Healthcare CEO Interview

Healthcare CEO Interview

 

 

For the purpose of this study, Mr Charles Vallier, CEOof University general Hospital was interviewed on the leadership role of the Chief Executive Officer in leadership with regard to Capital Allocation.

Summary of the Interview

Following the introduction, I went straight ahead into the purpose of the meeting which was to find out how he leverages his position as the hospital’s Chief Executive Officer to ensure the finances are adequate and well budgeted and allocated for the smooth running of the health facility. As he responded, he immediately stressed the importance of a two –way traffic approach to the management of the University General Hospital. A mixed approach according to him is one whereby both a bottom up approach and top down approach are used according to the area of interest. In the top – down method, what gets delivered down the chain of command is a series of standards and obligations that need to be met by the hospital in general as well as in the different departments and sections. The bottom up approach on the other hand involves the making of requests, recommendations and budget proposals by the members of staff who do the ground work.

Decision making regarding the hospital’s running is not however linear and cast in stone according to the CEO’s specifications. Instead, it is a series of negotiations which ensure the decision that is reached works for the greater good which is the preservation of human life. Budgeting is the biggest challenge that the University General Hospital faces. This is because many a time, those on the ground go for what they feel is the best option in regard to supplies, machinery, instruments and medical procedures. However, the best approach is often in conflict with the budgetary obligations of the finance department. For this reason, the CEO often insists that they seek a more affordable alternative or readjust the budget if the item or items requested are extremely essential. This at times means foregoing other items that were on the initial budget.

According to Mr Vallier, this style of decision making is what has enabled the hospital to provide quality services to its patents ever since he came on board as the CEO. He also adds that as the Chief Executive Officer, his work is much like that of an orchestra’s conductor. The conductor never plays any instrumentin particular. His role however is to coordinate the experts of playing the different string, wind and percussion instruments to produce a wonderful melody. Likewise, Mr Vallier sees his position as one of leading and mediating between the hospital’s key sectors and department heads to ensure that the hospital makes the most out of the quarterly budget that it usually works within.

At present, the hospital is looking into purchasing two more MRI machines so as to increase the efficiency in cancer screening and also internal scans. This is in response to requests by the hospital’s oncology department which has been under a lot of pressure owing to the increased number of patients who are suffering from the different cancers and cancer-like symptoms. This will also reduce the number of intrusive operations that are being carried out in the hospital to investigate and isolate malignant growths. Though it is an expensive venture, this investment promises to save the hospital money in the long-run and the most importantly the doctor’s time which will have an effect of increasing the daily turnover of patients.

Involvement of other levels of management

From the interview, it is clear that a crucial part of this hospital’s management strategy is characterized by multi-tier communication and decision making. This involvement of all the levels of management is highly beneficial to the hospital in several ways.

Firstly, it creates an environment of transparency in regard to the allocation of the hospital’s financial resources. By making sure the different departmental heads have an understanding and appreciation for the budget and its limits, clarity concerning the distribution of funds is maintained at almost all levels of the hospital’s management. This transparency is a good motivational factor and it also helps the labour force to work faithfully even in times when the conditions are challenging (Sternberg, 2011).

Another benefit of this involvement of the managers is that the CEO has an opportunity to understand the conditions on the ground and hence negotiate for more funds since he now has solid facts and figures about the different areas that are in need of improvements, maintenance or investments. The manager also benefits by having an accurate assessment of the hospital’s workings including managerial successes and failures. This type of monitoring is crucial as it acts as a form of early warning system for impending disaster that may threaten the hospital’s operations. This gives the staff as well as management the knowledge and ample time to act proactively in a bid to avert disaster (Gaspar, 2012).

On his part, Mr Vallier can also assess the effects of different expenditures that the hospital engages in. This is because of the reports that he keeps being furnished with on a regular basis by the managers stationed in the different departments. This helps him and the hospital to distinguish which financial strategies actually work as well as those that need to be done away with or at least reduced.

Last but not least, this collaborative approach empowers the subordinate managers who then empower those whom they supervise. This has the effect of distributing the responsibility of running the hospital’s financial affairs across the board. This not only ensures good decision making but also shared responsibility for losses in the event that they are incurred by this hospital. If a success is realized, everyone takes credit for it and thus feels like part of the organization. The financial goals which are set also get to be realistic as opposed to a situation where the CEO would be dictating the manner in which funds will be allocated in the hospital’s budget. The allocation of finances in this context takes into account factors such as season, inflation and other variables that have a direct bearing on the hospital’s expenditure.

