Please help me answer the questions on the last page of the case study, at least the first 2. Thank you so much for the

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Please help me answer the questions on the last page of the case
study, at least the first 2. Thank you so much for the help and
make sure to explain in detail the answers of the
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Please Help Me Answer The Questions On The Last Page Of The Case Study At Least The First 2 Thank You So Much For The 1 (238.51 KiB) Viewed 43 times

CON010127-A-ENG-WOD SANTA TERESA HEALTH CENTER (A) Original written by professors Rui Vieira and Jorge Merladet at IE Business School. Original version, October, 2021. Published by IE Business Publishing, María de Molina 13, 28006-Madrid, Spain. ©2021 IE. Total or partial publication of this document without the express, written consent of IE is prohibited. Rodrigo Velilla is a young consultant that has recently been promoted to "partner", after ten years of hard work in his firm. Together with higher pay, his new position means that he will have to start doing some marketing and he will play some role in the management of the firm. Rodrigo has chosen to develop the Social Corporate Responsibility area of the firm. As his first task at it, he has called Marta Jiménez and old colleague of his at business school. While he worked in consultancy, she has devoted all these years to manage Santa Teresa, a non-for-profit started by nuns almost 100 years ago. Only recently, she has been named general manager. Marta thinks she could use some pro-bono work Rodrigo's firm will be offering, since their culture is that "every cent is spent in social work, none spent in admin", which for her means she does not have any money to hire professional management services. Santa Teresa Health Center is located in South Europe and provides help and treatment for alcoholism and drug addiction. Helping minors and young unemployed adults is a special priority, as it is working with adults in different industries of the region, mostly related to tourism (including accommodation and food services, construction, arts and entertainment). Employee heavy alcohol use or use of illicit drugs are associated with negative work behaviors such as absenteeism and frequent job changes. S MISSION AND VALUES Marta explains to Rodrigo that she does not think of the Health Center as just an alcohol and drug rehabilitation center, but more as "community against social marginalization", where people can resume life after months or years spent as social excluded. As part of its therapeutic intervention, the health center has a hand-crafted production facility to provide a meaningful way to occupy patients' time. It also has strong links to the business community with several relevant collaboration initiatives to provide working skills and facilitate the integration of patients back into the community. Marta has kept the focus of Santa Teresa in social service. She dreams of enlarging the premises to be able to produce a higher impact in society. Even if she has access to some volunteer work that helps her daily finance, the clinic barely struggles to make ends meet. She believes that she should work to have a more solid financial sustainability before taking the clinic further.
THE REHAB PROGRAMS The health center runs two recovery inpatient rehab programs: alcoholism and drug addict rehabilitation. They also provide outpatient services of aftercare (counseling and patients' care for mild abusers or after being released from a hospital or clinic). Inpatient assistance includes 24-hour medical care, emotional support and freedom from outside triggers. The length of treatment depends mainly on the severity of the addiction. The clinic management believes that treatments and rehabilitations work best when carried out in a controlled environment supervised by medical staff or experienced specialists: Alcoholism is a delicate issue that must be addressed as discovered otherwise it can cause permanent damage in terms of relationships and productivity at work. Non-judgmental specialists can guide patients through the detox process, intervention, and rehabilitation processes. ■ Drug addiction is also a delicate and complex issue wherein the person involved becomes reliant on drug substances and cannot control its excessive reliance without withdrawal symptoms. Drug detox allows the gradual expulsion of drug toxins from the internal organs of an addict. Outpatient aftercare offers to individuals released from a clinic or with a mild substance abuse, treatment sessions that can be scheduled during various times throughout the week. The treatment provides medication, counselling and a network of support, while allowing the freedom to continue working and caring for family while in recovery. Rehabilitation is the cornerstone of long-term recovery in most drug addiction cases. This treatment regimen can include, group work, mental therapy, relapse prevention, and general education on addiction. The clinic has 50 places for alcohol rehab, 80 for drug abuse rehab and 120 places for day-patient in aftercare. In average an alcohol patient stays six months, a drug rehab patient, one year, and an aftercare treatment typically lasts 9 months. The clinic runs its own laboratory for tests. THE COSTS Labor costs represent the largest segment of each program costs. These costs include the cost of services provided directly to the patient (direct service). Direct service personnel are physicians, psychologists, nurses, and social workers who spend the majority of their time working directly with patients. Other costs of treatment resources that are not used directly to treat individual patients but are necessary to run the program (indirect service) are recorded in a simple "indirect services" category to be allocated to each program. These costs include indirect service personnel typically are managers, maintenance workers, security and others who do not ually work directly with patients and indirect service activities, such as doing paperwork, attending meetings, or participating in training workshops. In sum, the treatment programs need to cover several costs: Treatment personnel (such as physicians, psychologists, nurses, physicians, social workers, and counsellors) Medical supplies Administrators and office personnel (including managers, human resources, and payroll) ■ Space, furniture and equipment Maintenance and utilities (including telephone, e-mail, and Internet services) ■ Laboratory services (including drug tests)
