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Select appropriate forecasting methods to enable cost and revenue forecasts to be constructed for Moorfields Eye Hospital for the year 2012-2013, adjusting for expected movements in prices.

Forecasting involves making projections about future performance on the basis of historical and current data. Forecasting methods is composed of the following categories: (a) Extrapolative methods (b) Explanatory variable methods (c) Simulation modeling Methods (d) Judgmental methods and (e) Composite methods, each having their own sub-categories. The appropriate forecasting method for me would be the Exponential smoothing, such as the Holt-Winters method under the extrapolative method; Exponential smoothing is a procedure for continually revising a forecast in the light of more recent experience. Exponential Smoothing assigns exponentially decreasing weights as the observation get older. In other words, recent observations are given relatively more weight in forecasting than the older observations perfect for adjusting expected movements in prices.

Another would be the Predictive modeling under the Explanatory variable methods; Predictive modeling is a process used inÂ predictive analyticsÂ to create a statistical model of future behavior. Predictive analytics is the branch ofÂ data miningÂ concerned with the prediction of future probabilities and trends. Because it is a branch of data mining it sorts through data to identify patterns and establish relationships. Sorting out data would be a help in determining changes that could occur in the forecasting cost and revenue of the said company. In predictive modeling, data is collected for the relevant predictors, a statistical model is formulated, predictions are made and the model is validated (or revised) as additional data becomes available, thus this would fit in adjusting for the expected movement of prices.

## Appraise the sources of funds available to Moorfields Eye Hospital.

The following are the sources of income of Moorfields Eye Hospital from Moorfields Eye Hospital NHS Foundation Trust's annual report and accounts for the financial year 2008/09.

## NHS clinical income

The issuing in August 2008 of a recommendation by the National Institute for Health and Clinical Excellence (NICE) for the use of Lucentis in the treatment of wet age-related macular degeneration (AMD) led to increased activity and income from AMD treatments was £4.4 million, exceeding plan by £3.3 million. Outpatient activity, including that related to AMD, was higher than expected with income £1.4 million more than planned. In its second year, the activity at Moorfields at Bedford continued to grow and income was £3.6 million, £0.5 million higher than plan.

## Income from private patients

Income of £2.4 million from Moorfields Eye Hospital Dubai in its second year of operations was satisfactory, exceeding plan by £0.8 million. Income from Moorfields Private in London was £8.9 million, £0.2 million greater than plan.

## Moorfields Pharmaceuticals

Moorfields Pharmaceuticals enjoyed another year of rapid growth with income increasing to £6.1 million and beating plan by £0.6 million. The decline in sales of bevacizumab, used in the treatment of AMD, following the NICE recommendation for the use of Lucentis, was much less than expected and sales were £0.5 million higher than plan. External sales of £5.7 million of other unlicensed products were £0.3 million ahead of plan but this was largely offset by sales of licensed hypermellose unit dose being less than plan.

## Non-clinical income

Non-clinical income, representing 14.5% of the total, is analysed in the table below:

## Non-clinical income Actual Plan Variance

Research and development 6.2 6.0 0.2

Education and training 3.7 3.3 0.4

Charitable and other contributions to expenditure 0.9 1.0 (0.1)

Transfers from donated asset reserve 0.7 0.7 -

Various fees and charges 4.8 3.5 1.3

16.3 15.0 1.3

Within fees and charges, Islington PCT, the host commissioner, paid the trust an incentive of £0.2 million for exceeding the 18-week target. Also, VAT reimbursements were £0.3 million higher than expected.

