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The Cincinnati Childrens Hospitals Environment
The modern-day healthcare industry and care delivery pathways are affected by various forces that present significant challenges. In general, one can define two major forces impacting global healthcare. Firstly, the technological force produces rapid transformation, creating a push for the widespread implementation of digital and information technologies in healthcare. In particular, machine learning (ML), artificial intelligence (AI), and telehealth tools are gaining popularity in the industry (Andreae & Betheil, 2022). As a result, healthcare organizations must constantly pursue innovations and technological development to satisfy the demands of time. The second force can be described as humanitarian since the modern healthcare industry puts significant professional and emotional demands on physicians and nurses. The need for constant development and value creation places physicians and nurses under heavy pressure, forcing them to adapt or quit.
Impact of Forces
Two extra challenges arise as the demand for qualified healthcare workers constantly increases, and their workload levels grow simultaneously. In 2016, the World Health Organization reported a global shortage of 7 million healthcare workers; by 2030, this number is expected to reach the staggering 30 million mark (Andreae & Betheil, 2022). In addition, a high workload contributes to emotional exhaustion and creates an unfavorable healthcare environment. According to the 2021 McKinsey Frontline Workforce Survey, insufficient staffing, emotional toll, and the demanding nature of the job were among the top five reasons to quit a job in healthcare (Andreae & Betheil, 2022). Overall, the influence of technological and humanitarian forces puts modern healthcare professionals in an uncomfortable environment.
Opportunities
The forces that present challenges and create distress may also provide opportunities for alleviating the negative impact in the future. Once implemented, cutting-edge AI and ML technologies may bring relief to healthcare professionals, serving as intelligent tools that process massive amounts of information and provide decision support. For instance, studies have already demonstrated AIs ability to predict kidney disease and forecast leukemia remission rates (Kent, 2020). In addition, AI-based clinical decision support (CDS) tools assist in streamlining workflow and patient scheduling, making the workplace experience more tolerable for the staff (Kent, 2020). As such, the current challenges in the healthcare industry offer Cincinnati Childrens Hospital a chance to demonstrate its excellence and create a comfortable environment for its staff members.
Proposal: Advanced CDS Implementation
In this regard, implementing an advanced AI- or ML-based CDS would offer substantial benefits for the Cincinnati Childrens Hospital. Being a well-funded and respectable pediatric health institution, the Cincinnati Childrens Hospital has the resources and expertise to utilize technological advancements for the good of the staff and the patients. The hospitals personnel would be able to work in a less stressful manner, always able to receive the necessary support from the trusted digital assistant. At the same time, the patients would also benefit from the care delivered by well-informed and satisfied staff.
Financial Statements
From a financial perspective, the Cincinnati Childrens Hospital is qualified as a non-profit healthcare organization. Its federal tax-exempt status is confirmed by an annual IRS Form 990, which demonstrates the organizations robust financial situation and significant potential for investments in technological innovations. According to the latest available submission from the 2020 fiscal year, Cincinnati Childrens had total revenue of $141 million; meanwhile, the total functional expenses accounted for $95 million. As such, the organization finished the 2020 FY with a solid $45 million net income (ProPublica, 2020). Almost $98 million came from investment income, which constituted 69.3% of total revenue; another $39.6 million, or 28.1% of the revenue, was earned from sales of assets (ProPublica, 2020). By the end of the 2021 FY, Cincinnati Childrens had over $2,3 billion of current assets, achieving a more than $400 million increase compared to the 2020 FY. The hospitals total assets in 2021 accounted for $8,5 billion compared to $6,9 billion in the previous FY. In addition, the organization achieved a substantial increase in operating income, making a total gain of $237 million compared to $188 million in 2020 (Deloitte, 2021). As such, Cincinnati Children has demonstrated positive dynamics in key financial indicators.
An assessment of Cincinnati Childrens Hospitals financial statements makes it evident that this healthcare organization has the financial capacity to pursue its stated vision, mission, and core values. Specifically, Cincinnati Childrens has sufficient current assets available for investment into advanced healthcare technologies. Moreover, the hospital can potentially invest in the comfort and well-being of its staff to enhance employee retention rates and firmly secure a place among the industry leaders.
