis Summary
Once the da Vinci Surgical System has been installed and rollouts the occupancy rate of the patients within the organization is estimated to increase in one year gradually. The current occupancy rate at the hospital is 88%. This is estimated to increase progressively throughout the year to reach a high of 108%, which is about a twenty percent increment that will translate to more revenue to the hospital. This is shown in the graph in the appendix.
The Average Length of Stay/ Outpatient Visit
There will be no significant impact on the average length of stay of the patients after the rolling out of the surgical robot within the health center. However, the number of outpatient visits within the organization is estimated to be hugely impacted. The institute forecast a gradual increase of outpatient visits in the hospital where the current number of outpatient visits is 2,690 patients, estimated to increase to approximately 3,293 outpatient visits. This can be viewed in the graph located in the appendix section.
The operating margin tends to be an essential financial analysis tool which is a percentage representation of the revenue generated by an organization that manages to provide funds that can be used in the payment of the company’s investors. Therefore, it is a critical financial tool used in analyzing the company’s stock value. One aspect of the operating margin is that when all other factors are assumed not to change, a high percentage value of operating margin indicates a healthy organization. Considering that, the company’s operating margin indicates gradually increasing where the standing figures are 139%, proving to be more economical to acquire the machine.
Average Collection Period, Average Daily Sales
The average collection period is used to determine the number of days when the credit sales were made, and the dates for the money received/collected from the customers. As a result, the average number of days a company takes to have its accounts receivable paid.
Changes (Increases and Decreases) in Volume
The number of patient outflow within the health facility is estimated to increase with the installation of the new surgical system. Currently, the number of patient activities within the health center is 33,102. However, within a year after installing the new system, it is estimated a gradual increase in the number of the patient to approximately 40,530.
Changes (Increases and Decreases) in Revenue and Expense
The revenue of the hospital will increase gradually due to the high number of patients accessing and seeking the hospital services for surgical services. As a result, the amount of revenue estimated to be generated from the patients, both outpatient and inpatient, is $ 9,094,500, which will fluctuate throughout the year and reach a top of about $ 11,154,700 by the end of the one year. Likewise, with the addition of the new surgical robot, the hospital expenses will also increase due to the high amount of maintenance charges that will increase from $ 250,000 to approximately $ 306,000 by the end of the year. Overall, the expenses of the hospital will increase from $1.237 to a total of $ 1.52 by the end of June 2018.
The Overall Impact of the DaVinci System
The overall impact of the da Vinci Surgical System on the hospital is positive both in terms of revenue generation to an increased number of patients, both inpatient and outpatient. In addition, the company is estimated to increase the total number of assets of the company to $ 14,535,000 compared to a total of $ 60,000 in current liabilities determining the quick ratio; the company would be in a better position to pay off its current penalties using its existing assets. This is a clear indication that the investment of the new surgical robot will have a positive and significant impact on the company profile.
Performance Measurement and Management
It is essential to ensure that the process and procedures within the hospital are considered and monitored to ensure the long life of the machine. Due to the complexity of the surgical system, the performance measure and management will have to be adopted and implemented to ensure a smooth flow of operations within the health center.
Routine Reports and Benchmarking
There will be a routine maintenance plan that will be scheduled to be conducted every quarter. A report will be prepared to indicate the machine’s status and indicate whether there is any malfunctioning. One of the critical aspects that the hospital intends to achieve is to provide top-quality and affordable surgical services to all.
Corrective Actions/Activities to Keep Things on Task
In situations where there is malfunctioning with the system, an emergency number has been provided. The issue is supposed to be reported to the manager head of inventory, who will then escalate the problem to the COO to make arrangements for immediate maintenance. Therefore, the responsible personnel will be the only ones authorized to operate the machine. Still, there will be an arrangement made before the visit where the Manager Head of Inventory will supervise them in the case of other learners.
The strategies implemented within the hospital about the operations of the machine have successfully been adopted, and six months after the rolling out of the new device, the hospital has continued to see an increase in the number of patients that translates to high revenue. Various factors need to be considered when making specific recommendations. Still, one of the main aspects that need to be considered is ensuring that all staff in direct contact with the machine have received the required training to preserve the engine and increase its products within the hospital.