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SPECIAL HOSPITAL FOR ORTHOPAEDICS AND TRAUMATOLOGY

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					SPECIAL HOSPITAL FOR ORTHOPAEDICS AND TRAUMATOLOGY
                  “St. ERAZMO” OHRID




                  BUSINESS PLAN
                     2007-2009




                     May 2006
                              Table of contents:

1. General data for Special Hospital for Orthopaedics and Traumatology “St.
   Erazmo” Ohrid
      a. Geographical location
      b. Status
      c. Organisational structure
      d. Staffing/management team
      e. Equipment
      f. Patient care
      g. Economic – financial results in 2005 – challenge basis

2. Current condition
      a. Health needs of the society and competition
      b. Collaboration with other health care institutions
      c. Legislation/regulation
      d. Participation/payment

3. Marketing and plan of services
      a. Service description
      b. Customers/patients
      c. Competition
      d. Advantages/disadvantages/opportunities/threats
      e. Suggested financing model
      f. Strategic goals/setting/measurable/achievable/realistic/set in time

4. Financial projections 2007 – 2009
      a. Range projections
      b. Success balance/revenues and expenditures
      c. Plan of development and capital investments

5. Conclusion/opportunities and risks/




                                                                               2
   1. General data for Special Hospital for Orthopaedics and Traumatology
      “St. Erazmo” Ohrid

           a. GEOGRAPHICAL LOCATION

The Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid is
located at the coast of the Ohrid Lake in Ohrid, tourist and cultural-historical centre in
Macedonia.

Traffic connections: 168km to Skopje
Airport Ohrid – 3 km

It is located on the coast of the lake at 60,476.00 m2 on the beach, the building has
ideal location with parks and promenade and many terraces facing the lake, at total
surface of 13,869.02 m2 buildings in function of health care (hospital blocks and
additional infrastructure).

           b. STATUS

The Special Hospital for Orthopedics and Traumatology “St. Erazmo” Ohrid is
founded on 19 July 1950 as a special hospital for bone-wrist tuberculosis. The many
years of professional, staff, space, technical and economic development created
conditions for successful treatment not only of bone tuberculosis, but of all other
orthopedic traumatologic diseases, and it developed in specialized HCI for health care
in the field of orthopedics and traumatology and the bone tuberculosis as well, but for
only 10 years, in 1988 it developed in Institute for Orthopedics and Traumatology.
Passing of the Health Care Law, and with a decision by the Parliament of the
Republic of Macedonia, No. 08-1870/1 from 18 May 1995, and the Court Register
No. 2553/95 from 16 June 1995 it changes its name in Public HCI Special Hospital
for Orthopaedics and Traumatology Ohrid, and later in 2000 by a Parliament’s
decision it got the name of “St. Erazmo”.
Capacity: 270 hospital beds

           c. ORGANISATIONAL STRUCTURE

Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid is organized
in medical sectors and departments, as follows:
     - Orthopedic-traumatology women’s department
     - Orthopedic-traumatology men’s department
     - Orthopedic-traumatology children’s department
     - Orthopedic-traumatology women’s paraplegia department
     - Orthopedic-traumatology men’s paraplegia department
     - Medical department for cerebral paralysis
     - New object – special standard
     - Medical department – operation block / OR I and II /
     - Medical department – intensive care and reanimation room
     - Medical department for physical therapy
     - Medical department – out-patient with changing room and plaster room
     - Medical department – RTG, KT and Echo
     - Medical department – bio laboratory


                                                                                        3
      -   Medical department for transfusiology (within each department there is a
          physical therapy department)
      -   Food department
      -   Laundry service
      -   Technical support department
      -   Administrative department for economic-financial works (finances,
          accounting, material accounting, invoice and liquidation, reception)
      -   Administrative department for social-legal works (social-legal works,
          archive, PP protection and insurance, staffing, security)

A Director, appointed by the Minister of Health on the basis of public vacancy notice,
manages the institution. His professional advisers in conducting specialized tasks in
certain special fields are the deputy director, the assistant director for economic
issues, and assistant director for social and legal issues, financial manager, head nurse,
and the collegiums as a professional board.

Medical departments are managed by Medical Department Managers, while heads of
departments manage the departments.

Management board functions as a management organ, consisting of seven members,
three of which are competent professional persons elected by the Hospital collegiums
and four selected by the Parliament of the Republic of Macedonia to be
representatives of the state capital (MOH).

Management staff, lead by the Director, is relatively young, having enough
professional and management experience that provides an ambient of safe realisation
of the obligations set in the business plan and other programmes of work,
development and investments and represents a compact professional body in the
realisation of the basic action as a whole.

Organisational situation of the Special Hospital for Orthopedics and
Traumatology “St. Erazmo” Ohrid is defined with a statute and adequate by-
laws, and it can be simulated according to an organogram given in an Annex:




                                                                                        4
                                                               PHCI Special Hospital for Orthopedics and Traumatology “St. Erzamo” Ohrid



                                                                                                      Menagement Board
                                          DIRECTOR
                                                                                                      4 members – external                              HEAD NURSE
                                                                                                      3 members – internal



                                                                                                                 Orthopedic-traumatology                 Head of medical department   Nurse in charge
                                                                                                                 women’s department
                                        Deputy director                        Colegium
                                                                                                                 Orthopedic-traumatology men’s          Head of medical department    Nurse in charge
                                                                                                                 department

   Ass. Director for economic issues                         Ass. Director for general-legal issues
                                                                                                                 Orthopedic-traumatology                Head of medical department    Nurse in charge
                                                                                                                 children’s department


                                                                                                                 Orthopedic-traumatology                Head of medical department    Nurse in charge
            Financial manager                                                                                    women’s paraplegia department


                                                                                                                 Orthopedic-traumatology men’s          Head of medical department    Nurse in charge
Administrative dept for economic issues                   Administrative dept for general-legal issues           paraplegia department
   -     financial accounting                                -     general-legal issues
   -     material accounting                                 -     PP protection and insurance                   Medical department for cerebral
   -     execution and invoicing                             -     Archive                                                                              Head of medical department    Nurse in charge
                                                                                                                 paralysis
   -     accounting                                          -     Staffing
                                                             -     Security
                                                                                                                 New object – special standard
                                                                                                                                                         Head of medical department   Nurse in charge




              Food storage                                     Department for preparation of food                Medical department – operation block
                                                                                                                                                        Head of medical department    Nurse in charge
                                                                                                                 / I and II OR


    Stationary storage room                                             Laundry service                          Medical Department – Intensive
                                                                                                                                                        Head of medical department    Nurse in charge
                                                                                                                 care and reanimation room



                                                                                                                 Medical Department for Physical                                      Nurse in charge
      Storage room for tiny inventory                          Department for technical maintenance              Therapy
                                                                                                                                                        Head of medical department




                                                                                                                 Medical Department – outpatient
                                                                                                                                                        Head of medical department     Nurse in charge
                                                                                                                 rooms with changing rooms and
    Basic means storage room                                                                                     plaster rooms


                                                                        RECEPTION                                Medical Department – RTG, KT
                                                                                                                                                        Head of medical department     Nurse in charge
                                                                                                                 and Echo

               PHARMACY
                                                                                                                 Medical Department –
                                                                                                                                                        Head of medical department     Nurse in charge
                                                                                                                 biolaboratory



                                                                                                                 Medical Department for
                                                                                                                                                        Head of medical department     Nurse in charge
                                                                                                                                                                                                         5
                                                                                                                 transfusion
6
                     d. STAFFING

          The Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid
          possesses approved and professional medical staff consisting of 38 doctors, PhD’s in
          the following fields: urologist 1, primariuses specialists – orthopediatricians 2,
          orthopedic specialists 9, physiatrist specialists 6, neurology specialist 1,
          anesthesiology specialists 3, sub-specialist orthopedics traumatologist 1, sub-specialist
          of plastic surgery 1, specialist of neurosurgery 1, specialist in medical biochemistry 1,
          specialist pediatrician 1, primaries specialist pediatrician 1, transfusiology specialist 2.

          According to the Program for professional specialization, the doctors were sent to
          specialization in the fields of anesthesiology 3, orthopedics 3, radio diagnostics 1,
          neurology 1, and general medical practice 1.

          Besides these another necessary medical and other staff has been engaged, in order to
          fully complete sustainable health care services, and with its highly professional
          approach of providing medical and other services brings into the successful treatment
          and following high medical standards in the health care procedure.

          In the part of professional completion of administrative tasks, PHCI Special Hospital
          for Orthopaedics and Traumatology “St. Erazmo” Ohrid possesses approved and
          professional staff consisting of 2 graduated economists, 2 lawyers supported by staff
          with higher and high school education.

          Total number of employed on 12 May 2006 was 256. Average age of the employed is
          46.14 years.

