Question 1: * Extraction and other services: 40% of all visits Fillings and root canals: 60% of all visits * Interest rate 2% * Total investments: 4. 710. 000, starts in 2009 (startup, water well) * Positive cashflow start in 2012 till 2021 * Average revenue per patient = 873,8 * Assumptions: * we did not take time of the different dental procedures into consideration. This is because I thought that the clinic would never get full, so there would never be a bottleneck situation where patients would have to wait that long that they would leave for the competitor.
Furthermore I assumed that more time was needed, that the extra costs was already calculated in the total costs of the particular treatment * Answer to question 1a: 625 patients per year to break-even * Question 1B: Since the average amount of people per day coming to a dental clinic in Eldoret is 22, in a radius of 80 km. * The total amount of potential clients per year is 22×365= 8030. * Currently there are 5 dentist active in the surroundings, if you would start a clinic, under perfect competition it would create 8030/6=1338,33 clients per clinic per year.
Since expectation is that Chebaiywa can offer lower prices and since the locals base their decision primarily on price, the amount of 624,32 client per year can be easily reached. * Question 1C: The amount of patients needed to break-even is not affected by whether there will be more competition or not. * The cashflows remain the same if the prices remain the same * However if the price needs to be adjusted in order to meet the competition, it is most likely that the amount of clients needed would increase. * The later the competition arises, the better. More time for the clinic to break even Question 2
The best payment alternative is giving patients the possibility to receive more/expanded services by paying a higher fee (e. g. in case: house calls, special access to medical staff). By offering a basic treatment package for the lowest fee, the people with less money will also be able to afford the services, The wealthier patients can pay more for a more elaborate treatment, through expanded packages with extra services for a higher fee, The alternative of having wealthier people pay more for the same services wouldn’t work, as it is very hard to check the ‘wealth’ of patients is too fraud-sensitive.
Question 3 Extra note first uncertainty: * This is defined as an effect uncertainty, because regardless if the clinic stays with ELI or become an independent entity, keeping the current policy of charging for services will dissatisfy the community which can lead to a deficit for the clinic. (Will the community keep visiting the clinic or not? ) Extra note 2 See slides of uncertainty-lecture There is an absence of probability because no one could predict whether the clinic would continue or not, under ELI or selfsustaining entity (financial wise, upset community) * Changes in 2004 showed that community reaction towards policy was unpredictable not equal to volatility of events * Uncertainty is not a result of complexity: cannot be solved with calculations or knowledge Scope: January 2009, the Kipkaren neighborhood of Chebaiywa, Kenya Major stakeholders: Tarus ; the committee members; Clinic staffs ; ELI ; the local Community
A significant infrastructure development led to a positive trend towards economic development. Tarus created the opportunity to generate sustainable income by executing his business ideas and help the local people to generate higher income. There is an uncertainty in the future of Chebaiywa Clinic’s viability due to starting to charge for services. Three scenarios * Becoming self-sustaining-entity Best Scenario Better infrastructure allows Tarus to realize the businesses. Assuming the businesses become successful, it will provide stable income for the clinic and higher income for the local people.
Taurus can preserve the clinic’s long-term goal to serve the community, implement free-service care and focus on the clinic. * Stay ELI’s clinic The clinic keeps the fee-for-service policy. With the given trend in the previous scenario, people will be able to afford to pay for services. However, this might not satisfies the anger of the people because of being charged for services and might not keep staffs from giving free-service care, which causes a deficit. * Failure businesses Worst Scenario If for any reason none of the business were profitable, then people cannot afford the services.
Similarly, Taurus failed to generate stable income for the self-sustaining clinic. Thus, the clinic cannot function well. There is a trend of a rising amount of people that are in need of healthcare, for example the rising HIV percentage. There is an uncertainty whether it is feasible to transform to a healthcare center. This can be defined as an effect uncertainty; it is not clear how the change will affect the organization with regards to level of quality, staff and equipment as well as he facility itself. Two scenarios * Transform Best scenario
To be able to generate funds and successfully transform into a healthcare center along with the needed investments for the water well, extra staff and resources and to maintain its reputation of quality that it already provides with the status of a dispensary. * Status quo Worst scenario The clinic will stay exactly as it is, with the consequence that it will not be able to provide the needed healthcare to the growing demand. The growing amount of people in need of healthcare in the community will have to continue to travel far.
Cite this Chebaiywa Clinic Case Essay
Chebaiywa Clinic Case Essay. (2019, May 02). Retrieved from https://graduateway.com/chebaiywa-clinic-case-524/