Case Memo Lakeside Hospital A
To: Dr. Lawrence
From: Aira Zeng
Date: September 25, 2014
RE: Renal Dialysis of Lakeside Hospital Approximately twenty years ago, at Dr. Newell’s initiative, Lakeside Hospital had opened the dialysis unit, largely in response to the growing number of patients with chronic kidney disease. The most common treatment for end-stage renal disease was hemodialysis. Since more and more independent dialysis centers were modern, attractively designed, and could offer psychological advantages to patients, they became Lakeside Hospital’s strong competitors. Furthermore, the Medicare had begun paying independent dialysis clinics for standard dialysis treatment, Lakeside Hospital had to decrease 50 percent capacity of the dialysis department. Whether Lakeside Hospital could afford to operate the department with 50 percentage capacity and whether they should close this department is the issue I’m going to talk about today.
Criteria and situation analysis: 1. From ethic, Lakeside Hospital was a comprehensive hospital, it provided patients not only dialysis treatment but also initial treatment as well as emergency. It is important for a comprehensive hospital to serve all different kinds of treatment. Since the dialysis unit had been operated for over twenty years, it had a strong experience in this field and won the trust from the patients. For this point, Lakeside Hospital shouldn’t close the dialysis department. 2. From profit, in Lakeside Hospital, dialysis unit used to be a profitable unit, since it decreased its capacity by 50 percent, we have to calculate the breakeven, overhead, and total costs and revenue to see whether it’s still reasonable to continue operating the dialysis unit.
Key numbers and method of analysis:
1. Breakeven:
We suppose the water usage, medical supplies, and purchased lab services as variable cost; employee’s salaries, benefits, and equipment depreciation as fixed cost. All revenue and costs will increase or decrease as straight-line
From: Aira Zeng
Date: September 25, 2014
RE: Renal Dialysis of Lakeside Hospital Approximately twenty years ago, at Dr. Newell’s initiative, Lakeside Hospital had opened the dialysis unit, largely in response to the growing number of patients with chronic kidney disease. The most common treatment for end-stage renal disease was hemodialysis. Since more and more independent dialysis centers were modern, attractively designed, and could offer psychological advantages to patients, they became Lakeside Hospital’s strong competitors. Furthermore, the Medicare had begun paying independent dialysis clinics for standard dialysis treatment, Lakeside Hospital had to decrease 50 percent capacity of the dialysis department. Whether Lakeside Hospital could afford to operate the department with 50 percentage capacity and whether they should close this department is the issue I’m going to talk about today.
Criteria and situation analysis: 1. From ethic, Lakeside Hospital was a comprehensive hospital, it provided patients not only dialysis treatment but also initial treatment as well as emergency. It is important for a comprehensive hospital to serve all different kinds of treatment. Since the dialysis unit had been operated for over twenty years, it had a strong experience in this field and won the trust from the patients. For this point, Lakeside Hospital shouldn’t close the dialysis department. 2. From profit, in Lakeside Hospital, dialysis unit used to be a profitable unit, since it decreased its capacity by 50 percent, we have to calculate the breakeven, overhead, and total costs and revenue to see whether it’s still reasonable to continue operating the dialysis unit.
Key numbers and method of analysis:
1. Breakeven:
We suppose the water usage, medical supplies, and purchased lab services as variable cost; employee’s salaries, benefits, and equipment depreciation as fixed cost. All revenue and costs will increase or decrease as straight-line