Strategic Financial plan for Cascade Medical Center

Healthcare Finance
April 23, 2024
Healthcare Quality
April 23, 2024
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Strategic Financial plan for Cascade Medical Center

Executive Summary

Cascade Medical Center will be set up in Cascade town in the larger Fairfield City Council. The city has an approximated population of 380,000 people, most of whom are immigrants from other countries. The hospital is a 500 bed capacity providing a wide range of hospital and community health services. The main services provided are categorized as either acute care service in medicine, cardiology, surgery and emergency medicine. The sub-acute care service includes rehabilitation and the ambulatory care unit in association with other local health providers.

The forecasted population growth in the area provides an opportunity for the increased demand in health care services. However, hospitals are facing a major challenge in sufficient funding for service delivery requirements. Recruitment and retaining the workforce has been a major concern in the center particularly due to the ageing workforce in health related field. There is also insufficient infrastructure to accommodate the future demand for services. This strategic financial plan will identify the areas to be developed in the next five years to accommodate future growth and sustainability.

The hospital nevertheless expects to face challenges in providing quality and affordable care to the thousands of people in the community. The increasing demand for health care services has put other service providers under in a tight financial position. Effective management of the hospital resources is therefore important to ensure that the hospital is able to run smoothly and achieve its aim of providing quality and affordable care to all. There is need to balance the budget and meet the patient demands. This requires significant strategic measures to be undertaken. The hospital will work with the community and other development partners to deliver the most appropriate scenario with the highest quality care. The financial plan set out the areas the hospital considers to be important to ensure the future of the Cascade Medical Center. The financial plan will provide the basis to understand the financial future and guide the setting of service standards to ensure sustainable budget strategy.

The strategic financial plan will start by discussing the core values and state the mission and vision of the hospital. The core values state what traits that the organization will rely on to ensure provision of service to our patients. The organizational goals of the new hospital are also stated. The goals act as the guide to all stakeholder to ensure that we all work together to achieve the goals set. Thereafter, the plan will discusses the operational and the financial plan of the hospital. The operational plan discusses the services and facilities provided by the hospital to the community. The financial plan and budget demonstrate the proposed spending, and projected earnings for the first year of operation. The projected budget statement shows that the hospital will have good operational margins.

This strategic financial plan represents the current financial position of the hospital as well as the anticipated future revenues, expenditures and potential issues that may affect the financial resources of the hospital. It will discuss the potential fiscal challenges to guide the strategy, policy options and future budget scenarios. The strategic financial plan provides the first year budget forecast to serve as a guide to budget choices and policy for the first year.





The history of Cascade Medical Center date back to three years ago, when a team of three doctors decided to open an outpatient clinic in the area.  The clinic was in operation for two years, when the owners decided to expand and open a modern hospital facility to offer a wide range of services. This was due to an increase in cases of deaths and hospitalization from non-communicable diseases such as diabetes, heart diseases and kidney failure. The coid-19 pandemic brought to a halt the progress of the project, and the clinic was temporarily closed. The owners have already acquired a business property where they intend to operate the new facility. The property can accommodate a 500 bed capacity hospital as well as other facilities. The new hospital will have surgery and imaging facilities, fully equipped laboratory, dental facility and other modern equipment. It will also run an ambulance unit to reach the patients at their homes and work.

Value Statement

Cascade Medical Center will be guided by the following values:

Passion: The center will show care in our services and opportunities. Cascade will bring enthusiasm and creativity and a ‘can do anything’ attitude in our interactions with all stakeholders. We will strive to generate excitement and commitment to our patients to ensure they have compassion-centered care.

Teamwork: The professional staff, management and other support staff shall be committed to helping one another to achieve the goals of the organization. All of us will share the objectives, challenges and success in ensuring the best health care service to our patients. We shall at all times respect individual autonomy and consider all suggestions and contributions.

Adaptability: we recognize that the health sector is ever changing and the organization will embrace the need to adjust to any changes in the field.

Integrity: our guiding principle will be straight talk through delivering the promised results and communicating regularly with all involved parties.

Continuous improvement: We shall at all times embrace and advance new opportunities and innovations in order to achieve the mission and vision of the center.

Respect: We will honor the dignity, privacy, confidentiality and rights of all people and in particular our patients right to privacy, confidentiality and information. The center will at all times include the loved one in our circle of care to ensure high quality service to our patients.

Mission Statement

The mission statement for Cascade Medical center will be to provide a responsive healing environment for patient and their families, and to provide quality care with attention to clinical excellence, patient safety and commitment to the best healthcare to our patients.

Vision Statement

To be the medical center of choice for our patients in the region, and to be a leader in provision of high quality, cost effective, and compassion centered care to improve the health status of our patients.