(Word count: 325 words)

## Project proposal

Title: The Eye Opener (a fund raising project)

## PROJECT OVERVIEW

We aim to be the leading international centre for excellence in the care and treatment of eye disease and to be at the forefront of research and teaching in the field. At the same time, we strive to provide a flexible and responsive service guided by patient needs. - Moorfields Eye Hospital mission

This project aims to raise funds for establishing a new Moorfields Eye Hospital in Accra, Ghana in line with Moorfields Eye Hospital in Dubai. Where in The hospital hosts a fund raising event, every three months, inviting investors, donators, sponsors, volunteers and different clientele. Every three months the hospital comes up with a service or a package to advertise the services they offer and calls in volunteers to help them. In this way the hospital can gain profit through the service they offer with less expenses because of sponsors and volunteers.

## PROJECT DETAIL

Goals & Objectives

There are two major goals for the "The Eye Opener" (a fund raising project) and specific objectives within each of the goals.

Goal #1 - To reduce the expenses of hospitals in their services with the help of investors, donators, sponsors, volunteers.

Objective #1.1 - Invite investors, donators, sponsors, volunteers and introduce the proposal.

Objective #1.2 - Get a good number of investors, donators, sponsors, volunteers to sign up for the said project.

Objective #1.1 - To recruit a group of undergraduate students (15-25 students each semester) to become volunteers in the The Eye Opener (a fund raising project)

Objective #2.2 - To provide a 4 week training program for the volunteers

Goal #2 - To effectively disseminate the special services/package offered by the hospital for the month to the people in the community.

Objective #2.1 - To provide people in the community with relevant information

regarding eye health and a wide range of eye problems, from common complaint

to rare conditions that require treatment that is not available anywhere else in the

UK.

Objective #2.2 - To provide a program that best fit the needs of the people in the community.

Clientele

There are different clientele groups for this project.Â

The first, and primary, clientele are the people in the community. This clientele group is represented in the project objectives for Goal #2.

The second clientele groups are the investors, donators, sponsors, volunteers. This clientele group is represented in the project objectives for Goal #1.

Both clientele groups are important and essential components of this project. It is expected that significant learning will take place for both clientele groups.

Methods

The primary methods for achieving the goals and objectives of the Project will be:

The creation of a Center in the city that will become a focal point for providing information regarding eye health and a wide range of eye problems, from common complaint to rare conditions that require treatment that is not available anywhere else in the UK, and

the development of a recruitment/training program and supervised practicum for student volunteers.

In addition, a Documentation/Dissemination Plan will be developed by staff to guarantee the systematic collection of information about the operation of the Project and provide the basis for sharing information with other similar projects.

The Project will employ three full-time and three part time staff.

Project Director (full time) - Responsible for hiring project staff, overseeing project development and operation, establishing and maintaining links with local government agencies, and budget.

Center Coordinator (full time) - Responsible for establishing the community Center, developing working relationships with formal and informal community leaders, and scheduling of Center programs.

Volunteer Coordinator (full time) - Responsible for recruiting university student volunteers, developing and offering training programs for volunteers, scheduling volunteers for service at the Center.

Project Evaluator (part time) - Responsible for collecting entry level data and conducting periodic assessment of changes in their level of knowledge, comprehension, and application of that information. Also responsible for developing and implementing a system for periodic formative evaluation of the work of the student volunteers.

Center Assistant (part time) - Responsible for maintaining the structure and appearance of the Center, routine correspondence, and other forms of communication with people in the community.

Graphic Artist (part time) - Responsible for creating illustrated posters to teach about eye health and a wide range of eye problems, layout/design of project publications, and development of volunteer recruitment and training materials.

Governing Board - Made up of both community leaders and university staff. Responsible for sanctioning the operation of the Center and providing feedback to the Project Director on Center policies and operation.

(Word count: 780 words) (#1 Total Word Count:1350 words)

## Question 2: In this task you are tasked to apply financial appraisal techniques used to evaluate potential investment decisions.

2.1 Use investment appraisal methods to analyze to competing projects: establishing Moorfields Eye Hospital in Accra, Ghana and commissioning additional inpatient ophthalmic care facility in Moorfields Eye Hospital in London.

