Health Management: Business Case Study


The Australian Government faces foremost challenges in the healthcare’s delivery and funding. The Australian system of healthcare is highly rated at the global scale, as supported by the low death rate of the newborns and sustained raised avg. life anticipation. These developments are now threatened since the health scheme suffers from an aging population, the growing severe diseases’ burden, and the increasingly obsolete society of the health services (Armstrong, et al., 2007). In September 2015, the Australian population was 23,860,100. Between 1994 and 2013, Australia’s population increased by 30% (Maria, et al., 2017)

The average Australian can expect to live 73 years of a healthy life. Definite life expectancy is specific on a decade longer; nevertheless, this longevity is regularly accompanied by surging disability from severe diseases, morbidity, death and health care expenses. Much of the growth in healthcare expenses could be attributed to medical technology’s advances. Medical mistakes in Australia cost annually more than $1 billion (probably $2 billion).15 The Australian Healthcare’s Quality Study found that 1/2 of these mistakes was possibly avoidable. (Armstrong, et al., 2007)

The foremost aim for conducting this report was to investigate the using of the total knee replacement (TKR) practice and maximize the effectual healthcare management scheme for such technology. TKR is a surgical operation in which, an artificial prosthesis or joint substitutes the injured knee joint. The TKR’s key sign is a pain, subsequently functional restriction. Regularly, the individual’s daily activities should be considerably influenced by pain and functional restrictions to be considered as a TKR’s candidate. Generally, patients undergoing the surgery of TKR for osteoarthritis have considerable enhancements in terms of pain reduction and function improvement (Medical Advisory Secretariat, 2005)

In 2003, the TKR rate in Australia in 2003 was 123/100,000 population, whereas; this rate increased to be in 2013 213/100,000 population, with growth in the procedures’ number for the 40–69 and ≥ 70 age sets and entirely as revealed in figure_1. The largest absolute growth in TKR procedures was evident for people aged 40–69 years (rise of 14,014 procedures), while there was little alteration in the procedures’ number for aged individuals below 40 years (rise of 11 procedures). The TKR incidence is anticipated to be 65,569 procedures by 2030, or 248 TKRs per 100,000 population, at a projected $AUD1.38 billion cost to the healthcare scheme (Ackerman, et al., 2019).

Throughout the report, many aspects were discussed to give a comprehensive viewpoint for this technique. The opportunity being presented is a new, innovative, technology-based knee replacement technique and accompanying prosthesis. Both benefits and risks were discussed clearly in which, the furthermost common risks and complications correlated to knee replacement are deep vein thrombosis (DVT), motion loss, stiffness, infection, Instability, and osteolysis (softening and bone loss). THR procedures were found to be cost-effective in which, its cost in Australia is ranged between at $AUD19, 000 to $AUD30, 000 per patient, with over $AUD1.2 billion spent yearly in Australia on OA-correlated hospital admissions. (Ackerman, et al., 2019) The TKR procedure is safer since the TGA approved it and confirmed that it is the most reliable treatment for advanced osteoarthritis.


One of the utmost difficult tasks of healthcare managers is to balance the commitment to modernity and innovation on implementing new technology and procedures into the clinic setting and the need to carefully consider all factors before implementing new technology (Dixon-Woods, McNicol, & Martin, 2012). From the numerous issues facing healthcare managers; the continual modifications owing to the development of advanced technology. This is seen in device, prosthesis and pharmaceuticals products which can be expensive, disrupt current practices and lead to other flow on changes and costs (Ross, 2011). New technology needs to be introduced in a mode that guarantees its safety and effectiveness (Birken et al., 2015). Consistent with Broekhuizen et al. (2015), ideally, the new technology supporting evidence should be strong and conclusive. In the up-to-date healthcare surroundings, there is repetitive stress on managers of doctors needing to access the latest technology, from service sources to equip locations with their technology version, and from insurers concerned about the rising expenses correlated to this technology. Nonetheless, the new technology supporting evidence is regularly scattered, inconclusive, or funded by private stakeholders or lacks cost-effective analysis.

