DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS
5.7 OBJECTIVE 5: THE FINANCIAL COMPONENT AT ST APOLLINARIS HOSPITAL
could be asked to supply an item of medical equipment, or give a donation to help improve the equipment levels at St Apollinaris. However, this recommendation may not be allowed unless cleared by the Department of Health. Individuals may argue that this recommendation is improper due to the nature of the relationship between the hospital and the medical suppliers, the following must be remembered:
• The contribution on the part of the medical suppliers does not benefit a single individual, but rather the community at large.
• The process whereby supplies are purchased is by means of a tendering process. This process is open to scrutiny.
• If a company benefits and makes a profit from selling supplies to the hospital, it has a social responsibility to the hospital and the community the hospital serves to try to improve the conditions at the hospital.
5.7 OBJECTIVE 5: THE FINANCIAL COMPONENT AT ST APOLLINARIS HOSPITAL
The objectives of this part of the study were not adequately achieved for the following reasons:
1. The financial records obtained from St Apollinaris Hospital were less than adequate to make appropriate inferences and conclusions. The records provided did not include all the costs that were incurred during the2006/2007period. The budgets and financial information provided was superficial and hence there was
not enough information to allow for proper identification of budgeting and spending shortfalls. There were no minutes for the cashflow meetings that were supposed to be held weekly. There were no budgets or statements of income and expenditure for the2007/2008 period.
2. Due to the sensitive nature of financial information, the researcher did not wish to enquire about further information. The researcher has outlined that the review of financial information was not to identify potential problems with individuals, but rather to propose interventions to help with further planning. The requesting of financial information may have undermined any attempt to maintain neutrality.
3. There was missing financial information with regard to equipment purchased during the 2006/2007 period, the vehicles that were purchased and the cost of the maintenance of the hospital buildings and equipment.
From the information that was provided it is observed that there were 5 out of 22 times when the actual expense incurred is less than the budgeted figure with regards to employee compensation and goods and services.
It is also observed that for goods and services, there is a wide range of amounts, from R 283 821 to R 1 321 463 in the 11 month period. The researcher questioned the budgeting process that the hospital followed and was told that it complied with governmental protocols. However, it was worth noting that the wide range in expenditure shows inadequacies in the budgeting process as there is no correlation or consistency in the expense incurred.
With regards to the compensation to employees the budgeted figure of R 2 160 917 was allocated to salaries for a month. The actual expenditure figure ranged from R 2 128 812 to R 2 741 532. While one cannot make proper conclusions about the compensation of employees, it is strange to note that the 88% of the general employees and 83% of the top managers acknowledged that understaffing was a problem. How could the budget for compensation to employees exceed the budgeted amounts? The possible explanations are
that there is inadequate financing from the Department of Health, or that the institute is adequately staffed according to the Department.
The following recommendations are suggested:
1. A proper analysis of the financial results must be undertaken. There should be care taken to identify trends in expenditure, reasons for over expenditure and reasons for under expenditure. This would allow the financial manager to be better able to predict the cost of running the hospital. It would also identify areas in which the hospital may be overspending. If the hospital could run by spending only R 230 000, the researcher is not able to justify the expenditure of R 1 320 000 for the same cost category in a different month.
2. The minutes of the cash flow meetings should be analyzed to assess areas wherein there are areas which require additional funding but would not be able to gain funding until the committee decides on its expenditure. If these items are regularly requested, they could be moved onto the actual yearly budget.
3. Budgets should be compiled for the different sections of the hospital. These budgets could be drawn according to the different departments or depending on the different categories of costs. For example, budgets could be drawn up for the theatre, wards, kitchen, etc or they could be compiled according to medical supplies, consumable items, equipment, etc.
4. The procedure whereby which the budgeted costs are calculated must be reconsidered. There needs to be a method whereby costs are categorised into fixed, variable or mixed costs and the importance and occurrence of these costs established to identify suitable budgeting strategy.
5. This budgeting strategy should be implemented with a cost effective inventory management technique like the just in time or ABC systems. This would
decrease the amount of money that could be "tied up" in inventory that could be used in other areas.
6. In trying to decrease costs, the financial manager should begin with the most expensive cost factors. In this instance, it is the compensation to staff component.
The general employee questionnaire attempted to identify those areas where the staffing was adequate and even over adequate, which may have resulted in staff members becoming complacent and lacking accountability. 17% of the general employees identified the foreign or new doctors as lacking accountability. Amongst the doctors, as a group they expressed the view that they were adequately staffed. 47% of the staff thought that top management lacked accountability. In a purely business environment, a further study would have been conducted to determine how productive these two groups of individuals were and if found not to be optimal, staffing in these sectors could have been reduced thus reducing compensation costs. This saving could have been used in other improvement projects around the hospital.
Another point for possible monetary saving is with regards to the way in which overtime is paid to the doctors. Assuming a staff compliment of approximately 14, with there being 30 days in the month, each doctor would be able to claim overtime for approximately 34.28 hours per month. However, further investigation on this possible cost cutting measure would have to be investigated.