(b) Strengths and improvements of Bluesberry’s operating environment to provide best value for money Strengths
Bluesberry has an internal audit department to monitor the internal control environment. This will help to provide advice over value for money.
The centralised buying department purchases all medical supplies after researching for the lowest costs. This ensures that the hospital is being economical as the least amount of resources is being used.
All orders are authorised by a purchasing director. This will ensure that only valid expenditure is incurred.
Bluesberry has introduced an overtime scheme which has seen a reduction in the use of temporary staff, which was expensive. This has resulted in an overall reduction in labour costs and possibly improved care levels with permanent rather than temporary staff working, who may better understand the patients’ needs.
The hospital has implemented a new procedure of time clocking in and out cards to record the hours staff members have worked. This ensures that staff are only paid for the hours they have worked, as opposed to being paid with no record of whether they have actually worked for the required hours.
Bluesberry has heavily invested in new surgical equipment, which has improved patient recovery rates and will lead to more operations being performed. With improving recovery rates and utilisation of equipment the overall effectiveness of the hospital will improve.
A capital expenditure committee has been established to plan and authorise the purchase of significant capital items.
This should ensure that significant cash flow expenditure is budgeted for, and that the expenditure will be for valid items only.
Improvements
This could be further improved in that the internal audit department could provide advice to departments on initial implementation of procedures rather than just reviewing them afterwards.
However, care must be taken to ensure that the quality of the goods purchased is considered as well as the cost.
To improve the process the buying department could consider establishing an approved supplier listing. In order to be placed on the list both the cost and quality of goods has to be of an adequate level, hence improving the efficiency of the goods purchased.
The purchasing director is a senior individual and it is not necessarily an efficient use of his time for him to authorise every purchase order, especially as there is a considerable number of them. The buying team receive in excess of 200 forms a day.
Instead a purchasing supervisor should be designated to authorise orders up to a pre-set level with only orders above this level going to the director for authorisation. This should free the director to focus on other areas where costs can be reduced within the hospital.
Although overall costs may have been reduced, a smaller number of staff now has to cover all of the required staffing hours. Their efficiency levels must have reduced as they are working normal shifts and then overtime.
To improve this further the human resources department should embark on a recruitment drive to find permanent staff members to fill gaps and reduce overall overtime and temporary staff usage.
This system is also used to determine overtime payments; however, there does not appear to be any authorisation of this overtime and employees could be being paid simply for staying longer hours as opposed to filling a staffing gap.
This could be further improved in that a report of overtime hours per staff member should be sent on a weekly basis to the department head for authorisation. This should ensure that the hospital keeps its labour costs to a minimum.
This equipment is not being utilised efficiently as there is a shortage of trained medical staff. In order to maximise the efficiency and effectiveness of this equipment it would be advisable to look at ways to address these staff shortages.
For example, there may be medical staff at other hospitals who wish to be seconded to Bluesberry to gain experience on this new type of surgical equipment.
The committee is made up of senior managers, however, due to some capital expenditure being very significant in value, it would be improved further if board approval was required for any orders above a designated level. The board would have an overriding requirement to consider whether this expenditure would deliver value for money for the hospital.
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