In this case, 5 out of 10 orthopedic surgeons at the private facility support a new knee replacement technique and prosthesis. The prosthesis was approved by the TGA (Australian Therapeutic Goods Administration). On the downside, the procedure has a further cost of $2,000/procedure that will be sustained by the hospital. Moreover, it is not fully covered by any of Australia’s major health insurers; in fact, the country spends only 9.4% of its GDP on health (Dixit & Sambasivan, 2018). The proof was not decisive regarding the technology profits though it was implemented for a decade. The cost of surgery has remained high because the government has failed to increase Medicare reimbursement to maintain the pace of inflation (Hillis, Watters, Malisano, Bailey, & Rankin, 2017). Furthermore, since only half of the orthopedic surgeons want to switch to this new procedure, the hospital cannot only replace the old procedure with the new one.

The Opportunity

The opportunity being presented is a new, innovative, technology-based knee replacement technique and accompanying prosthesis. The new procedure and prosthesis being offered are longer-lasting than the standard one currently in use, which means that patients will not have to have regular knee surgeries. According to Tateishi (2001), the application of prosthesis involves the use of bone cement to reduce inflammation common in rheumatoid arthritis. It will decline the surgeries figure that patients have to sustain during their lifetimes since arthroplasty uses prosthesis counting on the knee destruction’s magnitude and core illness (Tateishi, 2001). Another added benefit is that the surgical technique utilized for the knee-replacement is less invasive and requires smaller incisions than the current procedure offered. Therefore, patients will not have large or long scars, and they may benefit from a decreased infection and complication rate due to the smaller incisions (Semsarzadeh et al., 2015). The chance may also permit the hospital to announce that it is one of the leading hospitals in the district to offer this advanced technology to KR individuals, thus enhancing its reputation.

Benefits and Threats

The total knee replacement surgical introduction would offer numerous benefits to the facility and further health stakeholders in Australia. Initially, it would aid in the patients’ treatment with osteoarthritis having failed to reply positively from an invasive procedure (Health Quality Ontario, 2005). Currently, the facility treats osteoarthritis using arthroscopic surgery, analgesics, physiotherapy, and anti-inflammatory drugs; however, some of these strategies fail to reclaim normalcy on the patients’ knee. Therefore, knee replacement surgery would be a fast and efficient treatment for osteoarthritis. The procedure also lessens the entire knee replacement surgical figure that patients receive in a lifetime. The prosthesis replacement in TKR reduces the chances of regular surgeries (Da Silva, Santos, Júnior, & Matos, 2014). Besides, consistent with Azar (2018), the scholarly literature unequivocally specifies that less invasive surgeries have fewer threats correlated to them and, most significantly, they run a lower risk of infection and healing issues.

Other benefits are realized by both health practitioners and managers. Initially, the management would practice the raised patients’ figure owing to the offered new surgery. This new technology could be exceedingly attractive to an extensive patients’ range. Further still, the technology introduction would advertise the hospital as a forerunner in new technology implementation. This would likely receive media attention and be a promising advertising talking point to encourage people to choose the hospital for their healthcare needs. The management will not employ much publicity and advertisement. Total knee surgery is beneficial to health practitioners because it improves their skills and expertise. They also attain the chance to learn new stuff during training.

There are numerous key risks that should be considered either before implementing this technique or after performing the surgery. Most considerably, there is not an agreement among the orthopedic surgeon community regarding whether this new procedure and prosthesis are safe and efficient or not. The shortage of agreement is inconvenient and suggests that there may be considerable threats correlated to the employed technology. A second risk is that not all the surgeons in the hospital are willing to switch to the new procedure; in fact, only half are. This signifies that the existing procedure and the new one would need to be offered together instead of the substitution of the current procedure with the advanced one. This will lead to additional costs and logistical issues. Plus, patients might be leery of having a procedure done if half of the staff refuses to perform it. The third threat involves insurance and expenses. Presently, the key insurance firms do not cover this procedure, and this rule might not be altered since the insurance policies will not change instantaneously (Dixit & Sambasivan 2018). If insurers do not cover the procedure, then; there will be little individuals who either have non-major insurance offered, who will cover the procedure or are willing to pay for themselves instead of insurance coverage. Therefore, it is quite likely that the hospital will invest money and other resources into offering this new procedure and not have patients use it. Finally, if, eventually, the consensus among orthopedic surgeons is that the procedure is risky or problematic, the hospital could obtain a negative reputation for supporting inappropriate procedure.

