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Carolinas Medical Center Essay

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Carolinas Medical Center

Introduction

Carolinas Medical Center (CMC) requires a detailed financial plan, which helps it to meet its commercial goals in the next year. The plan describes the suitable allocation of the company’s financial assets and income as well as setting different spending strategies, which helps it to sustain the desired level of profitability (Dudin et al., 2015, p.4). The successful financial plan is composed of expenses, investments, and income of the CMC. For this reason, the three elements form the building blocks of a sustainable commercial plan.

Include all the elements required in the projected budget

A successful budget is a key factor to the achievement of Carolinas Medical Center. The organization can use the budget to optimize the amount of money and to benefit from the income. Therefore, this kind of budget must meet key elements including comprehensiveness, meeting the priorities, resource forecasting, capital needs, and service objectives (Birt, 2013, p.11). In terms of comprehensiveness, the budget should cover all the particular details. It involves categorizing all the expenses and income and ensuring that all items are included in the lists. Additionally, the budget must meet the priorities in order to highlight where resources are needed. If all the financial obligations are met, CMC should make a decision on ways to assign any leftover funds (Dudin et al., 2015, p.4).

The budget should also reflect the long and short-term capital needs. It is important to remain up-to-data after budget preparations (Chaston, 2012, p.41). CMC should incorporate any changes that occur in the monetary situation irrespective of its size or effect. Finally, a great budget requires professional input; hence, the organization should pursue expert opinion, which can play a major part in realizing a financial plan that precisely mirrors CMC’s goals and needs (Henry, 2012, p.23).

Include capital expenditure planning and contingency plans for unexpected events

Carolinas Medical Center is determined to ensure that its expenditures are fully managed since they can negatively influence the commercial health. The spending has a great impact on the failure or success of the business (Birt, 2013, p.13). Precisely, the total expenses of the organization in the first, second, and third years is $23,800,000, $25,970,000, and $28,346,500. It illustrates the expenditure of the company is increasing each year. Some of the expenses entail payment of salaries, supplies, travel, maintenance, contracts, marketing, miscellaneous. For instance, in the first financial year, the firm will spend $18,200,000 on salaries and $4,200,000 on supplies. Furthermore, $140,000, $280,000, $560,000, $140,000 and $280,000 on travel, maintenance, contracts, marketing, and miscellaneous respectively in the same year.

In the second year, the hospital plans to spend $20,020,000, $4,410,000, $154,000 and $308,000 on salaries, supplies, travel, and maintenance respectively. Moreover, contracts, marketing, and miscellaneous will require $616,000, $154,000, $308,000 respectively. During the third year, the company intends to use $22,022,000, $4,630,500, $169,400, and $338,800 on salaries, supplies, travel, and maintenance respectively. Similarly, contracts, marketing, and miscellaneous will need $677,600, $169,400, and $338,800 respectively.

Budget summary:

  1. Describe the organization’s current business model

The business model of the CMC involves a highly specialized system. The health facility concentrates on provision of medical-related services, which seeks to meet the demands of sick patients (Dudin et al., 2015, p.9). Therefore, its business model does not diversify to other social services. it has also narrowed down to few number of services such as general diagnostic, MRI, and CT which helps it to improve its efficiency and quality of care (Chaston, 2012, p.41).

  • Evaluate the impact of internal resources and financial capabilities on the business model implementation

CMC has embraced the specialization business model hence it has few internal resources that are a source of revenue (Henry, 2012, p.24). Its internal resources include the CT, MRIs, General diagnostic, and interventional. Internal resources include machineries, finances, human resources, technology, and brand. The business model tends to limit the financial capability of the health facility. For instance, total revenue for the first, second and third year are $28,000,000, $30,800,000, and $33,880,000 respectively. Consequently, its net profits are $4,200,000, $4,830,000, and $5,533,500 during the same period. The hospital does not use diversification model, which can play a role in expanding its financial capability. The introduction of non-medical services could facilitate in growth of its financial streams. Furthermore, few internal resources lead to lower level of revenue and collapse of business model (Birt, 2013, p.13).

  • Determine how the organization’s internal resources and financial capabilities affect your financial plan

Carolinas Medical Center should match its financial capabilities and internal resources with available business opportunities in the market. The firm should organize its strategies through the financial plan (Couto et al., 2017). Therefore, it is important for the organization to possess sound financial capabilities and internal resources to implement and reinforce financial plan (Henry, 2012, p.21). CMC should assess the existing strategic circumstance and available opportunities such as company division’s divestitures. The financial plan is linked to resources of the hospital, which implies that the roadmap to profitability is via internal focus, that attempt to use the special characteristic of the CMC’s collection of financial capabilities and resources (Dudin et al., 2015, p.9). An exceptional collaboration of monetary capabilities and internal resources can facilitate competitive advantage, which ultimately leads to more profits.

  • Determine how they will affect implementation of the plan

Financial capabilities and internal resources will affect the implementation of the plan because they determine the competency and strength, cost position, and competitive viability. Based on the competency and strength of CMC, it can use modern equipment and technology to achieve its objectives. A firm with robust capabilities and adequate internal resources has the ability to implement its plans (Birt, 2013, p.15). Cost position entails the capacity of the business to obtain and administer resources and provide unique value to its patients in a manner that is unrivalled with its business rivals. Therefore, if CMC has a strong cost position, its level of preparedness is high which means it can easily implement the plan (Chaston, 2012, p.47). Competitive viability refers to the aptitude of a firm such as CMC to challenge its business competitors because of the products or services it provides particularly on the quality standards. In this respect, a competitive hospital has top resources, which play a part in its innovation and expertise (Birt, 2013, p.17). Additionally, higher competitive edge increases its possibility to implement the financial plan

  • Explain the details of the budget assumptions and the strategies to increase volume

CMC has identified the budget assumptions and strategies intended to increase volume. Precisely, the organization will use strategies to increase volume such as purchasing and installing a new MRI and raising marketing to physician. Importantly, it will hire or train more staff to operate new MRI. Some of the assumptions include the increase in revenue and salaries per year at 10 percent and 4.0 percent respectively. Furthermore, it is assumed that the rise in supply expense will be 5.0 percent annually while travel as a proportion of revenue will be 0.50 percent. The maintenance, contracts and marketing as per a percentage of revenue will be 1.0 percent, 2.0 percent, and 0.50 percent respectively. Finally, the miscellaneous and salaries as a proportion of revenue will be 1.0 percent and 65.0 percent respectively.

  • Conclusion

Financial plan is a vital part of business strategic development. The budgetary estimates of Carolinas Medical Center should ensure that its meets its monetary goals. It should also describe the expenses, income, and investment (Couto et al., 2017). More importantly, the organization should ensure that the financial capabilities and internal resources are matching in order to utilize emerging opportunities. Some of the factors that affect the aptitude of CMC to implement its plans include competency, cost position, and competitiveness in the market (Birt, 2013, p.11). Therefore, the company must seek to diversify its resources aiming to achieve huge amount of resources.

References

Birt, I. (2013). Manage Finances and Develop Financial Plans: In Your Business. Tilde Publishing and Distribution.

Chaston, I. (2012). Public sector reformation: values-driven solutions to fiscal constraint. Palgrave Macmillan.

Couto, V., Wiley, E., Plansky, J., & Caglar, D. (2017). Fit for Growth: A Guide to Strategic Cost Cutting, Restructuring, and Renewal. John Wile

Dudin, M., Kucuri, G., Fedorova, I., Dzusova, S., & Namitulina, A. (2015). The innovative business model canvas in the system of effective budgeting.

Henry, A. (2012). Understanding strategic management. Oxford University Press, USA.

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