Establishing Moorfields Eye Hospital in Accra, Ghana would require more time, longer time-to-market resulting in a smaller market share and longer time for decisions making because of the time needed to gather information. In comparison to the previous project, commissioning additional inpatient ophthalmic care facility in Moorfields Eye Hospital in London has greater flexibility and quality of production because of the availability of resources, faster time-to-market resulting in a bigger market share because hospital is already established, improved company image, better morale and job satisfaction, leading to greater productivity as additional ophthalmic facility is seen as an improvement in the hospital and this project provides quicker decisions due to better availability of information and it seems that this projects has the shortest payback period --- This is literally the amount of time required for the cash inflows from a capital investment project to equal the cash outflows. The usual way that firms deal with deciding between two or more competing projects is to accept the project that has the shortest payback period.Â  The shorter the payback period, the better the investment, under the payback method.

(Word count: 189 words)

2.2 Justify the selection of a project (out of two competing project in 2.1) using investment appraisal techniques.

Using payback method I can justify the selection of the project, there are arguments favoring this methods. Firstly, it is popular because of its simplicity. Research over the years has shown that UK firms favor it and perhaps this is understandable given how easy it is to calculate. Secondly, in a business environment of rapid technological change, new plant and machinery may need to be replaced sooner than in the past, so a quick payback on investment is essential. Thirdly, the investment climate in the UK in particular, demands that investors are rewarded with fast returns. Many profitable opportunities for long-term investment are overlooked because they involve a longer wait for revenues to flow.

Commissioning additional inpatient ophthalmic care facility in Moorfields Eye Hospital in London as I mentioned in (2.1) has greater flexibility and quality of production because of the availability of resources, faster time-to-market resulting in a bigger market share because hospital is already established, improved company image, better morale and job satisfaction, leading to greater productivity as additional ophthalmic facility is seen as an improvement in the hospital and this project provides quicker decisions due to better availability of information and it seems that this projects has the shortest payback period --- This is literally the amount of time required for the cash inflows from a capital investment project to equal the cash outflows. The usual way that firms deal with deciding between two or more competing projects is to accept the project that has the shortest payback period. The shorter the payback period, the better the investment, under the payback method.--- It is probably best to regard payback as one of the first methods you use to assess competing projects. It could be used as an initial screening tool, but it is inappropriate as a basis for sophisticated investment decisions.

An example of this would be my selection of the project which would be additional inpatient ophthalmic care facility in Moorfields Eye Hospital in London. Let us say that adding an inpatient opthalmic care facility in the hospital would sum up to a total of £30million and with the aim of earning £3million per year (net cash earnings), the payback period is calculated thus: £30million/£3million= 10years. Ten years would be the payback period of this project. Compared to establishing Moorfields Eye Hospital in Accra, Ghana this project would require more income for: establishing the hospital itself, hiring workers for the hospital, and getting the facilities for the hospital to function. From the look of this scenario, the payback period for this project would reach more than 10years.

(Word count: 431words)

2.3 Recommend a selected investment project based on a post- audit appraisal.

Investment Proposal

The aim of this document is to get you describe how our business will work. When this document is completed, it should provide a clear answer to the following questions:

What are you going to sell?

How are you going to deliver it?

How much money do you need?

T his should allow you to quickly evaluate the potential of our business, and help you decide whether you want to look in more detail at our investment proposal.

This document is the first step in working with Moorfields Eye Hospital.There is no ideal length for this document. We are happy that we have provided you with enough information to think that our Hospital is an establishment in which you want to invest.

You are simply looking to get a clear understanding of our current operations and future plans.

## Section 1: What are you going to sell?

We are selling our best service.

## Who we are

Established in 1804, Moorfields Eye Hospital is one of the largest centres for ophthalmic treatment, teaching and research in the world, as well as the oldest. More patients come to Moorfields than to any other eye hospital or clinic in the UK because of our world-famous reputation, based on the expertise of our clinical staff and the cutting-edge research we undertake.