Patients’ Threats

  • Total Knee replacement’s threats and complications are comparable to those correlated to the entire joint replacements. The utmost severe complication is the joint’s infection, which happens in <1% of patients. The infection’s risk factors are linked to the patient and surgical factors. Deep vein thrombosis (DVT), which is the utmost shared complication of the KR surgery, arises in 15% of patients and is characteristic in 2–3%. Nerve injuries arise in 1–2%. Stiffness or persistent pain happens in 8–23%. Prosthesis failure arises in 2% of patients at a 5-year period. Finally, the complications’ risk could be raised for the obese patients.
  • Polyethylene podium’s chipping/fracturing amid the 2 constituents (femoral and tibial) might be an alarm. These residues could be held in the knee forming an acute pain.
  • Periprosthetic fractures are shared in elderly individuals and could arise postoperatively or intraoperatively (Medical Advisory Secretariat, 2005).
  • Motion Loss, in specific sometimes, the knee may not regain its normal motion scale (0–135º) after performing the TKR surgery. Plentiful of this is reliant on the pre-operative function. Utmost patients could attain 0–110 º, nonetheless, joint’s stiffness could occur. In specific circumstances, the knee manipulation is employed under anesthetic to lessen the post-operative stiffness.
  • Plentiful implants surgeries are also present from the designed firms to employ the high-flex knees, supplying a higher mobility scale.
  • UnsteadinessThe kneecap of definite patients could be dislocated to the knee’s exterior side after the implant. This is hurting and regularly requests to be cured by surgery for kneecap realignment. Nonetheless, this is fairly infrequent. Formerly, there was a noteworthy threat of the implant constituents loosening over time owing to wear. With medical technology’s enhancement, this threat was inclined significantly.
  • InfectionThe recent AAOS classification divided the prosthetic contagions into 4 kinds; positive intraoperative culture, initial postoperative, severe hematogenous, and late acute infections.
  • Though it is comparatively infrequent, periprosthetic contagion rests one of the utmost difficult joint arthroplasty’s complications.
  • Broad clinical and physical records continue to be the paramount trustworthy gadget for differentiating the potential infections. In definite cases, characteristic symptoms of hurting joints, fever and nasal sinuses could be happened, and investigative inspections are executed to approve the contagion. Actually, furthermost patients do not exhibit the clinical indications; the clinical demonstration might interfere with further complications like pain and aseptic loosening. In those cases, diagnostic examinations could be valuable in excluding or confirming infection (Medical Advisory Secretariat, 2005).

The threats mentioned here should be mitigated by applying the risk management operation. The operations’ context was established and the threats identified. The succeeding stages would encompass analysis and assessment by the consequences’ linking and the occurring probable threat. The risks are then dealt with and monitored. The procedure’s safety is one of the threats that require closer attention. The patients undergoing surgery may suffer from the injury of the nerve, artery or ligament, allergy, and an implant failure like aseptic loosening (Kutzner et al., 2018). Specific of the mitigation strategies comprise training of specialists and the use of accomplished surgery equipment. The staff unwillingness would be altered through rewards like pay increments. The higher expenses could be declined through engaging with the local government on the facility supporting to aid the locals. Ultimately, the reputation threat is declined by employing familiar specialists with technological operations.

