Answer

Executive Summary

The project presented in this report is about expansion of a hospital so that a pathology service laboratory could be created within the hospital. The project aims at installing laboratory with all the equipments, facilities and accessories as well as professional and support stall that will be in charge of the lab. The project is to be rolled out in phases starting from formulation to advertisement of services to be offered at the end of the project. While undertaking the project, consultation and collaboration with relevant bodies will be done sequentially. The whole project is intended to last for a period of about one year. This is because the physical space is already provided for. It is planned that the project will address some of the major challenges facing pathology such as dominance of anatomic pathology over clinical pathology, a narrow focus on surgical pathology with limited correlation with molecular focus of diseases, and many people training with a focus on surgical pathology. This  situation, therefore, results to less attention being paid to molecular pathology. Furthermore, insufficient collaboration between pathologists and clinicians in diagnoses and commoditization of molecular pathology services also ails effective delivery of pathology services.  It is the best interest of the hospital that the pathology service will be able to handle 200 samples per day at affordable cost both for the hospital and clients.

Background: Situational and Problem Statement

Situational

Molecular genetics is the science of studying both the chemical, physical and biological structure of genes at a molecular level. The study employs techniques of both genetics and molecular biology (8). Pathology on the other hand is the application of molecular genetics in the study of origin, cause and nature of diseases. It, therefore, involves the molecular study of organs, tissues, body cell, fluids and autopsies so that a diseases can be studied and diagnosed for treatment purposes. Pathology can also be undertaken for forensic purposes (4). There are many facets of pathology ranging from general to clinical pathology. According to (2), there are about 19 domains of pathology all of which requires slightly different but related specialties. However, not all these domains are given proper attention in a manner that meets medical demands.

Problem Statement

There are many problems facing pathology in the current medical practice all over the world. These problems include but not limited to: dominance of anatomic pathology over clinical pathology, to narrow focus of surgical pathology with limited correlation with molecular focus of diseases, many people train with focus on surgical pathology and therefore less attention is given to molecular pathology (2). Furthermore, there is insufficient collaboration between pathologists and clinicians in diagnoses and treatment exemplar, and at the same time, many laboratory tests are commercialized and can consequently break out with molecular pathology. Moreover, in as much as pathology departments control all abnormal tissue samples, the subject of tissue banking are followed up by few pathologists in most medical facilities. Finally, there is limited support and adoption for fragmented laboratory analysis (2). The magnitude of the problems facing pathology is therefore evidently no small matter. A timely and suitable solution is needed, whether it solves the problem in part or as a whole. This explains the need formulate a business case to support an initiative of introducing a new section of Molecular Genetics

Project Description

The project is setting up a pathology service facility within an existing large public hospital. The facility’s overall goal is to handle molecular genetics cases with special focus to maternity/paediatric genetic testing. The project, therefore, considers the vital resource needed to have the facility in efficient and effective operation upon installation. Among the most important resources include human capacity in terms of expertise, experience, skills and knowledge of pathology and associated sciences (5). Additionally, there is equally important need of laboratory facilities, equipments and products. These include, histology products such as, tissues embedding centers, tissue processors, cryostats, coverslippers, microtomes, autostainer, and reagents. These products must be fit for their purposes and meet standard specification. Beside histology products, there is need for exam room furniture, hematology analyzers, chemistry analyzers, lab cabinets, power raceway system and electronic information systems including data analysis software (2).

In addition to equipment and human capacity, the project also needs specific ethics of practice, strategic management and governance, quality, assessment and management system, record keeping system, a request-Test-Report Cycle, and analytical and examinational standards and procedures (5). From the major requirements to the minors, it is evident that a pathology service facility is comprehensive and need proper planning and precision in implementation of the project.