          Staff structure according to complexity coefficient according to the Collective
          Agreement is:

Level of complexity
according to Collective            I    II   III   IV   V/1 V/2 VI/1/2 VII/1a VII/1-b      VII/2-b   VIII     Total
Agreement for Health Care
Services
Number of employed                 29   19   38 15      6   86   17         9    9         27        1          256
/12.05.06/



          Sex and age structure is:

Till 35                                      Male                                    14                     30,43
                                             Female                                  13                     28,62
35-45                                        Male                                    27                     40,41
                                             Female                                  45                     40,27
45-55                                        Male                                    32                     49,26
                                             Female                                  87                     49,98
Over 55                                      Male                                    12                     58,08
                                             Female                                  26                     57,35
Total:                                                                               256                    46,14




                                                                                                     7
Because of keeping the rhythm in refreshing the doctor’s and other medical staff with
young employees in the Action plan for Investments and Development for 2006 there
are planned specialisation and sub-specialisation practices for doctors in the following
fields:
       - Radio diagnostics 2
       - Orthopaedics         3
       - Pharmacy             1
       - Neurology            1
       - Internal medicine 1
       - Anaesthesiology 1
And if the department for superficial comma is formed, there will be a necessity of
specialists in the field of:
       - Anaesthesiology 3
       - Neurosurgery         2



           e. EQUIPMENT

PHCI Special Hospital for Orthopaedics and Traumatology Ohrid, i.e. medical
departments have modern equipment with high technology where we could emphasise
the following:
       - 2 operation aseptic rooms with complete infrastructure and instruments
       - 18 beds for intensive care and reanimation with necessary infrastructure
       - RTG room
       - Echo and IT Scan cabinet
       - 2 laboratories for medical analysis/transfusion and medical biochemistry/
       - 1 pharmacy
       - 5 out patient practices with reception
       - 1 plaster room
       - Block of 4 physical therapy departments with necessary equipment
       - 1 pool and 1 small children’s pool with complete physical therapy
          equipment
       - Professional and general library
       - Complete information system /hardware and software/

           f. PATIENT CARE

Treatment of patients is done in teams with medical PhDs, primariuses, specialists,
orthopaedic specialists, physiatrist specialists, neurosurgery specialists,
anaesthesiology specialists and several doctors doing different specialisation practices
supported by other medical, higher medical and paramedical staff.

PHCI Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid has
hospital beds facing the lake, with signaling equipment, TV, telephone, refrigerators,
comfortable baths and sanitary areas; each medical department has ambulance for
emergency cases, doctors’ room and living room.
It also has special separate objects, individual rooms for special care and special
services, such as apartments.



                                                                                      8
                         g. ECONOMIC-FINANCIAL RESULTS IN 2005 – CHALLENGE
                            BASIS

          PHCI Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid,
          following the newest trends in health care, and especially in the field of orthopedic
          surgery and traumatology and physical medicine and rehabilitation, has affirmed the
          attitude of expansive professional-staffing politics, implementation of new methods
          and working techniques and adequately defined attitude of working organization
          functionality according to the needs. Set goals regarding the economical parameters
          could be pulled down to:
                 - Keeping rhythm with contemporary world trends in health care, and
                    especially in the field of orthopaedic surgery and traumatology, physical
                    medicine and rehabilitation.
                 - Economic legislation – economity, productivity and rentability

          In the period January – December 2005 there were 2500 patients with their partners
          that received hospital treatment, out of which 2198 as HIF insureees and 302 others,
          i.e. non-insured patients at HIF, actually 2089 diagnosis/patient, out of which 1903
          HIF insurees and 186 others. 22264 patients received specialist-consultative
          treatment/diagnosis, out of which 21533 HIF insurees and 731 others.

          The number of conducted operations is 1048, out of which 896 HIF insurees and 147
          others. There are 72,689 realised hospital days, out of which 64,461 for patients and
          5228 for escorts. The level of capacity use is 73.76%, and average treatment time is
          29.07 days.

          According to the defined service values and point value 1, registered in the Price List
          for Health Services in the Republic of Macedonia given by HIF, PHCI Special
          Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid in 2005 has realized
          total income of 155,407,769.00 MKD, out of which revenues of treated HIF insurees
          are of 121,598,245.00 MKD, actually structure of 78.24% and 33,809,524.00 MKD
          out of other services, actually 21.75% in structure.

          Total expenditures are 151,242,908.00 MKD out of which 65,451,943.00 for salaries
          and compensations or 43.27%, for goods and other services 82,524,579.00 or 54.56%
          and capital investments 3,266,386.00 or 2.15%. The indicators for current liquidity is
          0.43, ongoing liquidity 4.85, and the financial stability 125.60%.

          The number of employed in calculated hours is 279, and the average net payment in
          calculated hours is 9,626.00 MKD.

          Table of total revenues and total expenditures for 2004 and 2005

Account    PO SIT IONS                               Plan 2005          2004           2005    Index/a     Index       Structure
               EXPENDITURES
            1. Tax expenditures (a+b+g)            159,035,600   141, 390, 726   147,976,522   93.05%    104.66%
           a) Salaries, rents and compensations     66,482,000     61,633,376     65,451,943   98.45%    106.20%        43.27%
    401    Basic payments and rents                 48,238,000     44,278,412     47,190,591                            72.09%
    402    Salary contributions and personal tax    18,244,000     17,354,964     18,261,352                            27.09%
           b) Goods and other services              92,553,600     79,757,349     82,524,579   89.16%    103.47%        54.56%
    420    Travel and daily expenses                   592,400        204,302        148,817              72.84%         0.18%



                                                                                                                   9
421    Communal services, heating, communal       29,669,700    19,211,805    27,724,796             144.31%         33.59%
       transport
423    Small inventory, tools and other           42,154,500    40,334,341    34,469,791              85.46%         41.76%
       stationary
424    Daily maintenance and fixing                6,795,415     3,517,777     4,203,484             119.49%          5.09%
425    Contract services                          13,161,585    15,639,506    15,316,878              97.94%         18.56%
426    Other daily expenditures                      180,000       849,618       660,813              77.78%          0.80%


       c) Interest payments
451    Local credits interest
       2. Capital expenditures                                   2,568,625     3,266,386    0.00%    127.16%          2.15%
481    Construction objects                                      1,800,000     2,198,336
483    Furniture and office equipment                              768,625     1,068,050

                                                                                                       0.00%

                                                                                                       0.00%
       A) TOTAL EXPENDITURES                     159,035,600   143,959,351   151,242,908      95%    105.06%        100.00%
       2. Non-tax income                          21,317,400    24,938,419    33,809,524   155.86%   135.57%         21.75%
721    Entrepreneurship income and real estate                      76,963        77,117
       income
726    Sale of capital resources
723    Administration taxes and compensation      21,317,400    24,760,934    32,836,073   154.78%    132.61
724    Other Government services
725    Other non-tax income                                       100,519       896,334
       Capital income
731    Sale of capital resources
       3. Transfers and taxes                    137,718,200   121,380,876   121,598,245   88.29%    100.18%         78.24%
741    Transfers from other levels of            137,718,200   121,380,876   121,598,245
       government
742    International donations
       B) TOTAL REVENUES                         159,035,600   146,319,295   155,407,769   97.71%    106.21%        100.00%
       REVENUE SURPLUS                                           2,359,943     4,146,861             176.48%
       Revenue tax                                                 249,847       564,341             225.87%
       Net income surplus                                        2,110,096     3,600,520             170.63%
       Average number of employed                                      279           279



      Indicator of current liquidity – relation between bills of exchange, financial
      resources versus short-term obligations.

            AOP 125 BS 670746.-
      ML = ----------------- = ---------------- = 0.43
            AOP 175 BS 15411517.-

      Currently from the available resources the short-term obligations can be covered by
      0.43 MKD (actually 1 MKD obligation with 0.43 MKD financial resources). The data
      is very much prone to variations and dependent on the resource incomes and the
      procurement range.

      Current liquidity

             -    Short-term obligations (AOP 165 of BS) = 15411517.-
             -    Total trading resources – financial resources and needs and stocks (part
                  AOP 124 BS) = 74789546.-


                                                                                                               10
           74789545,-
    TL = --------------------- = 4,85
           15411517

    Each denar short-term obligation is covered by 4.85 MKD trading resources.

    Financial stability

          -   Capital finance resources (AOP 161 BS) = 151,804,294.-
          -   Permanent resources (AOP 111 BS) = 120,855,225.-

          151,804,294.-
    FS = ----------------------- h 100 = 125.60%
           120,855,225.-

    Long-term we are financially stable, because our HCI works only with individual
    resources without using other financial resources.