In 2009, we celebrated five years as one of the first 10 trusts across England and Wales to achieve NHS foundation trust status. We continue to be at the forefront of new NHS developments, demonstrated most recently in March 2009 when UCL Partners, of which

Moorfields is an integral part, was designated as one of the UK's first academic health science centres. This new partnership will enable us to build on our already strong record of collaboration and world-class excellence, deepening and widening our areas of expertise, so that we can offer patients in London and beyond even better care and treatment.

## What we do

The main focus of our activities is the treatment and care of NHS patients with a wide range of eye problems, from common complaints to rare conditions that require treatment that is not available anywhere else in the UK. We provide these services from our main hospital base in London's City Road as well as at 11 other sites in and around the capital.

Moorfields is also a postgraduate teaching centre and a national centre for ophthalmic researchinvolving, with the UCL Institute of Ophthalmology, the largest ophthalmic research programme inthe world. Moorfields Eye Hospital NHS Foundation Trust directly manages three commercial divisions:

Moorfields Private

Moorfields Pharmaceuticals

Moorfields Eye Hospital Dubai

In addition, Moorfields Eye Hospital is also commissioning additional inpatient ophthalmic care facility in Moorfields Eye Hospital in London. This would make our hospital more up-to-date giving our patient the recent care facility fit for their needs in an affordable price.

## Section 2: How are you going to deliver?

We are commissioning additional inpatient ophthalmic care facility. Our plan is to get the best equipment needed to satisfy our patients. The staff needed to carry out this operation is not a problem. We can pull out our qualified staff from areas and have our volunteers help with the operation. We can orient them on the operations and on the functions of the facility. Our new facility will reach our patient by words of mouth from our staff, newspaper ads, banners and commercials. Prices for the service will vary, but we can come up with packages and lessen the price to call out patient's attention and give them service that will truly satisfy them.

## Section 3: How will you implement your plan?

We would first get facilities needed for the operations and then get the staff we would need; pull out staff, register volunteers and train them for 2weeks. From the time of starting the training we advertise our new services and packages we will deliver. Packages should consist of those services that patients would avail (old or new) in other hospital but the offer them in a lesser price but with the same quality in service, thus, in this way patients would prefer our services from the other hospital.

## Section 4: How much money do you need?

The money needed for this operation would amount to £50million, this would over for the new facility needed for the operation, training of the staff and advertising. Our aim of earning would be £5million per year (net cash earnings), the payback period is calculated thus: £50million/£5million= 5years. 5years would be the payback period of this project. If this operation would run for a longer period of time we would be able to come up with a much bigger earnings.

(Word count: 790 words)

## 2.4 Select relevant financial information for use in the process of making strategic decisions on investment.

Capital budgeting is vital in marketing decisions. Decisions on investment, which take time to mature, have to be based on the returns which that investment will make. Unless the project is for social reasons only, if the investment is unprofitable in the long run, it is unwise to invest in it now. Capital budgeting is very obviously a vital activity in business. Vast sums of money can be easily wasted if the investment turns out to be wrong or uneconomic. The subject matter is difficult to grasp by nature of the topic covered and also because of the mathematical content involved. However, it seeks to build on the concept of the future value of money which may be spent now. It does this by examining the techniques of net present value, internal rate of return and annuities. The timing of cash flows are important in new investment decisions

The following are relevant information which can be used for making a strategic decision on investment, this is from Moorfields Eye Hospital NHS Foundation Trust - Annual reports and account 2008-2009:

## Financial report

A surplus of £640,000 (£2.2 million before impairment) was generated for 2008/09, which was better than planned. The surplus enabled the trust to maintain a financial risk rating of four throughout the year. The table below presents a high-level comparison between the plan and actual performance for the year.

