Business Need for Ceiling Lifts - Research Paper Example

Executive Summary The Veteran Administration Medical Center is a 163-bed facility. The VAMC provides medical, surgical, neurological, and psychiatric in-patient care as well as outpatient services. In addition, there are more than 125, 000 veterans enrolled, 300,000 visits a years, and 45,000 unique patients. The need for ceiling lifts is crucial for the hospital because the current lifting equipment is heavy, requires several employees in handling a single patient, takes up too much space, and is useless in transferring a patient who come to the hospital already in a wheelchair. This report finds that VAMC has to buy 163 ceiling lifts and initial cash outflow will cost $978,000 ($6,000 for each lift). Training will cost $30,000 (60 employees at $500 each). This is recoverable in less than three years. At the same time, present value of both implicit and explicit costs saved over the life of lifts is three times more than the initial cash outlay. Thus, considering both financial and non-financial advantages, the recommendation by the Capital Expenditure Committee that VAMC invest in ceiling lifts. Members of the committee are center director, chief of nursing, chief of physicians, chief of pharmacy, infection control nurse and some nurse managers. Guidmann Company will supply, install, and educate staff in proper use of lifts. In addition, Guidmann will demonstrate proper use of slings. Because of potential for infection, the hospital will use disposal slings, which are available as ward stock. The Installation of ceiling lifts is set to begin on October 1, 2010. Estimated completion date is July 1, 2011. The first phase will begin in the nursing home. The majority of nursing home residents require handling daily and nursing home injury account for most of the nursing staff lost days from work. According to Division of Occupational Safety and Health (2006), from 2000-2004 there were 1792 injuries in the nursing home due to patient handling, which resulted in 235,000, lost workdays. The second phase will begin in medical and surgical intensive care because patients in critical areas require intensive support and interventions. Back injuries account for 58 percent of lost workdays in the intensive care unit (Medilexican International LTD, 2010). The third phase will include medical and surgical wards. Quality Management will write policy and procedure. Policy will include title, purpose, policy, definitions, responsibilities, procedure, references, and any attachments. Moreover to benefit the new employees, the new curriculum will include training as well. Unit based competencies and all staff that move and handle patients will complete mandatory annual training updates. Mission, Visions, and Objectives The mission of the Veteran Administration Medical Center (VAMC) is to serve the needs of American’s Veterans by providing primary care, specialized care and related medical and support services. VAMC strive for excellence and demonstrate a commitment to the delivery of quality health care. In addition, VAMC integrates commitment to excellence and delivery of quality service by promoting health care, educating future health care providers, conducting research, and networking with other health care organizations (Fact Sheet: VA Federal Employer of Choice, 2009-2010). The vision of the VAMC is to be the health care choice of both patients and employees. VAMC has achieved its vision by accessibility, customer focused, innovative, and committed to participative and shared management (Fact Sheet: VA Federal Employer of Choice, 2009-2010). Purchase of ceiling lifts is in tune with the hospitals mission and vision. With proper training and education, ceiling lifts will reduce patient and staff injuries while becoming a no lift facility, which is the main objective of the hospital. Net Present Value Under this method, a project is acceptable if benefits exceed cost. While cost is the amount of money spent for purchasing lifts, benefits here represent cost savings. Due to increase in price level, value of money weakens over the years. This calls for converting expected savings into some comparable series. Thus, all savings expressed are in terms of a common denominator, that is, at present value. Net present value here considers saved costs. It is the sum of the present values of the cash proceeds (operation cost saved) in each year minus sum of present value of net cash outflows in each year. The present value (PV) is as follows: PV = ----- (Equation 1) Where CS = Cost saved ‘r = discount rate ‘t = time Initial spending costs factor highly in capital outlay since they are primarily a one-time commitment. The criteria used while employing this technique is: accept the project if net present value is greater than zero, and reject if net present value is lower than zero. Project Summary The initial cash outflow due to installing ceiling lift works out to be $ 1,008,000. This includes total spending on buying lifts as well as training staff to use the lifts. Cost savings net use a depreciation rate discounted at 6%over the 10-year life expectancy of the ceiling lifts. The present value of net cost savings works out to be $3,364,001. The values used in the tables above include the following assumptions: 1. Nurses have mean yearly salary of $42,000. Thus, salary per day works out to be $ 115. 2. Poor handling of patients results in the termination of two nurses. 