Other data prepared on the basis of calculated           2004            2005
hours:

•   Current expenditures per employed                    506,777.00      530,382.00
•   Salaries, compensations and rents per employed       220,908.00      234,595.00
•   Goods and other services per employed                285,868.00      295,787.00


•   Capital expenditures per employed                    9,206.00        11,707.00


•   Total expenditures per employed                      515,983.00      542,089.00

•   Non-tax revenues per employed                        89,385.00       121,181.00
•   Transfers from other levels of government per        435,057.00      435,836.00
    employed

•   Total revenue per employed                           524,442.00      557,017.00


•   Income per employed                                  8,459.00        14,928.00




                                                                                      11
                                     STRUCTURE
                        OF DEMAND FOR THE PERIOD 01.01 – 31.12.2005

DESCRIPTION                           2004             2005    INDEX     Structure 04    Structure 05
                                                                    %              %               %
Pension part                  31,187,157.00    21,973,445.00     70.46          22.42           15.75
Health care services          53,734,955.00    54,959,194.00    102.28          38.63           39.39
Material expenditures         32,399,196.00    41,397,290.00    127.77          23.29           29.67
Surgery services              21,767,136.00    21,195,831.00     97.38          15.65           15.19
Co-payment                                                        0.00           0.00            0.00
HIF TOTAL                    139,088,444.00   139,525,760.00    100.31          85.12           81.77
Citizens and organisations    24,319,885.00    30,324,936.00    124.69          14.88           17.77
International                                     790,399.00                                     0.46
Total demand                 163,408,329.00   170,641,095.00    104.43          100.00         100.00


     The table above shows that total HIF demands are increasing for 0.31% regarding last
     year, and the plan is realised more than 1.31%, demands from citizens, organisations
     etc are increasing for 24.69%. Total demands on all bases are increasing for 4.43%.
     From the structure of the invoice realisation can be seen that there is still dominating
     participation of HIF demands with 81.77%, the demands from citizens and
     organisations participate with 18.23%. In the structure of HIF invoice realisation it
     can be seen that the health care services participate the most with 39.39%, material
     expenditures with 29.67%, pension part with 15.75%, surgery services with 15.19%.
     Pension services are decreasing for 29.54%, health care services for 2.28%, material
     expenditures increase for 27.77% and surgery services are decreasing for 2.62%.

                          REALISED HEALTH CARE SERVICES
            Realised health care services in accountant period January – December
     Physical range compared to the same period last year:
     1. Surgery services                                                   2004 2005
     1. Ostheosynthesis                                                      134   148
     2. Bloody repositions of long bones without osteosynthesis               18    17
     3. Non-bloody repositions of long bones and joints                       55    43
     4. Amputations and resections                                            26    20
     5. Endoprothesis of hip with or without reconstruction                   97   141
     6. Corrective stabilising operations of spinal cord                      13    18
     7. Reconstructive stabilising operations of hip with KDK                 17    19
     8. Removing ostheosynthetic material                                     79   100
     9. Operations in the field of plastic and reconstruction surgery        193   214
     10. Ilizarov operations                                                 104    74
     11. Operations in the field of urology                                   21    18
     12. Reconstructive elongations of tendons and muscles                    43    78
     13. Removing of soft tissue formations                                    5    22
     14. Removing of egostosis, free anti bodies, meniscus with               49    40
          cyretage
     15. Neurosurgery                                                         29    31
     16. Arthroscopy                                                          71    66
          Total:                                                             954  1048
     Surgery services are realised for 9.85% more compared to last year


                                                                                          12
2. ANAESTHESIOLOGY REALISATIONS AND                            SERVICES        IN
    INTENSIVE HEALTH CARE
Description                                          2004       2005 Index %
Intensive medical treatment                           779        909     85.01
Sting canola anaesthesia                               66         38     57.58
Infiltration anaesthesia (small regions)                1          1      0.00
Infiltration anaesthesia (wider regions)              151        171    113.25
Coil anaesthesia of peripheral nerves                   5          1     20.00
Cauterisation plexus anaesthesia                       37         43    116.22
Spinal or paridural anaesthesia single                361        417    115.51
Leading regional anaesthesia (up to 30m)              362        416    114.92
Leading regional anaesthesia (each over 30m)          916       1074    117.25
Combined narcosis (up to 30m)                         185        173     93.51
Combined narcosis (each over 10m)                       0         11      0.00
Combined narcosis with single-channelled intubations 181         173     85.58
up to 1h
Combined narcosis with single-channelled intubations 583         537        92.11
over 15
Combined narcosis with intubations over 15m additive 1823       1883       103.29
Anaesthesiology check-ups                            3087       3322       107.61
Total:                                               8537       9169       107.40

Anaesthesiology realisations and services in intensive medical care are increasing
for 7.40%.




                                                                               13
3. OTHER HEALTH CARE SERVICES IN A STATIONARY
Description                                          2004    2005       Index %
Basic services – counselling and septic visits     66,278  67,467         101.79
Basic services – consigliore counselling          108,559 106,211          97.83
assistance and treatment
Plaster services in a stationary                      693   1,015         146.46
Additional services – bandaging and bandages       13,027  17,297         132.78
Infections, infusions, infiltrations and implants  47,703  45,855          96.13
Extensions                                          2,375   2,386         100.46
General and paediatrics check-ups                     710     821         115.63
ECG                                                   917     938         102.29
ECHO – sonographic analysis                           567     630         111.11
X-ray diagnostics                                   2,570   2,699          98.15
Transfusion services                                8,468  16,545         195.38
Laboratory analysis                                10,642  13,934         130.93
Dental services                                     1,165     241           0.00
Neurological status                                   817     436          53.37
EMG analysis                                           12     207        1725.00
Scavenging crankcase                                 3305   3,609         109.20
Orthopaedic check-ups                               2,575   2,693         104.58
Urological-surgical check-ups                       1,889   2,679         141.82
Transfusiology check-ups                            2,349   2,005          95.36
X-ray check-ups                                       972   1,230         126.54
Neurology check-ups                                   306     153          50.00
Cardiology check-ups                                   61       0           0.00
Biochemical check-ups                               2,430   2,604         107.16
Neurosurgical check-ups                             1,188   1,331         112.04
Total:                                            279,768 292,986         104.72

Kts                                                          290

Other health care services are increasing for 4.72% compared to the previous year




                                                                               14
    4. PHYSICAL THERAPY AND REHABILITATION SERVICES
                             2004       2005      INDEX %
Kinesis therapy              70,984     61,771    87.02
Hydrotherapy                 10,570     10,246    96.93
Massage                      34,030     26,462    77.76
Quartzing                    0          23        0.00
IR (infrared)                1,707      1,125     65.91
Paraffin                     17,818     17,573    98.62
Ultrasound                   10,824     8,210     75.85
Electrotherapy               24,160     19,901    82.37
Neuro-physiatrics            1,307      1,400     107.12
Working therapy              1,216      1,344     110.53
Physiatrist check-ups        6,309      5,843     92.61
Laser                        0          70        0.00
Total                        178,925    153,968   86.05

Physical therapy and rehabilitation services are decreasing for 13.95%.


5. AMBULATORY SERVICES
Description                                              2004        2005   Index %
Orthopaedic check-ups                                  17,777      16,234      94.56
X-ray check-ups                                         4,028       3,953      98.14
Neurosurgery check-ups                                  1,693       1,856     109.63
Urologic surgery check-ups                                376         161      42.82
Neurology check-ups                                       707         350      49.50
Surgery check-ups                                         463           0       0.00
Bandaging and compressed bandage                        1,401       1,268      90.51
Punctions                                                 375         333      88.80
Blockings                                                 786         772      98.22
Orthopaedic-surgery consiliar realisations                200         184      92.00
ECHO (sonographic analysis)                             5,351       7,363     137.60
Laboratory analysis                                     1,326       1,527     115.16
Plaster services                                        2,407       2,690     111.76
Repositions                                               260         230      88.46
X-ray diagnostics                                      11,453      10,967      95.76
KTS                                                     4,089       4,025      98.43
Laboratory check-ups                                        0         583       0.00
Total                                                  52,092      52,505     100.79

Ambulatory services are increasing for 0.80%.

This year there is a noted increase in the surgical interventions for 9.85%,
anaesthesiology realisations and services in intensive care are increasing for 7.40%,
stationary services are increasing for 4.72%, physical medicine and rehabilitation
services are decreasing for 13.95%, and ambulatory services are increasing for 0.80%
compared to last year.




                                                                                  15
During 2004 there was completed specialised hospital rehabilitation with HIF
decision to over 336 patients, and in 2005 to 187 patients, while there were also
specialist-consultative check-ups and hospital care as follows:

Check-ups with diagnosis in specialist-consultative health care:
                                   Total          HIF insurees               others
                2004               21 195         20 531                     664
                2005               22 264         21 533                     731

Check-ups with diagnosis in stationary health care:
                                   Total         HIF insurees                others
                2004               2016          1899                        117
                2005               2089          1903                        18


2. CURRENT CONDITIONS

a) HEALTH NECESSITIES OF THE COMMUNITY

In the last 15 years after the independence, in Macedonia there is realised intensive
growth in health care. The network of health care institutions for primary, special-
consultative, pharmaceutical and hospital health care covers all areas in the
municipality of Ohrid that creates conditions for available health care and satisfaction
of the biggest part of health needs of the population, the intensive development of the
health care institution network is monitored and intensively staffed for better health
care.

Health care of the population in the Republic of Macedonia is provided in 17 health
homes, with 16 newly formed after the division of the 16 medical centres in Health
Homes and General Hospitals (one Clinical Hospital) having great number of working
units, ambulatories and stations spread around in towns and about 330 medical units
in villages, 1 independent health care unit, 1 town general hospital, 6 special hospitals,
9 IHPs, 3 specialised disease centres, 3 natural treatment centres, 1 Clinical centre and
1 dentistry centre, as well as 850 private health care organisations.