All figures in £million 2008/09

Actual Plan Variance

Income

Clinical income

- NHS 78.8 73.4 5.4

- Private 11.3 10.3 1.0

- Moorfields Pharmaceuticals 6.1 5.5 0.6

Non-clinical income 16.3 15.0 1.3

Total income 112.5 104.2 8.3

Expenditure

Pay costs 65.2 62.9 (2.3)

Non-pay costs 38.7 34.6 (4.1)

Total expenditure 103.9 97.5 (6.4)

Earnings before interest, tax,

depreciation and amortisation 8.6 6.7 1.9

Impairment of fixed assets 1.6 - (1.6)

Net surplus 0.6 0.4 0.2

(Word count: 305 words) (Total Word Count: 1715 words)

## Question 3: in this task you are expected to interpret financial statements of Moorfields Eye Hospital for planning and decision making.

3.1 Analyse financial statements to assess the financial viability of Moorfields Eye Hospital.

Financial statements are the basis for a wide range of business analysis. Managers, securities analysts, bankers and consultants all use them to make business decisions.

Cash flow statement for the year ended 31 March 2009

2008/09 2007/08

NOTE £000 £000

## OPERATING ACTIVITIES

Net cash inflow from operating activities 16.1 2,468 11,600

## OF FINANCE:

Interest paid (555) (613)

Interest element of finance lease rental payments (14) (17)

Net cash outflow from returns on investments (225) (264)

## CAPITAL EXPENDITURE

Payments to acquire tangible fixed assets (3,543) (4,334)

Payments to acquire intangible assets (70) (99)

Net cash outflow from capital expenditure (3,613) (4,433)

DIVIDENDS PAID (1,826) (1,780)

Net cash (outflow)/inflow before management (3,196) 5,123

## MANAGEMENT OF LIQUID RESOURCES

Purchase of current asset investments (113,287) (37,260)

Sale of current asset investments 121,110 29,430

Net cash inflow/(outflow) from management 7,823 (7,830)

## of liquid resources______________________________________________________

Net cash inflow/(outflow) before financing 4,627 (2,707)

## FINANCING

Public dividend capital received - 2,830

Loans repaid to Foundation Trust Financing Facility (800) (800)

Other capital receipts 113 807

Capital element of finance lease rental payments (39) (36)

Net cash (outflow)/inflow from financing (726) 2,801

Increase in cash 3,901 94

(Word count: 206 words)

## 3.2 Carry out a performance audit of Moorfields Eye Hospital with reference to internal and external factors.

Project Brief

Salterbaker was commissioned by Moorfields Eye Hospital NHS Trust to review its contract for Non Emergency Patient Transport Services. and help the Trust decide what to do with the contract.

Specifically the "brief" was to:

â€¢review how the contractor had performed in line with the requirements of the contract - specifically around quality, journey times, volumes, and costs;

â€¢review the structure and terms of the contract itself;

â€¢ make recommendations to the Trust to assist them in deciding whether to continue with the existing contractor or go out to re-tender

What we did

In reviewing the Non Emergency Patient Transport Contract and the performance of the existing contractor Salterbaker worked closely with the Trust and its TransportÂ  Service Contractor.

We reviewed the tender submission, signed contract, and billing arrangements to assess their application, interpretation and accuracy and also examined the administrative, financial and management arrangements currently in place.

As well as reviewing the volume of journeys and journey timesÂ  we also conducted a performance appraisal of the Transport costs both from an operational perspective and from a cost benefit analysis to inform our recommendation as to whether to roll forward the contract into the extension period.

This was undertaken on an open book basis with the contractor to make them fully aware of the issues we were examining and the outcome of the performance review.

The Outcome

The work undertaken by Salterbaker enabled the client to have a clear idea of how its current contractor was performing against the contract and have all the necessary performance data and contractual information to consider its options for the future of the contract.