Operating Plan

The operation plan will reflect the specific strategies that the hospital will take over to realize the organizational goals. The corporate action areas to be addressed include; high quality health services, research and innovation, community partnerships, developing staff, efficiency and sustainability. The action implementation strategy at the facility level, measurable evidence and linkage to the national safety and quality framework for health care will be addressed through the strategic plan.

Community Profile

Cascade town is an urban, metropolitan developed area covering an area of 200 square miles. The area has a population density of 1,900 people per square kilometer.  The town is one of the most multicultural areas in our country with more than half of the residents born overseas. The town is characterized by high number of immigrants, high unemployment, and a large number of families dependent on welfare. The area has a population of more than 380,000 people with the population expected to continue increasing. Cascade has a high rate of reported deaths from preventable causes such as smoking, and high hospitalization rate from non-communicable diseases such as diabetes and obstructive airways disease.

Facility Profile

The hospital will operate on an initial 500 bed capacity along with outpatient care. The center will provide a wide range of acute and sub-acute hospital and community based health service to the people of this town. The hospital will provide service such as medicine, cardiology, surgery, pediatrics, gynecology, orthopedics and emergency medicine. The hospital will also provide rehabilitation service and will operate an Ambulatory care unit. The hospital will acquire all the necessary medical equipment for each special service offered.



The hospital will employ an initial 300 nurses, 150 qualified doctors and specialists, 20 health information system experts, 20 pharmacists, and a further 200 people for support services and causal work.

Clinical services

Cascade Medical Center will provide clinical services in emergency medicine, cardiology and operate a fully equipped high dependency unit. The hospital will also provide renal dialysis services, orthopedics, maternity, special care and pediatrics. In addition, imaging services such as CT, ultrasound, and general radiography services will be provided. There will also be a department for dental health.

Organizational Goals

Organizational goals enable Cascade Medical Center to become a better place for our patients, families and employees. They lead all of us towards working together to achieve improvements in health care delivery.

Quality and Safety

The hospital aims at improving patient safety measures to ensure no harm when in our care. The safety of our employees is also ensured by ensuring adequate supply of personal safety equipment’s in the facility. The center also strives to reduce sepsis mortality.



Patient satisfaction

The center aims at improving inpatient, ambulatory services, emergency department and diagnostic procedures to ensure patients are satisfied with our services.

Financial Performance

The center will aim at operating within the net revenues to ensure the facility can provide satisfactory services to our patients when they need them. Improvement of operational costs will also be kept in check at all times.

Stakeholder engagement

All employees will be engaged in decision making process. Their contribution will be taken into consideration whenever decisions affecting the operations are being made.

Financial Plan

Financial Forecasts

The current economic situation and its impact on the health sector require strict financial planning to ensure the hospital remains in operation. The hospital forecast an income and expenditure surplus of $3.6 million in the financial year 2021. The center also forecasts a cash balance of $8.2 million.

The hospital financial position will be determined by the following aspects.

  1. Acquisition of hospital facility and equipment’s. The medical center has identified a facility with the expected bed capacity. The hospital will lease the facility for an initial period of ten years, after which there is an agreement to buy the property outright.
  2. Recruitment of doctors, nurses and other staff. The center will start with an initial work force of 690 employees (300 nurses, 150 doctors and specialists, 20 health information system experts, 20 pharmacists, and a further 200 general hospital workers).
  3. The capacity of the hospital to admit and discharge patients. The underlying demand for health care services is high in the area with patients expected to take care of their medical expenses in conjunction with insurance and government health care programs. Thus, the reimbursement procedure will be of importance in the financial plan to ensure the hospital have access to state and federal government funding.

This financial plan aims at recognizing these issues and accommodates the costs of the solutions within the plan. The projected operating margin for the hospital for the year is 9.7%. Despite the economic pressures and budget constraints likely to face the hospital, there is an expectation of maintaining inpatient admissions and reduce nonessential expenditure. The projection shows the hospital is in a strong financial position to achieve the organizational goals, mission and vision. Hospital visits are likely to increase as more people seek services that were not readily available to them. The coivid-19 pandemic has seen many people lose their jobs. This also means that they have lost their health insurance. Many people are electing not to receive care which impacts the revenue sources for the health care sector. This is why it is important to assess the current financial position of the hospital and how the situation will impact the long-term plans for the hospital (Nowicki, 2018).

Underlying Baseline

Since, this this the first year of operations, the underlying financial performance position of the organization will be as follows.