Within these frames, PHCI Special Hospital for Orthopedics and Traumatology “St.
Erazmo” Ohrid makes constant analysis for the needs of the population in the region
spreading through the territory of the whole country, as well as the needs of the
patients from Albania, Kosovo, Serbia and Montenegro, regarding the fact that certain
treatment methods in the field of orthopedics and traumatology in this region are
applied only in PHCI Special Hospital for Orthopedics and Traumatology “St.
Erazmo”. These analyses are conducted with application of different methods, such as
organization of professional seminars and meetings with orthopedics specialists from
Albania and Kosovo in Ohrid and visits of the same in Albania and Kosovo in order
to meet the possibilities of treatment in the field of orthopedics and traumatology, as
well as the conditions for patient care provided in PHCI Special Hospital for
Orthopedics and Traumatology “St. Erazmo” Ohrid.

On the other hand, because of the conditions in the whole economy, bankruptcy and
falling apart of many enterprises, rapid decrease of the number of employed in


                                                                                       16
commerce, as well as the inability to pay the salaries to the employed, and the
compensations as well, conscious avoidance of paying the compensations from
greater number of legal entities, payment of “salaries” out of the legal payment
operations brought to decrease in HIF incomes, i.e. the funds for health insurance and
health protection of the population. Thus PHCI because of shortage of resources paid
by HIF have worse working conditions, have less drugs and medical supplies, do not
procure new equipment, i.e. do not change the amortized one, (average level of
amortization is estimated to about 80%), the obligations towards the providers are
constantly increasing, which brings into question the continuity of the work.

Because of absence of investment funds for permanent financing of PHCI in the part
of renovation and change of the old amortized medical and other equipment, PHCI is
forced to lose the rhythm of application of new contemporary methods for diagnosing
and treatment.

Concept of financing of PHCI by HIF only in the part of daily work forces PHCI to
work with very old equipment, which on the other hand increases the daily
expenditures. There are the problems that PHCI has in the part of changing the
amortized non-medical equipment (washing machines, drying machines, heating etc.),
which in any case increases the daily expenses by constant repairing and maintenance.

b) COLLABORATION WITH OTHER HCIs

Collaboration, professional development and expansion of services

PHCI Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid, in its
agenda for collaboration, professional development and expansion of services has the
following items:
    1. Extension and expansion with new contents of collaboration with Russian
        scientific research centre for reconstructive orthopaedics and traumatology
        “Ilizarov” from Kurgan – Russia
    2. Extension and expansion of the collaboration with Orthopaedic Hospital
        Valdotra – Republic of Slovenia
    3. Extension and expansion with new contents of collaboration with “Kalo”
        Institute, Berk Plague – France
    4. More intensive collaboration with Clinical Centre Skopje
    5. Expansion and extension of the established contacts with the Ministry of
        Health of Republic of Bulgaria for reciprocal stay for education of specialists
        in the Bulgarian health care institutions and vice-versa
    6. Expansion of the collaboration with doctors specialists from the Republic of
        Albania and Kosovo because of expanding the collaboration through
        organising professional conferences
    7. Connecting in the function of mutual collaboration with other eminent clinics
        from the Balkan and wider, because of expanding the services (health tourism,
        operations, treatment, education etc.)
    8. Professional stays in renowned orthopaedic centre in Europe and exchange of
        professionals
    9. Directing doctors specialists to sub-specialisation
    10. Directing doctors to specialisation in the following fields:
            - Radio diagnostics         2


                                                                                     17
           - Orthopaedics            3
           - Pharmacy                1
           - Neurology               1
           - Internal medicine       1
           - Anaesthesiology         1
           If the department for superficial coma were formed, there would be need
           of:
           - Anaesthesiology         3
           - Neurosurgery            2
   11. Organising professional lectures, seminars in different specialised fields, but in
       function of educating the existing professional staff with the news in the field
       of health care
   12. Special accent should be put in the improvement of:
           - Conservative and operational treatment of spine deformities (scoliosis
                and kyphosis)
           - Equalisation and elongation of the extremities according to the
                methods from D-r Ilizarov
           - Specific and unspecific infections of the locomotion system
           - Early detection and treatment of inborn anomalies of the locomotion
                system
           - Diagnostics and treatment of cerebral paralysis
           - Locomotion system’s trauma and its consequences
           - Treatment of patients with superficial coma
           - Rehabilitation of paraplegic and hemiplegics patients
           - Improvement in the field of arthroscopy
           - Endoprothetics of shoulder, elbow, hand, fingers
           - Spinal spine simulation

It is planned to conduct an analysis of the number of patients referred from chosen
doctors, according to chosen doctors from all regions in order to define whether in
certain time frame there is decrease or increase of referred patients to specialist-
consultative and clinical health care.

Also there are planned visits to chosen doctors in the Republic of Macedonia
according to HIF branch offices, as well as to the presidents of the doctor’s
committees for improvement of rehabilitation as an expanded hospital treatment in the
form of affirmative meetings because of getting acquainted to the services conducted
in PHCI Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid, in
order to animate the doctors to refer patients to a specialist-consultative and hospital
health care to PHCI Special Hospital for Orthopaedics and Traumatology “St.
Erazmo” Ohrid.

c) LEGISLATION/REGULATION

Health Insurance Law regulates the health insurance of the citizens, rights and
obligations received with the health insurance, as well as the way the health insurance
is implemented. Health insurance is implemented as compulsory and voluntary.

Compulsory health insurance is established for all citizens of the Republic of
Macedonia for provision of health cervices and co-payment on the basis of the


                                                                                       18
principles of completeness, solidarity, equality and effective use of the resources
under conditions defined by this law and the regulations brought on the basis of this
law.

Voluntary health insurance is established for provision of health services that are not
covered by the compulsory health insurance.

The compulsory health insurance is implemented by HIF. Other insurance companies
founded according to the insurance regulations can implement voluntary health
insurance.

Prices of the health care services are not yet determined at a Price List of health care
services in the Republic of Macedonia brought by the Ministry of Health – health
Insurance Fund of R. Macedonia 1992 with point value for the services of 1 denar
that represents one of the postulates for impossibilities of development and investment
reconstruction of PHCI and the low satisfaction of the employed because of the low
salaries that were not corrected in the last fifteen years.

PHCI Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid
follows the legal regulation regarding the privatisation procedures in the health sector.

d) COMPENSATION/PAYMENT

According to the Agreement for Providing and Way of Payment of Health Care
Services to the Insurees in Specialist-Consultative and Hospital Health Care, HIF
defined budget ceiling for PHCI Special Hospital for Orthopaedics and Traumatology
“St. Erazmo” Ohrid in the amount of 132,000,000.00 denars for 2006.

On the basis of such defined budget ceiling for 2006 the Plan for Revenues and
Expenditures should be passed and the work coordinated according to the defined
plan elements for conducting the type and range of health care services by diagnosis
for insurees, such as:

Plan and type of health care services of insured people for 2006 (stationary) according
to group of diagnosis of MKB – 10 with similar diagnostic-therapeutic procedures in
quartos: First quarto – 346, Second quarto – 476, Third quarto – 543 and Fourth
quarto – 349, Total – 1714.

Plan and type of health care services of insured people for 2006 (ambulatory)
according to groups of diagnosis of MKB – 10 with similar diagnostic-therapeutic
procedures in quartos: First quarto – 4744, Second quarto – 4946, Third quarto – 5330
and Fourth quarto – 4674, Total – 19694, and number of realised hospital days in
quartos: First quarto – 12120, Second quarto – 16660, Third quarto – 19090 and
Fourth quarto – 12130, Total – 60000 and average treatment time according to all case
types of 35 days.

The base for this is found in the historical expenses and performance indicators for the
last 3 – 5 years. Analysing the HIF payments on the benefit of PHCI Special Hospital
for Orthopaedics and Traumatology “St. Erazmo” Ohrid on all basis it is realised that
the realisation of Plan of range and type of health care services and according to the


                                                                                        19
results, i.e. defined budget ceiling it is not correctly supported by HIF, and the
payments do not coordinate, actually are always lower than the realisation according
to the Quarto Agreement, and in the future it is expected HIF to fulfil its obligations.

In the part of defining the service prices, putting price value with points for services
with value of 1 denar, the position itself of health care is degraded in compilation with
other services which means that its correction is expected or defining prices
according to diagnostically similar groups with prices on real bases.

On the basis of this range the parameters have been defined for expenditures and
revenues for 2006. The payment by other health care services beneficiaries (uninsured
people) and according to programs is realised in a satisfactory way.