3. Hospital has 163 beds and each bed requires one lift 4. The bed assignment is eight beds per nurse thus, the hospital would have 20 nurses attending to beds. For three shifts, the total staff strength works out to be 60. 5. As nurses have more time to attend to assigned patients after improving facilities, their productivity would go up by 10%. 6. Life of each lift is 10 years. 7. Determination of lift depreciation is by straight-line method over ten years. Based on the worked out net present value, investing in ceiling lifts is justified to improve health care services of VAMC. The VAMC aims to meet the demand for health care services of residents and veterans of Jackson and its neighborhood. It does not have profit motto and is community based. There is, therefore, lack of commercial orientation that tends to reduce effectiveness of its delivery system. To this end, continuous improvement of the facilities with which its staff work should be done on a regular basis and it should focus on patients satisfaction with a view to become more responsive to patients’ requirements. Acceptability of Key Stakeholders Hospital as defined is an institution for health care providing patient care by specialized staff and equipment that often, but not always, provides for long-term patient stay. The key stakeholders in the hospital are the physicians and nurses in addition to the patients and the community. Before implementing a capital expenditure, it is important to have a complete understanding of the impact that change will have on the individuals involved. Considering the idea of purchasing new equipment that will serve as a tool in handling patients, this will create a different level of acceptability to stakeholders namely physicians, nursing staff, and the community. Impact of Capital Expenditure to Physicians As the impact of capital expenditure to physicians shown in the section C of the completed capital expenditure approval form, it could affect one or two physicians. The intensity of the effect on physician’s attitude will tend to reduce the physician’s practice at the hospital, or the affected physician will be very impressed and will tend to discuss the expenditure favorably in the community and with other physicians. Individual’s perception to change is different in any industry. On the negative side, some physicians may feel a change may minimize their function. However, on the positive side, physicians may be prepared to do what is right for the patients and staff in the hospital. In this case, it is purchasing ceiling lifts to reduce injury to patients and staff. The goal of the hospital is to reduce length of stay in the hospital shifting care from in-patient to outpatient services. When patients fall and are injured due to poor handling by staff, this adds pressure to the physician because an injury may contribute to more days in the hospital and care from the physicians. More days in the hospital lead to chances of infection, and skin problems such as bedsores. In turn, cost is greater than expected and usually the hospital has to absorb the cost. For example, VAMC spent $1,000,000 a couple of years ago because of a patient developing a bedsore while in the facility. The patient spent more than 30 days in the hospital prior to developing the bedsore and an additional 30 days prior to transferring to the nursing home. Impact of Capital Expenditure to Nursing Staff Nursing and ancillary staff will have the most impact from the purchase of the ceiling lifts. Nonetheless, it could have a negative impact to some employee’s attitude because some are hesitant about changes and may not be willing to accept change. However, for some open minded employees who consider the value of adapting the ceiling lifts can achieve the benefits of reduced risk of injury, improved job satisfaction, and increased morale. In addition, injured caregivers are less likely to be re-injured, pregnant caregivers can work longer, and staff can work to an older age, more energy at the end of the work shift, and less pain and muscle fatigue on a daily basis. The nursing shortage is expected to decrease 20% by 2015 and 30% by 2020 and the average age of nurses is 46.8 (Department of Health and Human Services for Disease and Control, 2009). It is imperative for VAMC to work toward preserving nurses by reducing back and shoulder injuries. In fact, nurses will be able to work longer with installation of ceiling lift because of better handling equipment when caring for patients. . Moreover, when nurses have lifts attached above beds, it inevitably speeds up the physical movements of patients. This results in time savings and hence nurses could spend more time with other assigned patients. Nurses would undoubtedly welcome such capital spending. As quality in the delivery of health care services goes up, staff will welcome such spending. Impact of Capital Expenditure to the Community What is more important to the community is to receive better services from the hospital they stay in, so it is very important for the hospital to focus on such needs on how to provide good customer services which in turn creates a good reputation inculcated to the mind of the patients. Evaluating the impact of the ceiling lifts gives the following benefits to the community: Improved quality of care, improved patient safety and comfort, improve patient satisfaction, reduced risk of falls, friction burns, dislocated shoulders, and reduce skin tears and bruises. This in turn would improve the satisfaction level of patients. Overall, the perceived value of health care services provided by VAMC would go up. This brings in more patients; more revenue to the VAMC. Thus, the overall