Hospital Corporation of America: SWOT Analysis

Topics: Corporation, Hospital Words: 407 Pages: 4

SWOT Analysis

SWOT analysis is a commonly used method to analyze the internal and external environment of any company, including Hospital Corporation of America (HCA). A SWOT analysis evaluates strengths and weaknesses (internal factors) together with opportunities and threats (external factors). HCA Healthcare Inc. is one of the leading healthcare service providers in the USA. On December 31, 2018, the company had 173 hospitals in the US and six hospitals in the UK (HCA Healthcare, 2019).

The company generated more than $46 billion as total revenue in 2018 and 4.39 billion as net income (HCA Healthcare, 2019). HCA grows steadily without significant mishaps for the last five years. A SWOT analysis will help to identify if any changes in development are to be expected in the nearest future.

Strengths

The largest chain of hospitals in the US;
Efficient management;
Stable financial performance;
Strong mergers;
Top healthcare professionals.

Weaknesses

No significant presence outside the US;
Fraudulent activities (Kacik, 2019).

Opportunities

Aggressive expansion to the UK;
Expansions to other countries in Europe and Asia;
Acquisitions of smaller providers.

Threats

Changes in governmental policies;
Increased competition;
Adverse events hurting the US economy.

Radiology Budget

The budget was prepared for a radiology department in an HCA hospital that performs approximately 8,000 scans a year with an average cost of $2,000 per procedure. The budget includes monthly values for projected expenses and revenues for one year. The projected values are presented for three conditions: if the department performs at 80%, 90%, and 100% of its capacity.

Rubin (2017) states that fixed costs in radiology include salaries, fringe benefits, maintenance expenses, and housekeeping costs, while variable costs include bonuses, contract labor, supplies and pharmaceuticals, malpractice expenses, and others. All of these matters were included in the prepared budget. The assumptions for income and expense projections are listed in the table below. The revenues also vary depending on the performance and workload of the department.

Income and expense assumptions.

Item	Assumption
Revenues:	The revenues were calculated base on the assumption that the department performs 8,000 scans a year charging $2,000 per procedure
Medicare	The percentages are allocated using the annual report for 2018 (HCA Healthcare, 2019)
Medicaid
Other
Expenses:
Salaries	Salaries are calculated assuming that there are 3 three radiologists, 6 nurses, and one receptionist, and one manager
Bonuses	Bonuses are assumed to be 15% of salary and depend upon the performance of the department
Fringe Benefits	Fringe benefits are assumed to be 30% of the salary
Contract Labor	Contract labor is assumed to include the services of accountants, network specialists, and marketing managers
Employee Training	The employee training cost is calculated allocating $2,400 for training per employee
Supplies and Pharmaceuticals	Supplies and pharmaceuticals were assumed to be between 8% and 10% of total expenses
Maintenance	This item includes maintenance of radiology equipment, computers, network system, and software updates.
Housekeeping Expenses	Housekeeping expenses are calculated, assuming the area of the department is equal to 2150 sq. feet.
Other Expenses	Other expenses include malpractice events and any additional costs that cannot be attributed to other categories.

When developing a budget in healthcare, it is preferred to avoid fixed budgets. According to Vraciu (1979), a fixed budget is unrealistic in healthcare; therefore, a flexible budget was prepared. The central problem is that the usability of such a budget “is contingent upon the accuracy of the activity forecasts” (Vraciu, 1979, p.136).

A flexible budget allows understanding how revenues and expenses vary depending on different factors, including management efficiency, the performance of equipment, and demand for the services. Therefore, it was decided to include three levels of department performance.

References

HCA Healthcare. (2019). Annual Report 2018. Web.

Kacik, A. (2019). Whistle-blower accuses HCA of fraudulent billing practices. Modern Healthcare. Web.

Rubin, G. (2017). Costing in Radiology and Health Care: Rationale, Relativity, Rudiments, and Realities. Radiology, 282(2), 333-347. Web.

Vraciu R. A. (1979). Programming, budgeting, and control in health care organization: The state of the art. Health Services Research, 14(2), 126–149.