Other indirect costs such as transportation, accounting, security, insurance (including professional liability). The health center is located in donated facilities and crucial to program operations are volunteered time and services, but also donated equipment, supplies, and other resources. THE BUDGET The center's budget for next year follows: Professional salaries": 6 physicians x 150,000 € 20 psychologists x 75,000 € 900,000 € 1,500,000 € 960,000 € 24 nurses x 40,000 € Total direct costs Medical supplies 3,360,000 € 375,000 € 187,500 € Rent, utilities and clinic maintenance Administrative costs to manage patient charts, food, laundry 525,000 € Laboratory services 78,000 € Other costs (including transportation and other administrative clinic expenses) 136.000 € Total indirect costs 1,301,500 € 4,661,500 € Total * These costs include professional service paid. However, it is important to note that the clinic also includes a significant amount of volunteer work of social workers that provide nursing and social work activities. At first, it was difficult to estimate the cost of each service, since most professionals spend some of their time working for any of the three services. Marta solved the issue by computing the total hours worked by professionals of each category for each of the services: Monthly hours worked Alcoholism Drug Aftercare Total employee hours per month Physicians 30 120 180 Psychologists 180 120 600 Nurses 120 240 720 The budgeted costs for each program are the following: Year budget Alcoholism Drug Direct costs Physicians 150,000 € 600,000 € 150,000 € 900,000 € 450,000 € 300,000 € 750,000 € 1,500,000 € Psychologists Nurses 160,000 € 320,000 € 480.000 € 960,000 € Total direct costs 760,000 € 1,220,000 € 1,380,000 € 3,360,000 € Indirect costs* 260,300 € 416,480 € 624,720 € 1,301,500 € Total costs 1,020,300 € 1,636,480 € 2,004,720 € 4,661,500 € Full cost per patient per year 20,406 € 20,456 € 16,706 € * Rate to allocate indirect costs = 1,301,500 € / 250 patients = 5,206 € per patient Marta has recently become aware of activity-based costing as a method to refine costing systems. She is not sure about the outcome of the new analysis but she wants to discuss it with Rodrigo on the base of reliable numbers. Marta asked her accountant to prepare some information about the different activities performed at the clinic. This is the budgeted information obtained for next year: 30 300 360 Aftercare RSITY Total Este documento es autorizado
Alcoholism Drug 5,500 m2 Aftercare 6,000 m2 Total 15,000 m2 Space occupied by each program 3,500 m2 Patients-years' 50 80 120 250 900 1,400 700 3,000 Number of laboratory tests Patient-years is a measure of the quantity of service rendered. The number of places available is 50 for alcoholism patients, 80 for drug abuse patients and 120 for after care patients. Since occupation is 100%, the number of patient-years of service rendered is also 250. REVENUES AND DEMAND The in-take of patients is limited by the size of the premises. The center's sole recurrent source of revenues is the public price paid by the regional government for the treatment of each patient. Santa Teresa rises some additional money from private donors, business community, and the region's most prominent savings bank. However, since these cannot be anticipated, they are not budgeted, and only when they are collected, they are invested in improvements to the facilities and new equipment. Alcoholism 9,200 € Drug 23,500 € Aftercare 11,500 € Full treatment price per patient DISCUSSION Set yourself in the position of the two decision makers of the case and propose the available courses of action to improve the sustainability and the performance of the clinic. The following points may guide you throughout the process: 1.- Can you help Marta produce an ABC costing approach that could help her discuss with Rodrigo the profitability of each line of work? What would be the cost pools, what could be the drivers and the rates? 2.- What benefits do you believe Marta can get from developing ABC costing at Santa Teresa? 3.- Since Rodrigo is a seasoned consultant and he can keep the objectivity of the newcomer to the firm, what improvements do you think Rodrigo wants to focus on? Being a consultant, he will be discussing measures to be taken on the base of the numbers provided to him. In addition, only after careful analysis he can suggest numbers-based quick wins and maybe later longer-term improvement options. 4.- Do you think that because Rodrigo is used to working with for-profit organizations, he could offer decisions that would not be sensible in a non-for-profit organization? What broader strategic considerations can arise from managing a small or medium enterprise? 5.- What adverse effects can occur if the clinic decides not to use ABC costing? Which (wrong) conclusions could be drawn? Are there any social implications? ‒‒‒