Solution Description

The problems stated are not subjective to the thinking and reasoning of an individual or a few people but they are objective and empirical in nature. This fact, therefore, justifies the need to develop a comprehensive, efficient and cost effective strategy that is pragmatic and practical (4). For this type of solution to be realized, collaborative and consultative approach should be adopted to bring on board all the stake holders on board. The stake holders in this case would include personnel in charge of human resources, personnel in charge of IT, personnel in charge of laboratory infrastructure, equipment, and facilities, personnel in charge quality assurance, and management system, personnel in charge of processes, procedures and logistics, personnel in charge of finances, personnel in charge of architectural layout of the physical space, and personnel in charge of overall administration (3). Each personnel should have a clear and precise structure of what their department needs and within which time. After all the departments have clearly described their parts and what they need, a round table discussion should be held between all the leaders of the departments to come up with resolution on what is best for the expansion and creation of a pathology service department within the hospital.

This discussion should also engage approved consultants of molecular pathology laboratories. A good example of such consultants are the Medical equipment Sources, LLC, which are known to be one of the best consultants on ROI projections, and workflow consultation (4). Upon agreement through discussion, resolution, and approval should be made on what is to be done in which sequence they should to be done. After such resolutions and approvals, are made, a budget should be made by professional so that it is sufficient to suffice for the whole project. Immediately the budget is approved, advertisements of tender for supplies of services, materials, and equipment should be done. After the advert is done, the hospital should wait for a specific period of time so that contactors should place their application. The department of procurement should then shortlist the contractors and invites them for closed door discussion. From the discussion, the best contactors should be identified in terms of their capacity, efficiency, and cost effectiveness for the supplies for which they are to be contacted. Upon agreement between the contractors identified and chosen and the hospital, contracts are signed by both the parties.

According to (5), even as the contract is signed, priority must be given in the order or urgency and necessity. For example, the contract for the architectural works must be the first priority so that the physical space is planned and arranged in a suitable way that will ensure flow of operations in the molecular pathology lab. The architectural work should also comprise of interior design of the lab that will promote the well being of the personnel, while at the same time ensuring integrity and confidentiality of the operations and procedures. Upon the completion of the architectural works, quality assessment must be done to ensure that the work meets internationally recognized standards and specifications just before the installation of lab facilities and equipment. 

The contract of supplies and installation of equipments should follow so that the equipments are procured and installed first in pilot phase and finally in the actual phase of the are suitable for the project. All the equipment, accessories and facilities procured must be tested to ensure that they are fit and meet all the quality standards and specifications recognized worldwide (1). A comprehensive quality assessment must be done on all the facilities, accessories and facilities before they are subjected to routine use. This will aid the licensing process.

The next and one of the most important is to advertise for job vacancies with specification of skills, experience, expertise, and knowledge on molecular pathology. The vacancies should be broad, including, information management, pathological operation management, equipment and machine operations, data analysis, laboratory technicians, risk managements, and quality management. The applicants must be given timelines within which their applications must be with the hospital (2). The hospital will then vet the testimonial of the applicants and do short listing depending on the contents of the claims made in the testimonies. The shortlisted candidates should then be invited for thorough interviews from which the knowledge, skills, experience, and expertise will be established with respect to the need of the molecular pathology laboratory jobs advertised. While conducting the interviews, proper care must be taken to ensure the specialties needed are addressed and that suitable candidates are singled out from the interviewees. The candidates picked must have all the qualification, trainings and competencies as specified in the adverts. This is to ensure they are able to effectively and efficiently provide, medical pathology services that are in harmony with the good laboratory practices, and laboratory quality systems (4).

Finally, to accomplish the aim of the project, the new service offered must be advertised. In the advertisements, clear information must be passed with regard to the requirements, the processes, and the expectations during and after the service. The advert should also clarify the timelines and lengths of procedures of molecular pathologies. These pieces of information are important for the clients and patients who may need the services advertised.