  • Losing weight is recommended for obese individuals before executing thesurgery.
  • For the polyethylene platform’s Fracturing, advancements in implant design have significantly reduced these problems nonetheless; the probable for concern is still present over the knee replacement’s lifespan.
  • The DVT avoidance could encompass lower leg aerobics and intervallic legs elevation of the patient to raise circulation, upkeep remedy, and stockings for blood thinning.
  • For fractures, reliant on the prosthesis’s steadiness and the fracture’s position, these could be surgically cured with interior fixation and open lessening or the prosthesis’s revision (Medical Advisory Secretariat, 2005).


The upfront money needed to begin offering the new procedure to patients at the hospital is substantial. First, payment is required to purchase the equipment, which includes both the prostheses and the surgical equipment necessary to put the prosthetics into the patient. Consistent with Reiter and Song (2018), it is not unreasonable to suppose these expenses will be in several $ million, at min. A further cost that should be considered is the staff training expenses on executing this new procedure. Everyone, to include the surgeons, nursing staff, operating room technicians, billing department employees, and many other workers, will need to have some level of training on the new procedure and what it entails. Of course, the most extensive training will be for the surgeons to learn how to conduct the operation safely. A reasonable assessment would be $100,000 for every one of the surgeons in the training expenses, whereas’ for the rest of the workforce, these expenses would nearby $150,000 in total (Reiter & Song, 2018).

Numerous options are existing for attaining the needed funds to pay for these costs. First, the company that sells the prosthesis equipment and related procedural technology might be willing to train surgeons for free. They may have a program in place that provides free training to surgeons so that they can sell to the hospitals the equipment, technology, and further products necessary to execute the surgery (Reiter & Song, 2018). The second option would be for the hospital to pay with the currently available funds or with a loan for the entire expenses with the hope that they would rapidly set the variance with an increased patients’ figure employing the hospital for their knee replacement requirements. However, this payment proposal should be met with caution since insurers are not, currently, covering this procedure, and few people are willing and able with their funds for KR surgery.

TKR Cost-effectiveness
The costs encompassed surgery, offset expenses, complications, unrelated healthcare expenses experienced in prolonged life-years after getting joint replacements, and patient out-of-pocket expenses (comprising time for waiting, travel, pre-surgery appointments, recuperation, and operation). The expenses were taken in the year 2003 and the upcoming expenses were discounted at a yearly scale of 3%. All expenses were stated in Australian dollars (AUD). It was reported that the TKR is effectual, but cost-intensive healthcare procedure for the aging individuals. Besides, taking into account demographic alterations in Australia, the financial investment correlated to TKR for healthcare insurers will rise remarkably and thus, stimulate discussions on the allocation of resources for the orthopedic surgery.

The averted avg. DALYs were 1.1 per individual with a knee replacement. The avg. cost per patient (without time expenses) for a knee replacement was $AUD 11,000 encompassing offset expenses and $AUD 21,000 without offset expenses. The further cost-utility ratio (comprising unrelated healthcare expenses, offset expenses, and time expenses) was $AUD 17,000 per DALY avoided for KR. The potential sensitivity analysis exhibited that the knee replacement is cost-effective at a threshold of $AUD 50,000/DALY avoided in the entire simulations. TKA was verified to be cost-effective from the perspectives of the healthcare insurers, even though its marginal expenses remarkably rose with increasing age. (pone)

Clinical Factors

Numerous clinical factors encompassing safety, efficacy, and suitability needed to be considered. The procedure is safer since the TGA approved it. Consistent with Felson (2017), total joint arthroplasty is the utmost reliable cure for the advanced osteoarthritis. Numerous surgeons and further medical practitioners agree that the total knee replacement surgery is efficient in the patients’ curing who are not responding to the osteoarthritis’ non-surgical treatment (Felson, 2017). This surgery type is appropriate when the patients are suffering from acute pains, nonetheless; it should not be recommended based on joint destruction or radioactive severity. Previous cases were studied in which, the knee replacement surgery was efficaciously employed in reducing fibromyalgia (Pechon & Mears, 2014). Nonetheless, prostheses failure rates are higher among obese patients, and the effects of the surgery on young patients are still not clear because such children are physically active (Felson, 2017).

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