RUPA HOSPITAL

The Rupa Hospital one of the more technologically sophisticated hospitals located in south section of Madras. It is located in an area which is rapidly growing so that it is experiencing capacity limitations. The capacity constraints are specially serious in three areas, these being Pediatrics, Adult surgery and Cancer. The hospital is considering expansion in these three areas. The cost of such expansion must be balanced against the cost of quality health care. The cost of hospitalization is quite high and there is increasing public pressure through the news media to make such cost affordable for middle class and low income families. Since Rupa hospital is private hospital, costs are not regulated by any government agency and even through the hospital cares about providing medical assistance and facilities to all who need it, it is under no obligation to admit those patients who cannot afford to pay for the hospitalization. In respect, the cost of expansion is expected to be met by additional paying patients. Puja Bedi has recently been hired as an assistant administrator of the hospital. She has recently returned from America after completing her graduate studies and earning a Masters degree in hospital administration from a well-known university. She will be working with director, Mr.Mittal, who has been with the hospital from last 30 years and has risen from the ranks. He is not well educated but has considerable experience. He is highly conservative and believes in leaving the well- enough alone. Bedi is expected to incorporate some advanced thinking and new optimal ways of doing business into the apparently lax practices at the hospital. Even though, hospital expansion plans in general, the board of directors of the hospital has approved sum of Rs. 40lakhs for expansion in the three areas mentioned earlier. This amount is for new beds in these three wards. Bedi is assigned the responsibility to prepare feasibility studies and determine as to how many beds current demand levels justify for each ward and how many beds to actually add in each ward, given the financial allocations approved. Bedi and her associates have completed statistics based on last years patient census data in each of the three wards. The average bed occupancy rate per day along with its standard deviation is given as follows. The distribution for each department

Ward Surgery Cancer Pediatrics

Average number of beds used per day 15 25 20

Standard deviation 3.7 6.0 4.8

The present capacity of each ward is as follows: Surgery Cancer Pediatrics 20 30 23

A well known architect, in consultation with a construction company has given the following estimates for the cost of adding one bed and all necessary supporting equipment for each of the three wards as follows: Surgery Cancer Pediatrics Rs 2lakhs Rs 2.4lakhs Rs 1.3lakhs

Since the number of beds in each ward follows a normal distribution, sometimes patients will be turned away because there will be more patients than the available beds. However, one of the criteria that the board of directors has established is that demand should not exceed capacity more than 5 per cent of the time. Bedis responsibility is to prepare a report for Mittal as to how many beds are to be bedded to each of the three wards in order to optimize the usage of these beds. Questions: 1. Do you think there is enough information available for Bedi to make a rational statistical decision? Explain 2. At the current level of capacity, what percentage of the times one or more patients are turned away because no bed is available, for each ward? 3. Make a study of a given ward in nearby hospital and come up with an optimal number of beds in that ward, so that more than 5 per cent of the times demand exceeds the capacity.