Cost Benefit Analysis

This refers to an analysis done to analyze the amount that will be invested against the revenue and profit that the subject organization will expect during the investment’s lifetime (6).   Other than capital budgeting which is done before commencement of the project, cost benefit should also be done either when the project is in progress or before its commencement. Cost benefit otherwise known as cost volume analysis can either be done using break-even or though other simple analysis. Unlike other simple analysis break even shows the minimum volume of output that an organization can maintain without incurring losses. This point is known as the margin of safety. Break-even point on the other is the point at which the cost of production will be equal to the revenue expected from the goods and or service sold. Cost benefit to be undertaken can be done as follows;

Approximated Cost of the Required Equipment

            The above revenue estimates are assumed to be the market rates for the services delivered using them. The general consultancy price on the other hand is assumed to be $ 2000 per session. From the analysis above, it is evident that the benefit that accrues from the project is higher than the cost. The calculations for the above proof are as follows;

Cost of acquiring the equipment = $ 1,297,000The

 Benefit that accrues out of using the equipment = $ 1,632,000

 Profit = (1,632,000- 1,297,000)

= $ 335,000

The benefit in the next five years will be 335,000* 5

$ 1,675,000

Assuming that all the equipment is put into use on a monthly basis, the health facility expects a gross profit of $ 335,000 from this project. This can be presented graphically as follows;

Break-Even Analysis

As had been described earlier, break-even is the point at which the revenue expected out of a project is the same as the cost of producing the service or the subject goods and services (6).  It is a good practice to establish the break-even before a project is commenced so that planning towards a faster achievement of the same can be done. At this point the business makes neither profit not loss. Ability to break-even faster influences the ability of the subject organization to gain certain levels of competitive advantage (3). This being a service firm, in establishing the break-eve, the facility will be seeking to know the number of patients that it must serve for it to continue operating without making losses. Since a number of facilities within the facility, an average revenue and cost will have to be established as follows;

 Average cost = $ 1,297,000/7

$185,286

Average revenue = 1,632,000/7

= $ 233,143 + 2000

= $ 235,143

Hence the revenue or else the average sales that are expected per month is $ 235,143 while the cost of production which is assumed to be variable is $ 185,268. Assuming that a total of 90 patients are served per year using the facilities, the cost per patient is as follows;

$ 185,286 / 90

= $ 2,059

Revenue per patient on the other hand is as follows;

= $ 235,143 /90

= $ 2,613

Assuming that a fixed cost of $ 10,000 is incurred per year, the breakeven is calculated as follows;

Profit = Sales – Variable cost – Fixed Cost

P= (S- V_U) x – F

At break-even point, the profit expected by the facility = 0

Hence;

0 = (S- V_U) x – F

F = (S- V_U) x

10,000/ (2,613-2,059)

= 18.05

 At this level the revenue and the cost of production are as follows;

 =18 * 2070

= $ 37,260+ 10,000

= 46,260

Revenue 18* 2,613

= $47,260

This means that the facility will have to serve at least 18 patients for it to break even. This can be represented graphically as follows;

From the graph above, at 1 unit represents 3 patients. It is evident that at point 6 which represents 18 patients (3* 6) the total revenue is equal to the cost of production. It is, therefore, evident that the facility will break-even during its first year of operation. Hence the remaining 4 years of operation the company will seek to operate within the margin of safety.

Critical Assumptions and Risk Assessment

In an economic set-up, an ideal situation cannot be expected. This is due to various economic variables that keep changing every now and then (7).  The value of profit for instance would vary significantly in the event the inflation rates vary or other factors that would make the facility to either lose its client or even make the demand for the services offered to increase drastically. In order to cater for this uncertainty, the following assumptions have been made in this project;

1. The inflation rates remain constant during the first year of operation
2. The demand for the service from the facility does not vary within the first five years
3. The fixed expense does not vary within this long-run period
4. The variable cost will not change significantly during this period.
5. Legislations that govern operations of this facility will not be amended in the next five years.

Gantt Chart