3. Marketing and Plan of Services

           a) SERVICE DESCRIPTION

PHCI Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid
ensures both specialist-consultative and hospital treatment for all diseases of the
locomotion system including medicament-surgical, conservative treatment and
treatment with physical therapy and rehabilitation as extended hospital treatment, such
as:
      - Anomalies of the locomotion system, hips wrench, foot, neck and chest
          deformities;
      - Spine diseases (tumors, discus removal, deformities - kyphosis and
          scoliosis);
      - Operations of hips with applications of endoprotesis, osthetomies, plastic;
      - Knee-artoscopic and similar interventions, meniscus removal, sinvectomias,
          arthrodesis, horse foot, flat feet, excavatus, varus, adductus;
      - Unspecific and specific inflammatory diseases of bones and joints;
      - Treatment of all types of fractures of the locomotion system;
      - Extension of the extremities and solving of pseudoarthrosis according to
          “Ilizarov” method;
      - Operations in the field of urology and plastic surgery;
      - Cerebral paralysis (conservative and operative treatment);
      - Treatment with physical therapy, hydrotherapy, Kinezy therapy,
          heliotherapy, electrotherapy and laser therapy, etc.
      - Rehabilitation as extended treatment

For part of the previously described services, PHCI Special Hospital for Orthopaedics
and Traumatology “St. Erazmo” Ohrid is the only one on the territory of the Republic
of Macedonia that conducts such operation treatment of orthopaedic and
traumatologic cases according to Ilizarov.

           b) CONSUMERS/PATIENTS

PHCI Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid as a
specialised health care institution in the field of orthopaedics and traumatology in a
longer continuous period of time pays special attention to the contemporary way of


                                                                                       20
operational treatment with adequate input of other generally known treatment
methods.

Structure of patients on the basis of HIF insurees and uninsured persons is 78.24%
versus 21.76% out of financial aspect and 87.92% versus 12.08% from natural aspect,
while the structure of the branch offices in the Republic of Macedonia as dominants
expose patients from Ohrid with 28.43%, Struga 17.93%, Kicevo 13.24%, Resen
4.78% and Prilep 3.18%.

The structure of patients on the basis of age is: infants 1.48%, children aged 1-5
1.63%, children aged 5-18 10.00%, adults over 65 24.35%, other ages 60.00% and
blood donors 2.54%.

Regarding the territoriality of the patients that pay themselves, i.e. are not HIF
insurees, biggest part are from Albania 125, than Macedonia 29, Kosovo 27, Serbia
and Montenegro 1, Bulgaria 1, Switzerland 1, Australia 1 treated in a stationary, and
from Albania 242, Macedonia 331, Switzerland 9, Kosovo 50, Serbia and Montenegro
20, Bulgaria 2, Poland 1, Greece 3, Germany 4, Netherlands 6, USA 3, Sweden 1,
Romania 1, Israel 1, Slovenia 1, Australia 2, Denmark 1 treated in specialist-
consultative practice.

           c) COMPETITION

PHCI Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid is
very successful in the part of competition ability as a special hospital for the needs of
the patients in the Republic of Macedonia and abroad, so that the perspective to define
it as a regional specialised centre (Albania, Kosovo, Serbia) is open.

Although it faces the above-mentioned problems as system solutions, it compensates
with active solutions through exposing in the neighbouring regions with direct
participation of doctors’ teams in order to attract more patients who will personally
participate in their treatment.

As a strategy, it is planned to make a plan to visit the managers of the HIF branch
offices and chosen doctors from those regions because of animating the possibilities
of PHCI Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid in
the part of providing specialist-consultative and hospital health care. Also, because of
constant presence at the territory of Albania and Kosovo, several professional visits
and seminars in these regions with their eminent practices, doctors’ chambers and
hospitals, with constant presence through establishing higher forms of collaboration
for instance joint practice, training etc.

           d) ADVANTAGES/DISADVANTAGES/POSSIBILITIES/THREATS

PHCI Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid can
emphasise that advantages are the staff, doctors-specialists, mentioned above,
supported by medical staff with secondary and higher education with great
experience, as well as supported by other administrative staff as logistic support of the
health staff, equipment of operation rooms and the department of intensive care and
reanimation, equipment of bio-laboratory and transfusiology laboratory, departments


                                                                                      21
of physical therapy. Location and climate conditions are also advantages of PHCI
Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid, as well as
the strong organisation and function, as well as the function of the hospital IT system.

As disadvantages of PHCI Special Hospital for Orthopaedics and Traumatology “St.
Erazmo” Ohrid can be emphasised amortisation of part of the medical and non-
medical equipment, as well as inadequate space conditions for providing standard
patient accommodation.

Also as disadvantages that might contribute to quality improvement, efficiency and
patient satisfaction from health care services in PHCI Special Hospital for
Orthopaedics and Traumatology “St. Erazmo” Ohrid we would like to mention the
following:
    A. To improve the energetic efficacy of 40% of the whole surface in use of
        the hospital it is necessary to complete the following activities:
        1. Machine installations (heating and hot-cold water). Heating goes through
            radiators and radiator shutting off and 10% of its valves are out of order,
            while there is no linear shutting off. Also, there is no possibility for
            shutting off separate floors, because the boiler room has been dislocated
            and complete thermal isolation of pipes and channels should be installed.
            In addition to this, the hot water should be corrected. For these activities
            there is further project program, and the savings would increase for 30%. It
            is also thought about the advantages in the savings for eventual
            establishment of sun collectors for heating the pools, and for this there are
            undergoing pre-projects and calculations.
        2. Electrical and lightening system in the new block, or paraplegia center:
            Lightening of the rooms goes mainly through fluorescent lightening
            armatures, and the lightening level follows the standards for certain types
            of rooms. Special attention is paid to the choice of equipment in the room,
            where for lightening we are using hospital light armature type FTB-04 put
            on 1670mm basis. Completed floor and details above the beds. Lamps are
            from 65W and 20W for reading, but if they are turned on all together they
            give the opportunity for check-ups and control of patients and doing other
            things in the hospital rooms. The lightening constructions, 50% are out of
            order they cannot be used in the evenings. If we change them and use them
            completely during the night, savings of the electrical power during the
            night will be 40% bigger.
        3. Another thing is that the signalling system in the old building does not
            satisfy the regulations for this type of hospital and 30% of it is out of order
        4. One of the biggest anomalies of the hospital is that the hospital aggregate
            is out of order and currently supplies power only to the Ors. The hospital
            urgently needs new aggregate with bigger capacity for putting it in power
            at the intensive care unit, post-operation rooms and departments with
            special standard.

          - First priority is completing the facade of the building (windows)
       A. In the old building we would have energy savings for 30% bigger than
          before, if we change the locks at:
                    - Ground floor of 37.16 m2
                    - I floor of 52.83 m2


                                                                                        22
                       - II floor of 29.65 m2
       2.   At the paraplegia centre, which is on higher ground floor and three floors,
            unless we change all windows and doors that represent 30% of the whole
            façade locks there will be total savings of 25% of the hospital cubature.
            This includes:
                        - Handcuffs
                        - Handles from windows and doors
                        - Locks
                        - Ventuses
                        - Rubber diphthongs
       3.   Third pavilion (paraffin, electrotherapy) – façade locks are 10% damaged
            from the total surface of windows and doors handles, ventuses and rubber
            diphthongs.
       4.   Second pavilion (children’s department) – façade locks is 15% damaged of
            the total surface of windows and doors handles, ventuses and rubber
            diphthongs.
       5.   New building – object with ground floor and one floor. On the ground
            floor or the administration block the damage of the whole façade locks is
            5% of ventuses and rubber diphthongs
        -   First floor or patient admission block is with special standard and the
            damage is 50% of the total façade lock regarding damaged lagers,
            damaged lager beds and damaged brushes of the sliding part of the doors.

If these reparations and changes in the façade we will save 40% more energy of
the total useful surface of the hospital.

Regarding the sanitary parts there should be complete renovation in the old building
(ambulatory part, I KSZ and II KSZ) and in the new building (I KNZ, II KNZ and III
KNZ) with complete infrastructure. Interior (doors and laundry cupboards) also needs
renovation because of the damages in the new building (I KNZ, II KNZ and III KNZ).
Because of the old constructions it is necessary to renovate the ceilings in the I, II and
III pavilion, bring hot water in the new block and the ground floor in the old building
where the main construction is made of cane and to replace it with more
contemporary and practical solutions.

    B. Improving patient satisfaction
The main problem to improve patient satisfaction in PHCI Special Hospital for
Orthopaedics and Traumatology “St. Erazmo” Ohrid is the unsolved status of the
ambulatory services. Current condition is the following: they are divided with
plywood in metal L profiles screen system, and the work of nurse with doctor and
nurse patient is not functional. There is no loud speaker for information, the waiting
room is in the hospital hall and there are no separate toilets for the patients and the
staff. It means that it needs new project for the ambulatory block.

   C. Improving patient safety
   1. Object safety – roof constructions
   - In PHCI “St. Erazmo” the following activities has to be undertaken regarding
      this subject: construction of light roof from “Leksal” above the pool and
      physical therapy block which is 1.78 cm higher than the other roof surfaces
      and it is solved with aluminium locks which is completely damaged and


                                                                                          23
      blocked because of the big condensation. Construction of such roof that would
      not decrease the amount of light of the existing light bulbs provides closed air
      space, which would decrease the condensation for 80% and increase the
      patient safety and prevent them from collapsing.
      1st pavilion – transfusion – the roof is made of bar girder covered with salonite
      blocks, which are 30% damaged without possibility to repair them; the ceiling
      is made of lesonite blocks in wooden battens and no thermo isolation at all.
      2nd pavilion and heating relation are also of wooden bars with salonite blocks
      20% damaged, without roof thermo isolation and ceiling with mortar and cane.
   2. New part on the floor there are hospital rooms with special standard.
      Vertical communication is solved with stairs and no elevator. Patients are
      transported manually. Thus it is necessary to establish an elevator for the first
      floor in order to increase patient and staff safety.
   3. The problem with water safety will be solved by installing tabulator up to the
      safety level of lake depth, putting scales and ramps for going from the coast
      into the lake.