The proposal to implement an advanced CDS system is predominantly based on the IRS Form 990, Title 2 United States Code of Federal Regulations Part 200 Reports, and financial data provided by the Cincinnati Childrens Hospital. In particular, these statements will be used to gauge the organizations ability to fund a new innovative project. All statements contain critical information to accurately evaluate the hospitals financial conditions. For instance, Form 990 demonstrates such ratios as total revenue, total functional expenses, net income, notable sources of revenue and expenses, and total balance, assets, and liabilities (ProPublica, 2020). In addition, Deloitte (2021) provides detailed information about the organizations operational gains and expenses. Finally, Cincinnati Childrens (n.d.a) states an exact amount of funds available for reinvesting in the organizational mission $325 million. Therefore, it is possible to estimate with sufficient accuracy whether the proposal will be feasible for Cincinnati Childrens Hospital from a financial perspective. Financial statements contain the necessary information for making a justified decision on CDS potential implementation.
Proposal Impact
In terms of the proposals impact on the organizations financial statement, the funds spent on the potential implementation of the CDS system would be added to the category of total expenses. As such, implementing an advanced CDS would directly increase operational expenses and, potentially, reduce the hospitals net income. Still, the total revenue would increase, and the CDS would become a part of the Cincinnati Childrens assets. In this regard, adopting technological innovations would increase the organizations total value. While an exact amount would depend on the software type and complexity, the change in financial statements would reflect the organizations commitment to the values of innovation and excellence in healthcare delivery.
Flexed vs. Fixed Budget
The proposals implementation would differ depending on the available budget type. The flexed budget, where the actual financial statements determine the funding, would be significantly easier to tailor to the organizations patient and employee needs. For instance, a flexed budget would allow the implementation of more complex and advanced CDS solutions if the hospital surpasses projected income from investments and sales of assets. In contrast, the fixed budget would leave limited space for maneuver since a financial plan would strictly predetermine the budget. From the practical perspective, the use of a fixed budget would likely limit the proposal to CDS options that provide workflow improvement. If the flexed budget is used, the proposal will offer more advanced CDS systems. These systems would be suited for performing such tasks as diagnostics and drug interaction checks. Regardless, the proposal would create a certain financial burden for the budget, which warrants a justification before funding allocation.
Ratio Selection
The advanced CDS implementation proposal justification ultimately depends on the budget type and subsequent system selection criteria choice. As such, one can find it challenging to justify the proposal through financial ratios alone since concrete data on the proposals subject is relatively scarce. Therefore, a combined rationale that additionally considers medical and ethical reasoning seems more appropriate. Financial ratios justifying the proposal include potential reduction of operational expenses through error avoidance and increased efficiency stemming from improvement in patient satisfaction with services. In particular, the efficiency ratio considers such indicators as the proportion of patients receiving desired care; the influx of satisfied patients may improve revenue generation from the hospitals assets. Furthermore, the CDS system implementation proposal aligns with Cincinnati Childrens organizational vision, mission, and core values. As a result, the proposal justification incorporates all vital domains of modern healthcare organizations activity.
Ratio Results
Certain ML- and AI-based CDS systems can produce financial savings for a facility. Stinnet and Mullahy (1998) calculated the healthcare cost of preventing medication errors and drug incompatibilities and found that an advanced CDS system saves $60.67 per alert (as cited in Lewkowicz et al., 2020, p. 8). Extrapolation of an average saving per patient to a local population showed estimated savings of approximately $1.3 million over five years (Lewkowicz et al., 2020). In contrast, implementing CDS systems for cardiovascular disease prevention increased annual care delivery costs by $49 per patient for medium-sized practices and $102 for small practices (Lewkowicz et al., 2020). In this regard, one can see that care costs and savings per patient significantly depend on the organizations size and CDS type. However, larger hospitals, such as Cincinnati Childrens, would likely save more or incur fewer costs per patient during the implementation. As such, implementing an advanced CDS system would potentially reduce the hospitals operational expenses on drugs and supplies stemming from avoidable medication prescriptions and diagnostic process errors.
Moreover, scholarly sources demonstrate small to moderate improvement in patient satisfaction with care after the CDS implementation. For instance, Kwan et al. (2020) reviewed 108 studies containing data from 1,203,053 patients and 10,790 healthcare providers and found a 5.8% increase in the proportion of patients receiving desired care. During the period of July 1, 2020 June 30, 2021, the Cincinnati Childrens Hospital recorded 28,211 admissions, 125,114 emergency, and urgent care visits, and 1,336,660 outpatient visits (Cincinnati Childrens, n.d.a). Therefore, a five percent improvement in care delivery after the CDS implementation would mean over a thousand admissions, over six thousand emergency visits, and over 65,000 outpatient visits with more satisfactory outcomes. In theory, this improvement can be converted into extra revenue from the satisfied patients, thus turning the CDS system into an instrument for efficiency ratio improvement.