Best practices in the allocation of Capital

As the Chief Executive Officer of University General Hospital, Mr Vallier has also been adhering to the best practices in the area of resource allocation for healthcare establishments. An operation as sensitive as a hospital that caters to the needs of an entire locality is heavily dependent on the availability of different items such as medicines, medical equipment, staff, recovery rooms, theatres, cleaning facilities, security as well as a reliable IT infrastructure among other essentials of a hospital. These things not only need to be present but they also need to be at the right place, at the right time and in the desired quantity. If this fails to happen, crucial time and money is wasted trying to cover for these faults yet they can be averted through sound capital allocation strategies(Rich Consulting 2005).

The truth of the matter is that like most hospitals, University General has scarce capital resources available for its day to day operations. This is a fact that the CEO as well as his team of managers have to contend with on a daily basis. This challenge has however compelled the supervisors of hospitals and other health facilities to follow a stringent approach in the allocation of money in the hospital’s budget.

 

Comprehensive governance through driven by information

From the interview, it is clear that Mr Villay is an executive who takes care of the hospital as a whole through the string and functional network that he has created with all the departmental managers. The unifying factor between him and his team of managers is information. The information is about the budgetary suggestions that have been forwarder, the costs of running different sections of the hospital as well him as the overall manager ensuring that the money that is being spent is actually working for the good of the hospital, its patients, the staff and other possible stakeholders (Rich Consulting 2005).

A coordinated calendar and planning cycle

Every four months, money for the hospital’s different expenses and investments is released depending on the budget that had been agreed on. The predictability ad frequency of this release of funds is important for the continuity of the hospital’s short and long-term projects. The point people in each of these departments and projects have to produce evidence of the progress they are making as well as highlight the possible challenges they are facing especially in regard to the money aspect. This allows these supervisors and managers to formulate plans that are geared at completing these projects efficiently. To boost efficiency, projects and expenses that are closely linked or dependant on each other are planned together so as to increase savings by minimizing wastage that at times occurs where there is overlapping jurisdiction with regard to the required supplies(Kaufman Hall, 2003).

Clear definition of available capital as well as the prevailing expenditure

In the interview, the CEO clearly stated that there is a lot of two-way communication with respect to the departmental requirements as well as the capital that is available. These disclosures enable the departmental heads to come up with feasible budgets that are affordable to the hospital. When it comes to investments, it is now possible to seek the most appropriate items shoes cost is within reach of the hospital’s finances. They can also identify and create good business relationships with suppliers who meet their cost requirements. In so doing, the university general hospital’s team of managers makes the most out of a scarce resource in the name of capital (Kaufman Hall, 2012).

Data driven and team-based decision making

The individuals who come up with the initial departmental budgets are specialists.

For this reason, it is believed that the final figures are based on fact. Their proposals move back and forth between the departments and the finance manager with the Chief executive acting as an overseer of the whole matter. This is clearly a team effort where different people with different skills work together in a coordinated manner for the good of the hospital (Kaufman Hall, 2012).

Conclusion

From the above interview as well as the analysis on how Mr Villay allocates finances, it is clear that his is an example that should be emulated by any executive who seeks to steer a medical facility in the right direction. He manages to be part of the team and at the same time oversee the allocation of the hospital’s resources to the different areas where it they are most needed. The way capital is allocated in this hospital is well aligned to the best practices of capital allocation and the fruits of his hard work are evidence of the practicality of these practices (At Kearny, n.d.).

 

 

References

AT Kearny (n.d.) Capital Management, a High wire balancing act. Retrieved from http://www.atkearney.com/documents/10192/579244/Capital+Management-+A+High-Wire+Balancing+Act.pdf/e975992c-7011-40cc-b186-55c624b1a124  on March 16, 2013

Gaspar, J (2012) How the relationships between CEOs and their managers affects spending decisions- Essec Business School.  Retrieved from http://knowledge.essec.edu/research-highlights/how-the-relationship-between-ceos-and-their-managers-affects-internal-spending-decisions.html on  March 16, 2013

Kaufman Hall (2003) Capital allocation the right way: consistent, concurrent, connected and communicated, Kaufman Hall White Paper. Retrieved from http://www.healthleadersmedia.com/content/WHP-124636/CAPITAL-ALLOCATION-THE-RIGHT-WAY-CONSISTENT-CONCURRENT-CONNECTED-AND-COMMUNICATED  on March 16, 2013

Kaufman hall (2012) A Consistent Corporate Finance-Based Approach to Allocating Scarce Capital.  Retrieved from https://www.kaufmanhall.com/Services/Capital%20Allocation%20and%20Decision%20Making%20Services/  on March 16, 2013

Rich Consulting (2005) Implementing best practices for capital allocation for an electric and gas utility- A Client Case Study. Retrieved from http://www.richconsulting.com/our/pdfs/RichConsulting_CapAllocationCaseStudy.pdf  on March 16, 2013

Sternberg, S. (2011) The Job of a CEO at a 200 person Company. Retrieved from http://techcrunch.com/2011/09/10/job-ceo-200-person-company/ on March 16, 2013

 

 

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