Forecast prior year surplus/ (deficit) after tax from continuing operations 3.6
Less: all I&E impairments/(reversals) 0.3
Less: capital donations and grants net I&E impact -0.4
Adjusted financial performance surplus/ (deficit) 3.5
Net impact on patient care services -4.9
Net impact on non-patient care services -2.9
Net impact on employee expenses -3.5
Net impact on non-employee expenses 1.7
DoH Transitional support for acquisition -10.0
Prior year Sustainability & Transformation Fund -10.2
Dividend 6.6
Net Finance expenses 0.3
Other various net adjustments 0.2
Adjusted underlying financial performance surplus/ (deficit) -19.2


Proposed Hospital Budget

Revenue ($m)
Total Gross Revenue 2.573
Deductions 1.827
Net Patient Revenue 0.746
Other operating revenue 0.034
Total revenue 0.781
Salaries and contracted labor 0.319
Benefits 0.097
Drugs 0.024
Supplies 0.085
Professional fees 0.030
Purchased services 0.069
Other operating expenses 0.028
Depreciation 0.044
Interest expense 0.005
Total operating expense 0.705
Operating income 0.075
Investments 0.019
Community benefit (0.002)
Other 0.004
Non-operating 0.020
Net income 0.096
EBIDTA 0.125
EBDTA margin % 16.1
Operating margin % 9.7
Net Margin % 12.4


Capital Spending

The hospital will spend an intial$96.7 million in capital expenditure as follows. $52,3 million on facilities, $17.1 million on medical and non-medical equipment’s, $6.4 million on IT hardware and software equipment and a further $20.9 on Electronic Plant Information Center. The financial information was prepared before the expected loss of customer revenue as a result of the financial effects of the covid-19 pandemic. There will be an expected reduction in revenue from patients. The hospital is nevertheless set in a location with a high demand for health care services.

The capital budget for the hospital supports the mission of the center. The hospital aims at providing a conducive healing environment with the best clinical experience, patient safety and best healthcare to the patients (Niles, 2011). The hospital has acquired the necessary equipment to ensure patient get the required care and services. The assets purchased will contribute to the generation of revenue from patient services. The generated cash flows from the services will be generated back into the facility to cater for operational expenses.

The capital budget will ensure the hospital is able to achieve high standards of value based care. With value-based reimbursement model becoming dominant in health care, there is need to ensure effective equipment and services are available. Providing high quality services will ensure high performance which will result in even better compensation (Williamson, 2017). Value-based reimbursements will act as a guide to standardize the costs for medical care service. Adopting this approach will demonstrate that the center is committed to fair pricing strategies.


Cascade Medical Center external environment provides the hospital with an excellent opportunity to exploit opportunities to increase its revenue stream. Being the only major hospital in the area, the hospital will consider strategies to maintain a dominant position in the health care sector. The hospital will act as a referral center from other medical facilities to improve its patient turnover. This will increase the revenues and ensure a healthy financial position. According to the projected results, the operating revenue is likely to continue increasing. Deductibles from health insurance and government health programs form the largest source of revenue. This is because there are a significant high number of persons under the government health programs. Thus, the revenue stream from the Department of Health will sustain the financial resources of the hospital in the short-term.


The ability to develop a sustainable financial performance strategy determines the ability of a health organization to achieving its goals. The financial plan should integrate with all levels of the organization to develop strategic goals in marketing, clinical outcomes and financial performance (Marcinko&Hetico, 2014).This strategic financial plan provides the projected income surplus and cash flow for the first year. Strategic financial planning is essential to successful financial performance. In assessing health care organization’s financial and credit status, there is need to ensure that quality does not suffer to achieve budgetary equilibrium. The financial strategic plan should link with the management process to ensure that the organizational goals are met. This will ensure that capital budgeting is aligned with the goals, mission and vision of the organization.

The ongoing pandemic has made it difficult to develop an accurate long-term financial strategic plan due to the risk of financial investments and the likelihood of health care reforms after the covid-19 virus has been dealt with. However, Cascade Medical Center is expected to successfully manage their budget and implement the strategic financial plan. This can be seen by the projected operational income and net margin ratios. The hospital will be able to ensure high quality health services and review their performance systematically to ensure they achieve the status of the best medical provider in the area.


Marcinko, D.E. &Hetico, H.R., 2014.Financial Management Strategies for Hospitals And Healthcare Organizations: Tools, Techniques, Checklists, And Case Studies, Boca Raton (Fla.): Taylor &Francis.

Niles, N.J., 2011. A Case Study in Strategic Financial Planning In Health Service Organizations.Journal OfBusiness Case Studies (JBCS), 6(5).

Nowicki, M., 1999.The Financial Management Of Hospitals And Healthcare Organizations, Washington, DC: AUPHA.

Nowicki, M., 2018.Introduction to The Financial Management Of Healthcare Organizations, Chicago, IL: HAP/AUPHA, Health Administration Press.

Sadeghifar, J. Et Al., 2017. An Assessment of Implementation and EvaluationPhases of Strategic Plans in Iranian Hospitals.SAGE Open Medicine, 5, P.205031211773622.

Speziale, G., 2015. Strategic Management of a Healthcare Organization: Engagement, Behavioural Indicators, And Clinical Performance. European Heart Journal Supplements, 17(SupplA).

Williamson, S., 2007.Fundamentals Of Strategic Planning For Healthcare Organizations, New York U.A.: Haworth.