Essay on Major Forces Affecting the Delivery of Healthcare

5 pages
1246 words
Boston College
Type of paper: 
Research proposal
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US health Care is arguably one of the best in the world. However, just like any other healthcare industry throughout the world, it experiences influence from various forces that impact their operations, their expansion, their services, as well as their productions. As discussed in the previous essay, Abbot Laboratories is affected by forces such as; a cost of healthcare, technology, and product innovations. However, the two major forces that affect healthcare in large scale is a cost of healthcare and technology (ABT, 2017). In the previous year alone, US healthcare budget took a whopping $3 trillion, an amount which is close to 30% of the US government budget. According to US healthcare department, the impact of the two forces saw the major player in the industry loss or gain depending on how they responded to the forces. For instance, Abbot Laboratories had the efficiency of their operations impacted negatively thus translating to the reduction in sales in some regions.

Technology is a key force that impacts on the healthcare, the current changes in technology have been identified as the major cause of a drop in the revenues because of the affect operational efficiencies. With revenue of $20 billion in a year, Abbot Laboratory is bound to get affected by technology to the tune of $3billion annually which can either be added or reduced depending on how the company will respond. Based on the company's financial reports of 2015 and 2016, balance sheet and statement of income, the Company stands to gain a lot if it considers investing in technology upgrade (ABT, 2017). On the same note, the company stands to benefit if it can work on the costs that the company is incurring. If the company can lower its supply chain costs by 20-30%, it stands to increase its net profit by the same margin, 20-30%. The results will be realized both in the short run and long run.

Financial and Budgetary Considerations

For the company to be strategically situated in the market and perhaps be able to grow and generate more revenues, it has to respond to the two key forces appropriately, and it can do so through capital investment. Based on the financial statements of the company, 2015 and 2016s reports, statement of financial position, statement of cash flow, and statement of owner's equity will help the company in making the informed decision with regards to responding to the two forces (Persily, 2014). The statement of financial position, informs about assets and liabilities that the company is currently dealing with. The current ratio, current assets divided by current liabilities, which currently stands at 1.6%, informs the company whether it is healthy to acquire more investment capital while or not. In this case, Abbot Laboratories will have to acquire new healthcare technology that will enable it to be up to speed with the competitors. Technology is a key force which will either make a firm successful, and it can also render it obsolete as well. An analysis of the statement of income, where revenues and expenses are key considerations, ratios such as debt to equity ratio, which currently stands at 0.9%, will inform the company whether it can cut its supply chain costs to increase the profit margin. As per the analysis of the company's financial information, the company can cut its supply chain cost by investing on Just In time model where it will not incur warehousing, insurance, and storage costs instead it will focus on core activities. On the same note, the company needs to invest on flex budget because it will enable it to deal with any emergency as it happens rather than waiting for the end of a financial year before deciding on key emerging issues such as technology and costs.

C. Opportunities:

Being in a very competitive market, Abbot Laboratory is faced with challenges of technology and cost of healthcare while in the same measure it has opportunities which it can take advantage of. The company can invest in the latest technology in the healthcare industry to the tune of $150 billion; the latest technology will enable the company to develop its products with accuracy and precision that is needed in the healthcare industry, it will also enable the firm to gain a competitive advantage. In as far as the technology is concerned; it will improve efficiency in operations by 50% thus enabling the company to increase its production capacity while maintaining the quality of its products as well (Jarousse, 2014). Since the operational capacity will improve by 50% from the current standards, it will translate to 40% reduction in the cost of operations while the sales will go up by around 35% because the new technology will increase the units produced at every given period. Additionally, the company has an opportunity to reduce various costs by investing in just in time technique, a technique that will enable the firm to have a near zero inventory at any given time, thus making the firm profitable both currently and in the future (Garrison, 2015). The opportunities relate to the big picture of the healthcare industry in that it will enable the firm to be competitive in the market and perhaps continue to stamping its foot as the leader in the industry.

D. Proposal

Based on the analysis of the various sections of the essay, it is incumbent upon the firm to invest in production technology to ensure that it continued growth in the market is guaranteed. Based on the debt to equity ratio, which currently stands at 0.7%, the company can acquire more investment technology without feeling the threat posed by investors since assets are higher than liabilities by a secure margin, 25% (Mosadeghrad, 2014). On the same note, the current ratio stands at 0.9% which means the company can acquire new liabilities without having to feel the threat of liquidation. The company should also lower its supply chain costs by lowering the cost of operations, which will be addressed by new technology, as well as the cost of labor which is also significantly high having in mind that the companys core activities are not service based rather product based (ABT, 2017). In the short term, the company will experience a dip in revenues profit because of the investment that has to be made, however, in the long run, the company will reap benefits of technology because the profits will rise by 30-40%. The proposal will help in informing the strategic plan in that it will influence the next budget that will be put in place for the next financial year. Because the company will also address the cost of labor through the introduction of technology, HRs strategy of hiring will also be affected in that it will have to contend with the hiring, development and training of few employees.


Mosadeghrad, A. L. (2014). Factors influencing healthcare service quality. International Journal of Healthcare and Mangement, 3(2), 77-89. Retrieved from

ABT Income Statement | Abbott Laboratories Stock - Yahoo Finance.(2017). Retrieved 22nd October 2017, from, R., Noreen, E., & Brewer, P. Managerial accounting.(2015). Capital budgeting techniques. Chichester: John Wiley & Sons.

Jarousse, L. A. (2014, September 8). Take A Look At How Market Forces Will Impact Health Care | H&HN. Retrieved from

Mosadeghrad, A. L. (2014). Factors influencing healthcare service quality. International Journal of Healthcare and Mangement, 3(2), 77-89. Retrieved from

Persily, C. A. (2014). Team leadership and partnering in nursing and health care. New York, NY: Springer Pub. Co.

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