effectiveness of management team goes up. Organization Risks and Compliance issues Capital expenditure always includes some form of organizational risk. This is because it is the management’s job to ensure that capital is wisely spent. Moreover all new projects have different risk factors. These risk factors include the risk of failure, injury or employee resistance. It is human nature to resist change therefore employees are always opposed to new ways of doing things. Similarly since ceiling lifts is new to the company, some might be hesitant to engage in purchasing such items because it is costly or difficult to install. Ceiling lifts involves the risk of investing into something that requires much time and effort in training. In addition, may cause harm to staff that do not have enough knowledge and training in handling such kind of equipment. In addition, most specially, maintenance for such item might be costly and that it requires much attention in checking parts to make sure the equipment is working properly. These risk factors are important deciding the feasibility of any business plan. The organization also faces risk of litigation. This is because mishandling of the new equipment can cause harm to patients or employees. The aggrieved party can sue to organization for damages. Insurance is an effective method of hedging against these risks. Risk Avoidance Strategies More importantly, to address the risks in purchasing the new item, management must make sure cost-benefit method is applied. Management must conduct proper training about proper use and maintenance of equipment. In addition, management must know who will install and evaluate the installation of the equipment, the cost of repairs, what supplies to obtain, and to ensure compliance with established ceiling lift usage procedures. Even with all the due considerations there can always be an unforeseen errors. These errors as mentioned can lead to litigation and payment of huge amounts as a result. Therefore the organization must buy an insurance policy on the new equipment. This policy will safeguard the management against any unforeseen contingencies. Management Roles and risks Management has the objective of maximizing shareholders value and so it has to consider the long-term viability of projects before undertaking them. The long term decisions also consider factors that are not quantitative. These factors are part of customer relationship management. The management has to ensure that the customer should be satisfied. The monetary benefits also lead to shareholder wealth maximization. Capital budgeting falls within the scope of managerial decision making because it pertain to investment in ceiling lift, which enhance or add to existing facilities of the VAMC. These assets will result in the delivery of better services over time. These assets will also provide a yield on return spread over a period greater than one year. Thus, any decision with respect to capital spending would require careful consideration of cost and its associated benefits. Capital budgeting techniques are of great help in making such vital decisions. Management will ensure patients are cared for safely, while maintaining a safe work environment for employees. In addition, management will furnish sufficient patient handling equipment, ensure equipment repair/maintenance, and provide staffing levels sufficient to support safe patient handling and movement. Staff non-compliance is always a possibility. However, staff will complete initial, annual, additional equipment training, and management will maintain training records for three years. Staff with compliance issues will receive additional training by qualified staff. The management will review training progress and only then allowed these staff members to handle equipment. The minimizing injury risk for staff members and patients will be a result of this measure. Conclusion In conclusion, VAMC has to spend $1,008,000for instituting ceiling lifts. As project appraisal based on net present value method has revealed, the anticipated recovery period for the initial cash outflow in terms of net cost savings is less than three years. Overall, the present value of cost savings over the next 10 years is about three times more than initial capital spending i.e. ($3,086,122). VAMC is making a wise decision of engaging into new equipment. The hospital will not only meet its objective of a no lift facility, but it will increase revenue, better reputation, and most importantly patient and employee satisfaction. This customer satisfaction will translate into the primary organizational goal i.e. shareholder wealth maximization. The organizational risk can however be further minimized by buying an insurance policy. This strategy would also protect employees and patients against any risk. Thus VAMC should undertake the project . References Department of Health and Human Services: Center for Disease Control and prevention. (2009). Preventing back injuries in health care settings. Retrieved from http://www.cdc.gov/niosh/blog/nsb092208_lifting.html Division of Occupational Safety and Health. (2006). Nursing home: overexertion. Retrieved from http://lni.wa.gov/Safety/Topics/.../Nursinghomeoverexertion.pdf. Medilexican International LTD. (2010). Back pain: a common problem for nurses. Retrieved from http://www.medicalnewstoday.com/articles/48381.php Veterans Administration (2009-2010). Fact Sheet: VA: A federal employer of choice. Office of Public affairs media relations. Washington, D.C.: U.S. Government Printing Office References Read More