Thursday, April 28, 2005

Developing a Matrix-Structured Quality Financial System for a Public Health Laboratory

Tanya Koga and Kit Johnson.

With growing financial pressures on the Canadian healthcare system, Quality Financial Management (QFM) became increasingly important for ProvLab's multi-site laboratory operations to optimize resources, integrate management information, and align with customer requirements.

Develop a comprehensive QFM system (QFMS) with a matrix structure to improve functional operations, program development, and executive management. Steps within each department included environmental scan (SWOT analysis), recognition of recent goals and changes, identification of future internal and external initiatives that support the organizational goals.

The implementation plan for a QFMS follows the strategy-structure-performance model. Participants include Executive, Administrative and Support Managers, Front-Line Managers, Information Systems, and Finance. Our approach was to evaluate and modify the existing financial structure to support the goals of QFM. To this end, we developed simple, functional cost-centres that were manageable by front-line managers. Complex, multi-department program management created the need for critical analysis, rationalization volume analysis and standardized, detailed costing. By applying the volumes and costing for the programs across the cost centres, an analysis of program costs became evident and calculation of overhead rates simplified. By creating a matrix financial structure, management and performance became easier for functional operations and possible for complex programs. Implemented variance and forecast analysis was completed by each frontline manager or program executive and consolidated for Senior executive.

Four year's ago, ProvLab had no financial system or financial accountability process. The results of QFM include:
·A sustainable and realistic system which supports functional, program and organizational accountability and QFM;
·Detailed pricing, productivity analysis, strategic planning and impact analysis for multi-departmental changes;
·Increased productivity which reduced/contained; organizational costs
·Variance and forecast analysis which allows functional areas, programs and executive to anticipate financial directions and respond accordingly.

Implementation of QFM increased ProvLab's organizational financial management and accountability. It provided the necessary information to make decisions and guide the organization to success.

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