Good Finance or Bad Medicine

Taking-a-stand 14: “Good Finance or Bad medicine?” on pg. 386 (503)

Good Finance or Bad Medicine?

Imagine that you have just earned your business degree and have been hired as a hospital administrator at a small hospital that, like many others, is experiencing financial problems. Having studied finance, you know that efficient cash management is important to all firms in all industries to meet the day-by-day operations of the firm. One way to ensure such efficiency is to use a carefully planned and managed inventory control system that can reduce the amount of cash an organization has tied up in inventory. Being familiar with Just-In-Time Inventory, you know it is a proven system that helps reduce the costs of managing inventory.
At a meeting of the hospital's executive committee you recommend that the hospital save money by using a just-in-time inventory system to manage its drug supply. You suggest discontinuing the hospital's large stockpile of drugs, especially expensive cancer treatment drugs that tie up a great deal of the hospital's cash and shift to ordering them just when they are needed. Several members seem to like the idea, but the doctors in charge of practicing medicine and oncology are out-raged, claiming you are sacrificing patients’ well-being for cash. After debate, the committee says the decision is up to you. What will you do? What could result from your decision?

As discussion leader(s) for the episode, you should state your position, provide the reason or defense for your position, and indicate how a related theory or chapter concepts or procedures might apply.

As the new hospital administrator, I have been assigned the task of controlling our budget by reducing unnecessary expenses and by providing a...

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... There’s not allot of room for deviation or change.

Have you read anything in the popular business literature lately that is similar?

I did read an interesting article that describes what is being referred to as a drug shortage crisis. In one section of the article, there is a reference made with regards to Oncology Medications. The article summarizes that there is a shortage of these types of Cancer medications as a whole throughout the United States. The blame appears to be placed specifically at the drug manufacturer’s distribution channel, rather than at the Hospital Administration level.

References:
Nickels & McHugh. (2014). Understanding Business (Customized Edition). USA :McGraw-Hill Education.

Ventola MS, C. L. (2011, November 11). The Drug Shortage Crisis in the United States. Retrieved from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3278171/