Answer

Scaled Administrative Roles and Responsibilities

Situation

Beside nurse shortage, the cost of running the hospitals and other healthcare institutions has been increasing which affects delivery of quality care. It is important to note that the cost of the United States health care is currently exceeding 17 percent of its GDP. While other countries spend much less as compared to the US, the trend is the same (Andersen et al., 2011). While it is notable that there are several factors that lead to high costs of operating health institutions such as high supply cost, the administrative costs have got significant effect on the high cost of operating or running these institutions, an issue that requires immediate solution in order realize positive patient outcome. According to the 2016 report by the Commonwealth Fund, hospitals in the United States spend more than $200 billion in administrative costs, a figure that is a relatively high compared to other countries such as Canada and Germany.

Background

As the cost of healthcare increases every year, a logical starting point of solving the problem is addressing the waste of resources that is rampant in health institutions. Notably, anybody who is interacting with U.S health system is highly bound to encounter examples of superfluous administrative complexities within these hospitals and other healthcare institutions.  It starts from filling out duplicative forms to transfer of several medical bills and records that take place between providers to sorting out the insurance bills.  The administrative complexities which is associated with costs of operation is cited as the major reason as to why hospitals not only in the United States but also in other countries spend  large amount of money on operating the hospitals.  The administrative costs include overheads that are associated with performing administrative tasks, marketing expenditures, and wages paid to employees who are responsible for billing and coding.  According to the study conducted by Tseng et al.(2017),  it is important to note that careful management of money could assist the hospitals to reduce their spending by more than $150.

Analysis

One f the model or strategy that can be used to reduce high cost of operating the hospitals is employing administrative economies of scale. Administrative savings arises when large firms spread their administrative and management costs across all their plants, departments, divisions, or subsidiaries. Notably, the administrative savings can be achieved by employing the scaled administrative infrastructure which has got three major components.  The first component is reduced duplication. This component emphasizes on the doubling-up of roles that occurs within the hospitals in which two or more individuals perform one or related duties.  Therefore, it ensures that heath systems have reduced duplicative positions across all administrative functions. According to Christensen et al. (2017), health institutions must reduce redundancy in frontline managerial responsibilities and roles.  The second component is balanced span of control. According to this component, health institutions must balance managerial span of control by ensuring managers have the correct number of direct reports which are not too many and not too few as well. Notably, balanced span of control establishes standardized direct report ratios for the managerial positions.  The last component of the model is value drive integration. Health system should achieve true integration across its centralized functions in order to harness the significances to derive a greater value from every business unit.

One the same note, centralization is another method through which hospitals can reduce scale their administrative costs. Centralization is the process through which activities that involves planning and decisions making with an organization are concentrated to a particular location or leader.  According to the study conducted by Niaounakis and Blank (2017), a centralized organization adheres to standard methods and procedures which guide the organization hence assist in reducing administrative costs. In this particular system, the major decision makers are housed at the head office of the company hence there is no nee of deploying more equipment and departments in other branches. On the same note, the organization does not need to incur other costs to hire specialist for other branches since all decisions are made in the head office. Similarly, the clear chain of authority reduces doubling-up of responsibilities that may result in additional costs to the organization.

Recommendations

Scaled administrative infrastructure- this will majorly focus on the duplication of roles and responsibilities of employees.

Centralized system in which decision is made at the head office to prevent employing other specialists at ever department, something that leads to duplication.