Details

Case

SKMCH & RC: Testing Laboratories, Blood Bank and Collection Centres

Usman Asad, Arif Iqbal Rana

INDUSTRY : Health Services

AREA : Production & Operation Management

ORGANIZATION : Shaukar Khanum

LENGTH : 14

LUMS No : 03-824-2004-1

PUBLICATION YEAR : 2004

KEYWORDS:

Shaukat Khanum,Memorial Cancer Hospital,Research Center,SKMCH & RC,Production,Operations Management,Health Services,Imran Khan,Donations,Treatments

DESCRIPTION:

Shaukat Khanum Memorial Cancer Hospital and Research Centre (SKMCH & RC) was founded by the famous cricketer Imran Khan, in memory of his mother who died of cancer. The hospital would provide cancer treatment to all patients irrespective of their ability to pay. Its operations were started on 29 December 1994. However, with Imran¿s entry into politics and subsequent negative publicity, funds for the hospital through zakat and donations dwindled. In addition, increasing cost of cancer treatment, along with updating of equipment and other hospital facilities, demanded a sharp increase in operating revenues. Farooq Ahmed, the new Chief Financial Officer at SKMCH & RC decided to increase the revenues of the testing laboratories in order to cross subsidize the treatment of poor cancer patients. His initial study had shown that testing laboratories had excess capacity. As a test case he wanted to know the exact costs of the Complete Blood Count (CBC) test that constituted 99 percent of the tests done in the hematology section of the laboratories. However, once he began his analysis he realized that an accurate estimate of true costs would also help him re-evaluate earlier management¿s decisions of the percentage commission given to franchised collection centres and acquiring testing equipment on Reagent Rental Basis. 

LEARNING OBJECTIVES:

1) To introduce the mathematical modeling course to the students, in order to show how Excel can be used to do siimple, yet useful analysis for managerial decision making. 2) To introduce differential flows and contribution margin. 3) To emphasize the effectiveness of graphs as a tool for communicating data. 4) To highlight the importance of sensitivity analysis in mathematical modeling.

SUBJECTS COVERED:

Production, Operations Management