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Shaukat Khanum Memorial Cancer Hospital & Research Centre (SKMCH & RC) was founded by the famous cricketer Imran Khan, in memory of his mother who died of cancer. The hospital would provide cancer treatment to all patients irrespective of their ability to pay. Its operations were started on December 29, 1994. However, with Imran’s entry into politics and subsequent negative publicity, funds for the hospital through zakat and donations dwindled. In addition, increasing cost of cancer treatment along with updating of equipment and other hospital facilities demanded a sharp increase in operating revenues. Farooq Ahmed, the new Chief Financial Officer at SKMCH & RC decided to increase the revenues of the testing labs in order to cross subsidize the treatment of poor cancer patients. His initial study had shown that testing labs had excess capacity. As a test case he wanted to know the exact costs of the Complete Blood Count (CBC) test that constituted 99 percent of the tests done in the hematology section of the lab. However, once he began his analysis he realized that an accurate estimate of true costs would also help him re-evaluate earlier management’s decisions of the percentage commission given to franchised collection centers and acquiring testing equipment on Reagent Rental Basis. |
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