    D. Improving health care quality
In order to decrease the errors in the clinical practice it is necessary to renew old and
technically and technologically amortised medical equipment necessary for
diagnosing, as for instance replacing the PTG apparatus (bought in 1980) with a new
digital one with archive storage option and presentation of the current hospital
information system, mobile RTG apparatus for the OR, central sterilisation apparatus
etc. (in the part Development and Investment Plan). Regarding the oldness and
physical amortisation of the existing equipment, toilettes and bathrooms renovation in
medical departments and their completion with necessary equipment (hand dryers,
liquid soap machine, etc.), and in the function of decreasing the infections, and it will
raise the level of patient care standard.

Within the frames of the possibilities factor, it is emphasised that the goal of the
PHCI Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid is to
grow into regional centre of secondary and tertiary health care in the field of
orthopaedics and traumatology, develop the health tourism, introduction of new world
popular treatment methods and application of DSG. Altogether it is expected to form
new voluntary health insurance funds and completion of the begun reforms in the
health sector by the MOH.

Threats, as a factor in the defining of the Business Plan for certain period of time,
firstly are the threats of financial collapse of the existing HIF and the eventual change
in the MOH political strategy of the health reforms. Also, the political and safety
stability represents an important threat for the realisation of the business plan
projection.

Non-correcting the prices of health care services by HIF at a realistic market level
would, in near future, prompt decrease in the quality health care service provision
because of constant ageing of medical and other equipment caused by inability to
renew it, and because of lack of development and investment component in the prices
of the services covered by HIF. Also, the unrealistically low non-market price of the
health care services, covered by HIF, would provoke dissatisfaction of the PHCI staff
resulting from the constant low level of their salaries and the impossibility to


                                                                                       24
stimulate the salary increase from the savings and economical work, which represent
real threats in the BP realisation.

       E) SUGGESTED FINANCING MODEL

Regarding the suggested financing model PHCI Special Hospital for Orthopaedics
and Traumatology “St. Erazmo” Ohrid thinks that it urgently needs to define
diagnostically related groups by defining procedures, treatment time and correct price
that eventually covers equipment amortization and development component. In
defining these diagnostically common groups, besides HIF professionals also should
participate MOH and professionals from PHCI Special Hospital for Orthopaedics and
Traumatology “St. Erazmo” Ohrid. This should refer to standard treatment conditions.
On the basis of these diagnostically common groups, and according to the MOH
policy about the goals and tasks for treatment of population in the Republic of
Macedonia, would approach to defining type and volume of health care services
(diagnostically common groups) which would be treated in PHCI Special Hospital for
Orthopaedics and Traumatology “St. Erazmo” Ohrid and paid by HIF.

According to the analyses subjected to monitoring within a longer period of time,
defining the prices of health care services, no matter whether they would be defined
according to diagnostically common groups or hospital days or according to the
current method of point value of services, they should be on the level of bordering
expenditures with a point value of services of 3.00 denars, instead of the current 1.00
denar, which, according to the HIF methodology, would cover the effort of the health
care providers, amortization of instruments and equipment used to provide the service,
amortisation of health care objects, expenditures for daily and investment
maintenance, general performance expenditures and expenditures of small materials,
such as gauzes (except in operations), muslin material for quick bandaging, bandaging
spray, muslin compressions, wooden spatulas, wooden sticks, cotton sticks, rubber
thimble, narcotic drugs for superficial narcosis, disinfections means and cleaning
means, eyes, nose and ear drops, powder, creams, that does not give the perspective of
development and investment activities and stimulus for the employed in conducting
the over-planned executions.

As an example, we would give bordering prices of only the prices of few types of
surgery and conservative treatment, which cover previous development and
investment components, as follows:

a) Surgery Treatment
                       Operation type                  Operation   Hospital day   Hospital day
                                                                   (standard)     (special
                                                                                  standard)
 1     Wound debrimen                                19,955.00       1.351,00        1.781,00
 2     Removing free body                            24,867.00       1.351,00        1.781,00
 3     Tendolysis                                    34,753.00       1.535,00        1.965,00
 4     Carpal tunnel syndrome                        35,981.00       1.535,00        1.965,00
 5     Amputation of palm/foot                       41,752.00       3.193,00        3.623,00
 5a    Amputation of finger                          27,937.00       1.535,00        1.965,00
 6     Non-blood reposition + ostheosyntesis of      34,753.00       1.535,00        1.965,00
       palm/foot
  7    Non-blood reposition of forearm – upper arm   26,095.00       1.904,00       2.333,00
  8    Non-blood reposition of calf                  26,095.00       1.904,00       2.333,00



                                                                                       25
 9     Non-blood reposition of thigh                 26,095.00       1.904,00        2.333,00
 10    Ostheosyntesis of patella                     50,041.00       3.193,00        3.561,00

b) Conservative Treatment
 No.   Description/diagnosis                       Hospital day           Hospital day (special
                                                   (standard)             standard)
 1.    Conservative treatment                             2.640,00               3.070,00
 2.    Chemi-plegia                                       2.886,00               3.316,00
 3.    Paraplegia - Cerebral                              3.193,00               3.561,00

In this segment we should also emphasise better management with the length of
hospital treatment, drugs expenditure, as well as total expenditures management per
patient.

       F) STRATEGIC GOALS / DEFINED / MEASURABLE / ACHIEVABLE /
       REAL / TIME DEFINED

PHCI Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid is
planned to grow in high professional institution that provides health care services
according to highest standards (with adequate prices) of secondary and tertiary health
care in the field of orthopaedics and traumatology (endoprotic exchange of joints and
other orthopaedic problems, as well as trauma care), and care of patients of the
paraplegia type, hospitalising both HIF insurees and patients who will pay for their
own treatment.

Better planning and control of Budget execution is a strategic goal in the functioning
of resource optimalisation. Decrease in the average treatment time according to world
standards represents a strategic goal as well as the decrease of treatment expenditures
per patient and total. Working with optimal stocks in all segments represents realistic
strategic goals. Updating the new contemporary medical and non-medical equipment
is a key goal that needs to be realised according to the Programme of work,
development and investments through the component included in the price as a
development component (amortization).

Government policy in the health sector determines the time frame, direction of the
reforms and the political stability of the region.

The time frame to realise the strategic goals can be divided in a few segments,
defining that in a period of six months to do an analysis of:
    - Average treatment time of patients and procedures of eventual decrease
    - Number of referred patients from chosen doctors to specialist-consultative and
       hospital health care
    - Number of referred patients to specialist-consultative and hospital health care
       according to HIF branch offices
    - Possibilities of opening daily hospitals in the part of specialist-consultative
       health care
    - Analysis of average drug expenditures per patients and total expenditures per
       patients
    - Number of referred patients to treatment in other PHCI
    - Number of re-operations
    - Number of gained infections and decubituses


                                                                                       26
                -   Number of re-admitted patients within three months
                -   Number of repeated control check-ups
                -   Number of appeals
                -   Development of doctors reports that referred patients to specialist-consultative
                    and hospital practice in PHCI Special Hospital for Orthopaedics and
                    Traumatology “St. Erazmo” Ohrid and meeting with the first 10 every three
                    months
                -   Develop plan for inviting of guest-speakers that will present news in the field
                    of orthopaedics

                4. Financial Projections 2007-2009

                    a) RANGE PROJECTION

            PHCI Special Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid
            starting from the determined Budget frame by HIF management board, determined
            space and staff resources, regional coverage, health sector reforms, political stability
            and stability of the macroeconomic frame at the increase level of BDP of 4.5%, type
            and range of health care services in the stationary and ambulatory are determined in
            the following positions:

                                                 PLAN
            of type and volume of health care services for the insured persons for 2007-2009
                                              (stationary)

                                                                            Number of cases – patients
No.       Groups of diagnosis according to      Calculation   2007       2008        2009                     2006
          MKB-10 with similar diagnostic-         points
                therapeutic procedures
  1                        2                        3          4          5             6            7         8
1     C 30.8 - C 90.1                             7.980,00          73         73            73                     73
2     D 03 - D 48.6                              14.052,00          45         45            45                     45
3     E 10 - E 87.1                              26.148,00           4          4             4                      4
4     G 11 - G 83.9                              11.539,00         135        135           135                    135
5     I 43 - I 99                                 9.227,00          15         15            15                     15
6     L 02 - L 99.9                               8.190,00          35         35            35                     35
7     M 00 - M 99.1                              16.322,00         540        540           540                    540
8     N 19.0 - N 64.3                            12.386,00          14         14            14                     14
9     Q 04 - Q 98.9                              10.681,00          80         80            80                     80
10    R 07.3 - R 62.9                            14.833,00          13         13            13                     13
11    S 05.1 - S 99.9                            26.160,00         580        580           580                    580
12    T 01 - T 98.1                               4.906,00          10         10            10                     10
13    Z 00.0 - Z 98.1                            11.904,00         170        170           170                    170
14    Other - A18 B40.4 - B99.1; F01.9-F52.5;    15.223,00
      Y53.3-Y83.5; W45; P15.2; K07.6-K40.3;
      H83;
      Total:                                                   1714           1714          1714                   1714
      Total value:




                                                                                                         27
                                                  PLAN
             of type and volume of health care services for the insured persons for 2007-2009
                                              (ambulatory)

                                                                   Number of cases – patients
No.       Groups of diagnosis according to          Calculation     2007        2008          2009                          2006
          MKB-10 with similar diagnostic-             points
                therapeutic procedures
  1                        2                              3            4             5             6            7                8
1     C 40 - C 90.1                                     2.201,00       1950           1950             1950                       1950
2     D 03.9 - D 48.6                                     633,00         400           400              400                        400
3     E 10 - E 87.1                                     1.095,00           8             8                8                          8
4     G 11 - G 83.9                                     5.824,00         395           395              395                        395
5     I 43 - I 99                                       1.163,00         200           200              200                        200
6     L 02 - L 99.8                                       356,00          20            20               20                         20
7     M 00 - M 99.9                                     1.705,00       8800           8800             8800                       8800
8     N 19.0 - N 64.3                                     672,00          60            60               60                         60
9     Q 04 - Q 98.9                                     1.997,00       1250           1250             1250                       1250
10    R 07.3 - R 62.9                                   1.225,00          65            65               65                         65
11    S 06.1 - S 99.9                                   1.326,00       6300            6300            6300                       6300

12    T 01 - T 98.1                                       792,00         40             40              40                         40
13    Z 00.0 - Z 98.1                                   3.308,00          6              6               6                          6
14    Others - A18 B40.4 - B99.1; F01.9-F52.5;          2.287,00        200            200             200                        200
      Y53.3-Y83.5; W45; P15.2; K07.6-K40.3;
      H83;
      Total:                                                           19694       19694           19694                         19694
      Total value:

                                              CALCULATION
                  of the indicators for achieved goals through the performance results for
                                                  2007-2009

No.          Goals/indicators description               2007            2008            2009                                2006
 1                          2                       3   Ambulatory      Ambulatory      Ambulatory      Ambulatory
 I    Productivity
1.    Quantity (ratio) of the number of first and   +   2,28            2,28            2,28                              2,28
      repeated ambulatory check-ups
 2.   Number of average specialist check-ups        +   1036            1036            1036                              1036
      per doctor
 3.   Number of average hospitalised patients       +          59,10           59,10           59,10                             59,10
      per doctor
      Average index
      Agreed monthly/three months
      compensation
      Calculated monthly/three months
      compensation
 II   Efficiency
 1.   Number of treated patients in daily           +
      hospital
 2.   Number of realized hospital days                         60000           60000           60000                             60000
 3.   Number of hospitalised patients               -           1714            1714            1714                              1714
 4.   Average time of stay in hospital              -          35,00           35,00           35,00                             35,00
 5.   Number of patients referred to other HCIs     -
 6.   Average drug expenditures per patient         -       2985,00        2985,00         2985,00                          2985,00
 7.   Average expenditures per patient              -      77013,00       77013,00        77013,00                         77013,00



                                                                                                                     28
      Average index
      Agreed monthly/three months
      compensation
      Calculated monthly/three months
      compensation
III   Quality                                     -

1.    Number of readmitted patients for the       -              12              12              12                             12
      same diagnosis within one month after
      the dismissal
2.    Number of repeated operations for the       -              12              12              12                             12
      same diagnosis (re-operations)
3.    Number of infections caused in hospital     -               4               4               4                              4
4.    Number of patients with decubituses         -               4               4               4                              4
5.    Number of complaints and notes by           -               4               4               4                              4
      insurees for the HCI performance
      Average index
      Agreed monthly/three months
      compensation
      Calculated monthly/three months
      compensation
IV    Availability
1.    Average waiting time for diagnostic         -   10 min.         10 min.         10 min.         10 min.         10 min.
      examination
2.    Average waiting time to schedule            -    7 do 10d       7 do 10d        7 do 10d        7 do 10d        7 do 10d
      examinations and operations
3.    Average waiting time in ordinations         -   1,00 h          1,00 h          1,00 h          1,00 h          1,00 h
4.    Number of patients that have themselves     -
      provided implants, medical supplies and
      drugs
      Average index
      Agreed monthly/three months
      compensation
      Calculated monthly/three months
      compensation
V     Financial management
1.    HCI debts                                   -   15.000.000      15.000.000      15.000.000      0               25.340.90
                                                                                                                      4,-
2.    HCI deficit                                 -
3.    Quantity (ratio) of the number of medical   -      0.253        0.253           0.253           0.253           0.253
      and non-medical staff in the HCI
      Average index
      Agreed monthly/three months
      compensation
      Calculated monthly/three months
      compensation



                 b) SUCCESS BALANCE (REVENUES AND EXPENDITURES) 2007-2009

            Bearing in mind that financial results (income or debt) have direct influence on the
            resources, capital and obligations, in sense of their increase or decrease, it is
            completely clear that the entity for its internal needs, is obliged to provide the
            information for their real estimation. According to that besides the external demands
            based on fiscal motives (income tax), the entity also needs to respect the internal
            requests of the management team, which are based on management motives.



                                                                                                                 29
Defining and recognition of the revenues in the HCIs on the level of annual financial
report is conducted according to the new Accounting Law for the Budget
Beneficiaries.

Namely, Article 18 of the Accounting Law for Budget and Budget Beneficiaries
regulates the recognition of revenues and other income contained in the main book of
budget beneficiaries. The recognition of revenues and other income contained in the
main book of budgets and budget beneficiaries is detailed in the by-law regulations,
i.e. Article 17 of the Rulebook of Accounting for Budgets and Budget Beneficiaries.

Accounting principle of financial statements, according to Article 18, paragraph 1 of
the Law, means that the revenues and other income are recognised in the accounting
period where they were made only if they fulfil two criteria defined in Article 18,
paragraph 2 of the Law of Accounting Budgets and Budget Beneficiaries. Those are
the criteria of:
      - Measurability (when they can be stated in values)
      - Availability (when the revenues and other incomes are realised – paid within
           the accounting period they refer to, actually till 31 December in the current
           fiscal year)

According to the Law and By-law, HCIs that are beneficiaries of HIF resources, in
total revenue for the current fiscal year can report only the revenues and other
incomes that are paid by the end of accounting period, no matter whether the revenue
is realised through the Budget, HIF or other sources.

Analogue to the revenue and other incomes recognition, the expenditures are
recognised if they are paid by 31 December, except the revenues for drugs, medical
supplies and food for patients in the amount of the expenditures, no matter whether
they are paid, i.e. the same are corrected with the stocks of material shown in the
inventory.
      - Law of Accounting Budgets and Budget Beneficiaries (Official Gazette of
         RM, No. 61/02 and 98/02)
      - By-law of Accounting Budgets and Budget Beneficiaries (Official Gazette
         of RM, No. 28/03)
      - By-law of Account Planning for Budgets and Budget Beneficiaries (Official
         Gazette of RM, No. 79/03)
      - By-law of the Contents of Certain Accounts in the Accounting Plan for
         Budget and Budget Beneficiaries (Official Gazette of RM, No. 79/03, 74/05
         and 109/05)
      - By-law for Revenue Classifications (Official Gazette of RM, No. 100/01,
         45/03, 85/04, 42/05 and 68/05)
      - By-law for Expenditure Classification (Official Gazette of RM, No. 103/01,
         45/03, 85/04, 4/05 and 24/05)
      - Other legal regulations and general acts

Beneficiaries of special fund resources do not do calculation for unpaid salary and
other expenditures, and there is no calculation if they are not paid through giro-
account no later than 31 December.




                                                                                     30
          According to the regulations of the Health Care Law (Official Gazette of RM, No.
          38/91, 46/93 and 55/95 and the cleared text in 17/97), because of realisation of special
          social interest, HCI is managed by a Management Board, consisted of seven members,
          out of which 3 representatives of professionals from the PHCI and 4 representatives
          from the founder. In Article 135 of the same Law, among other tasks fulfilled by the
          HCI Management Board, is also included the determination of the annual financial
          report for the HCI.