(Word count: 275 words)

## 3.3 Assess how to improve the quality of financial information abut Moorfields Eye Hospital.

Fueled by public incidents and growing evidence of deficiencies in care, concern over the quality and outcomes of care has increased in both the United Kingdom and the United States. Both countries have launched a number of initiatives to deal with these issues. These initiatives are unlikely to achieve their objectives without explicit consideration of the multilevel approach to change that includes the individual, group/team, organization, and larger environment/system level. Attention must be given to issues of leadership, culture, team development, and information technology at all levels. A number of contingent factors influence these efforts in both countries, which must each balance a number of tradeoffs between centralization and decentralization in efforts to sustain the impetus for quality improvement over time. The multilevel change framework and associated properties provide a framework for assessing progress along the journey.

To assess what needs to be covered in the budget. Generally, this determination should reflect input from all levels of the organisational hierarchy, since budgeting is most effective when all personnel using the resources are involved in the process. A composite of unit needs in terms of labor, equipment, and operating expenses can then be compiled to determine the organisational budget.

To develop a plan. The budget plan may be developed in many ways. A budgeting cycle that is set for12 months is called a fiscal-year budget. This fiscal year which may or may not coincide with the calendar year, is then usually broken down into quarters or subdivided into monthly or semiannual periods. Most budgets are developed for a 1-year period, but a perpetual budget may be done on a continual basis each month so that 12 months of future budget data are always available. Selecting the optimal time frame for budgeting also is important. Errors are more likely if the budget is projected too far in advance. If the budget is shortsighted, compensating for unexpected major expenses or purchasing major expenses or purchasing capital equipment may be difficult.

Ongoing monitoring and analysis occur to avoid inadequate or excess funds at the end of the fiscal year. In most health care institutions, monthly statement outline each department's projected budget and deviations from that budget. Some managers artificially inflate department budgets as a cushion against budget cuts from a higher level of administration. If several department par-take in this unsound practice, the entire budgeting process must be repeated. Top level managers must watch for and correct unrealistic budget projections before they are implemented.

The Budget must be reviewed periodically and modified as needed throughout the fiscal year. Each unit manager is accountable for budget deviations in his or her unit. Most units can expect some change from the anticipated budget, but larger deviations must be examined for possible causes and remedial actions taken if necessary.

(Word count: 426 words)

3.4 Suggest a strategic portfolio for Moorfields Eye Hospital based on the interpretation of financial and ancillary information.

Managers must understand fiscal planning. Be aware of their budgetary responsibilities, and be cost-effective in meeting organizational goals. The ability to forecast unit fiscal needs with sensitivity to the organization's economic, social, and legislative climate is a high-level management function. Managers also must be able to articulate unit needs through budgeting to ensure adequate nursing staff, supplies, and equipment. Finally, managers must be skillful in the monitoring aspects of budget control. Leadership skills allow the manager to involve all appropriate stakeholders in developing the budget. Other leadership skills required in fiscal planning include flexibility, creativity, and vision regarding future needs. The skilled leader is able to anticipate budget constraints and act proactively. In contrast, many managers allow budget constraints to dictate alternatives. In an age of inadequate fiscal resources, the leader is creative in identifying alternatives to meet patient needs. The skilled leader, however also ensures that cost containment does not jeopardize patient safety. As well, leaders are assertive, articulate people who ensure that their department's budgeting receives a fair hearing. Because they can delineate unit budgetary needs in an assertive, professional, and proactive manner, they generally obtain a fair distribution of resources for their unit.

Hospital managers regularly are confronted with their patients' demand for increased service performance on the one hand and tight budgets on the other. As medical technologies influence both the costs and the service spectrum, strategic technology planning is among the critical tasks in hospital management. This paper addresses the corresponding problem of selecting the "best" portfolio of medical devices and proposes an appropriate decision support system. It starts with a multiobjective mathematical programming model that determines the solution space of all efficient portfolios of medical technology investments. The members of the planning committee with their diverging interests then are supported by their interactive exploration of that space until they jointly reach a satisfying portfolio and are not willing to make any further compromises between its objective levels. As one of its salient features the system does not require a prior preference information.

(Word count: 339 words) (#3 Total Word Count: 1246 words)