Short- and Long-Term Impact
Regardless, the proposal would require an initial investment from the Cincinnati Childrens budget. Therefore, the organizations financials would sustain short-term losses associated with software procurement and personnel training in CDS use. However, the long-term benefits of potential savings in care delivery per patient and increased patient satisfaction with the quality of care would outweigh the initial costs. The mitigation of strategic consequences for an organizations financials would require a careful selection of CDS solutions in accordance with the budget type. Nevertheless, implementing an advanced CDS system at Cincinnati Childrens Hospital would align with the organizations vision and mission, further securing its place among the best pediatric care facilities in the United States.
Added Value
From the financial perspective, the proposal may add value in the form of potential savings per patient, which would reduce operational expenses by making the hospitals services more efficient. However, the actual extent of financial value would significantly depend on the budget type, CDS solution selection, and the annual number of patient encounters. In this regard, the key value may likely be found in small to moderate yet consistent improvement in patient satisfaction with the quality of care. Given that Cincinnati Childrens Hospital records approximately 1.5 million patient visits annually, even a five percent improvement would lead to a notable increase in patient satisfaction. Consequently, an increase in customer satisfaction would positively contribute to the organizations reputation, reinforcing the Cincinnati Childrens Hospitals position among the industry leaders.
The CDS implementation would align with modern trends in the healthcare industry. In particular, the proposal would likely increase the hospitals staff workplace satisfaction by mitigating potential distress from the high workload and emotional pressure. Adopting an advanced CDS system should be perceived as a step into the future, a chance to overcome the challenges associated with modern-day healthcare. As one of the leaders in pediatric care, Cincinnati Childrens Hospital should not miss an opportunity to pursue a promising technological innovation. Additionally, implementing an AI- or ML-based CDS would reinforce Cincinnati Childrens position as one of the best U.S. pediatric hospitals. The organizations vision, mission, and values emphasize innovation and constant improvement of care delivery and patient satisfaction (Cincinnati Childrens, n.d.c). Hence, the CDS implementation would be consistent with the hospitals goals. The willingness to invest in advanced healthcare technologies for the patients sake would also contribute to a positive corporate image.
Financial Justification
The financial statements analysis demonstrated the availability of sufficient funds for the CDS implementation. While the actual implementation costs are relatively obscure, the CDS implementation tailored to the budget structure and patient needs seems appropriate within an organizational context. In particular, the CDS system adoption would align with Cincinnati Childrens Hospitals (n.d.c) vision and mission that emphasize the constant improvement of care quality and patient outcomes. In this regard, the benefits of increased patient satisfaction would outweigh the potential cost of initial financial expenditures. Additionally, the CDS implementation offers an opportunity for efficiency improvement through increased patient satisfaction.
Articulation of Response
One can claim that proposal is justified by a combination of financial as well as medical factors. The latter takes priority since the beneficial impact of an advanced CDS implementation on patient outcomes is well-documented. At the same time, the CDS may also become cost-effective in case of wise system selection and smooth adoption. In particular, the successful implementation has the potential for the organizations efficiency improvement and operational expenses reduction. In addition to the benefits for patient outcomes and satisfaction, the CDS may positively impact staff workplace experience. Given the highly demanding nature of modern healthcare, the Cincinnati Childrens Hospital would likely benefit from providing additional support to its employees. Overall, the advanced CDS system implementation proposal can be considered a step toward a promising investment in the context of the modern healthcare industry.
References
Andreae, S., & Betheil, M. (2022). Healthcare CEOs explain how to respond to the biggest challenges in the industry. World Economic Forum. Web.
Cincinnati Childrens (n.d.a). Facts and figures. Web.
Cincinnati Childrens (n.d.b). Awards and recognition. Web.
Cincinnati Childrens (n.d.c). About Cincinnati childrens. Web.
Deloitte. (2021). Childrens hospital medical center and affiliates: Title 2 U.S. code of federal regulations part 200 (uniform guidance) reports for the year ended June 30, 2021. Web.
Kent, J. (2020). How machine learning is transforming clinical decision support tools. Health IT Analytics. Web.
Kwan, J. L., Lo, L., Ferguson, J., Goldberg, H., Diaz-Martinez, J. P., Tomlinson, G., Grimshaw, J. M., & Shojania, K. G. (2020). Computerised clinical decision support systems and absolute improvements in care: Meta-analysis of controlled clinical trials. BMJ, 370, 136.
Lewkowicz, D., Wohlbrandt, A., & Boettinger, E. (2020). Economic impact of clinical decision support interventions based on electronic health records. BMC Health Services Research, 20(1), 1-12.
ProPublica. (2020). Childrens hospital. Web.
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