          Below are stated projections of the performance results determined by the previously
          elaborated internal and external factors, as well as the strategic decisions for the
          period 2007-2009 based on historical data for the period 2004-2006:

                                                                                                 In thousands denars,
                                                                                                 000
                                  Structure     Realization     Plan     Projectio   Projectio   Projection Structure
                                                                         n               n
                                  2005        2004     2005     2006     2007        2008        2009          2009
REVENUES
721; 723; 724 Own revenues         21.76%      24939    33810    31900     33500       35200        36790      21.80%
741 HIF revenues                   78.24%     121380   121598   132000    132000      132000       132000      78.20%
Total Revenues                      100.00    146319   155408   163900    165500      167200       168790       100.00
                                        %                                                                           %
Revenue/patient                                   60       62       65         66          67             68
Patients                                        2432     2500     2500       2500        2500           2500

OPERATIONAL COSTS
Salaries and social insurance                  61633    65451    65726      65726      65726        65726
Salaries and compensations         31.20%      44278    47191    47476      47476      47476        47476      28.13%
Social insurance compensation      12.07%      17355    18260    18250      18250      18250        18250      10.81%

Medical Supplies                               28924    26123    35842      36182      36567        36904
Spent drugs                         4.06%       6778     6148     6316       6376       6439         6498       3.85%
Dentistry materials                               49
Implants                            6.01%      12742     9085    14100      14234      14374         14507      8.59%
Sanitary materials                  2.43%       2873     3668     2752       2778       2805          2830      1.68%
Laboratory materials                1.64%       2157     2473     3574       3608       3644          3678      2.18%
X-ray films                         1.06%       1112     1607     2000       2019       2067          2087      1.24%
Contrast resources                  0.43%        263      649     1100       1110       1121          1131      0.67%
Other hospital supplies for         1.65%       2950     2493     6000       6057       6117          6173      3.66%
patient treatment

Non-medical supplies                           50834    56401    59541      63512      64907        65760
420 Daily traveling allowance       0.09%        204      149      200        202        204          206       0.12%
421 Electrical power                2.25%       3333     3410     3639       3840       3840         3819       2.27%
421 Water and sewage                2.09%        521     3156     2000       1858       1920         2000       1.18%
421 Waste and other communal        0.32%        603      487      600        600        600          600       0.35%
taxes
4212 Heating oil                   12.21%      12502    18465    20120      20504      20899        21283      12.61%
4213 Communications                 1.04%       1454     1571     1427       1441       1455         1468       0.87%
4214 Transport                      0.42%        799      637      672        678        685          691       0.41%
4231 Administrative materials       0.47%       1133      708     1532       1546       1561         1575       0.93%
4233 Clothes, uniforms etc.                       67              2317       2339       2362         2384       1.41%
4234 Patient food                   3.93%       6626     5940    10481      10500      10684        10782       6.39%



                                                                                                        31
4237 Maintenance materials           0.19%     980      288       893        901       910            918     0.54%
4239 Other materials for special     0.93%    2605     1409      2160       2180      2201           2221     1.32%
use
424 Daily maintenance                2.78%    3518     4203     1700     4533       4578             4620     2.74%
425 Contracted services             10.13%   15640    15317    11300    11865      12457            13017     7.71%
426 Other daily expenditures         0.44%     849      661      500      525        551              576     0.34%
48 Capital expenditures              2.16%    2569     3266     2791


AMORTISATION                                 12028    12141    12190    12340      12370            12490
Objects 1,00%                                 2488     2572     2600     2690       2700             2790
Equipment (different % according to type)     9540     9569     9590     9650       9670             9700

TOTAL EXPENDITURES without         100.00%   143959   151243   163900   165500     167200      168790         100.00
amortization                                                                                                      %
Expenditure/patient                              59       61      65         66           67             68
Net income                                     2110     3601      /      /            /         /

               c) DEVELOPMENT AND INVESTMENT PLAN

          In order to provide constant standard level of health care in 2007-2009, the
          performance and investment activities of PHCI Special Hospital for Orthopaedics and
          Traumatology “St. Erazmo” Ohrid would be divided in a few segments according to
          the priorities of activities as a necessity in order to follow the sustainable standard
          level in the process of health care provision, which would depend on the direct
          relation of the changes in health care service prices with the implementation of
          development percentage, investment and following of world standards defined by
          WHO, such as:

          I PROCUREMENT OF NEW MEDICAL EQUIPMENT
    1.      RTG apparatus, universal digital, skeleton diagnostics with a     Comp.            6.800.000
            stand for spine panoramic                                                                            1
    2.      Mobile RTG - digital C-ARM with mem.20"                           Comp.            3.920.000         1
    3.      Ultrasound (echo) apparatus with three sondas                     Comp.            9.700.000         1
    4.      Electromyography, 4 channelled, computerized with printer         Comp.            2.480.000         1
    5.      Magneto therapy apparatus                                         Comp.              250.000         1
    6.      Interfered powers apparatus – intermed – vacuumed                 Comp.              350.000
    7.      Blood pressure apparatuses                                        No.                  6.000         5
    8.      Microchematocritus centrifuge                                     No.                200.000         1
    9.      Dry biochemistry photometer                                       No.              7.000.000         1
    10.     Sterilisation apparatus                                           No.              2.500.000         2
    11.     Water bath                                                        No.                 96.000         1
    12.     Criophugas                                                        No.                500.000         1
    13.     RTG mammoth                                                       No.              4.800.000         1
    14.     Test-tubes Centrifuge /Trust/                                     No.                185.000         1
    15.     Coagulation meter four/eight channelled                           No.                185.000         1
    16.     Cell saver                                                        No.                620.000         1
    17.     Dia-dynamic powers apparatus                                      No.                260.000         1
    18.     Scale with calibrator for taking blood                            No.                 30.000         1
    19.     Paraphin boiler                                                   No.                190.000         2



                                                                                                    32
20.    Physical therapy apparatus with ultrasound                     No.        280.000    1
21.    Combined laser with physical therapy                           No.        410.000    2
22.    Dead bodies fridge                                             No.        960.000    1
23.    Plaster saw                                                    No.         35.000    4
24.    Intensive care monitor                                         No.        620.000    7
25.    Laryngoscope                                                   No.         25.000    2
26.    Aspirator                                                      No.         10.000    7
27.    Hydraulic beds                                                 No.         31.000   20
28.    Cassettes                                                      No.          2.500   20
29.    Ambu /complete/                                                No.        200.000    3
30.    Infusion mate                                                  No.        185.000    1
31.    Therapy pram                                                   No.          6.000   10
32.    Gauzes barebones                                               No.          3.000   10
33.    Mobile reflector                                               No.         15.000    2
34.    RTG images development apparatus                               No.        930.000    1
35.    Ultrasonic                                                     Comp.    3.100.000    1
36.    Arthroscopy set                                                Comp.    3.000.000    1
37.    Operational microscope                                         Comp.    620.0000     1
II     Other equipment
1.     Office furniture /desks, tables, chairs, armchairs,            Comp.      60.000
2.     Laser central printer for IT system data                       No.       185.000    1
3.     Circulation of the existing IT system, hardware and software   Comp.     185.000    1
       /PC, monitor, printer, UPS, Flash memory/
4.     Copier                                                         No.        93.000     1
5.     Calculator                                                     No.         6.000     2
6.     Manual lathe                                                   No.        12.000     1
7.     Iron                                                           No.         1.000     3
8.     Hand dryer                                                     No.         6.000    20


    III Other Procurement
1.    Reconstruction and realization of other roof surfaces           Comp.    2.700.000
2.    Reconstruction and re-adaptation of the central heating                  5.000.000
      cauldrons from EL oil to liquid oil gas
3.    Construction-artisan works of ambulatory part and hot           Comp.    4.900.000
      relation
4.    Reconstruction of the other heating system, water supply        Comp.    2.500.000
      system, water drain system
5.    Reconstruction and modernisation of the existing elevators      Comp.    3.500.000
      and construction of new ones in the apartment block
6.    Reconstruction and change of windows, doors and other           Comp.     850.000
      carpentry and window shades
7.    Reconstruction and painting of the hospital rooms               Comp.      300.000
8.    Horticulture designing of the place                             Comp.      360.000
9.    Formation and building of operation block                       Comp.   15.000.000
10.   Realisation of anti-fire stairway in the new building and the   Comp.    1.700.000
      operation ambulatory block




                                                                                 33
Realisation of capital and on-going investments depends on the available resources
provided through formation of investment fund for renovation of the amortised
equipment in PHCIs on the level of MOH and supplied through donations, intended
resources from alcohol trade, tobacco products etc., development investment funds by
HIF for the necessities of maintaining the current standard level in provision of
specialist-consultative and hospital health care, as well as forming internal
development funds in PHCI Special Hospital for Orthopaedics and Traumatology “St.
Erazmo” Ohrid for the development component contained in the price of health care
services approved by HIF.

At the moment, as priority Project proposal, without avoiding the previous
disadvantages and threats, there is necessary procurement of RTG apparatus,
universal, digital for skeleton diagnostics with a stand for spine panoramic and is
incorporated in the Business Plan as Annex 1.


   5. Conclusion (possibilities and risks)

Realisation of this Business Plan for the period 2007-2009 is closely related to the
financial income by HIF, actually to how much it will pay for the invoiced realisation,
i.e. both from the realisation of the HIF contract in the revenue part and the revenue
from other uninsured patients, and also to the decrease of total expenditures, actually
the economic work of the PHCI, as well as the completion of the financial
construction through donations, legates etc. in the field of investment cycle.

HIF stability and defining of the health services payment for a longer period of time
and their market price and the stability of the Macedonian and regional political
system are crucial in the realisation of the set goals and development of PHCI Special
Hospital for Orthopaedics and Traumatology “St. Erazmo” Ohrid into a modern
health care institution for secondary and tertiary health care with international status.


                                                                                 Director
                                                                 D-r Vladimir Strezoski
                                                                    (illegible signature)




                                                                                      34

				
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