Capital Justification Essay

Words: 928
Pages: 4

Capital Purchase Justification
According to the hospital’s five-year plan, an investment in capital equipment should boost the quality of services offered at the hospital. Many options of capital investments that hospital could invest in exist. However, this report recommends an investment in the MRI (Magnetic Resonance Imaging) equipment. This equipment involves a large capital investment upfront, but it can be profitable in the end. The hospital has considered factors such as the cost of this equipment, the facilities needed, and the return on investment of the equipment. The above factors are among some of the factors that are considered when buying large capital equipment for an organization such as a hospital (Keefer,
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The demand for imaging is also growing with an increase in the recorded cases of cancer. This makes the purchase of the machine prudent because of the need for imaging that is increasing. Increased scanning speed
The MRI machine increases the speed of performing scans with its new technology features. The machine has the capacity to display results immediately after the scan and even during the scan. This is unlike some other technologies, for example, x-rays, which allow for processing time. The MRI machine has a real time locator, which allows fast reconstruction of data, and enables a real-time display of results. The faster speeds of scans also mean that more patients can be served utilizing the machine maximally (Tofts, 2005).
The initial investment in the MRI machine is significantly high because the cost of purchasing and installing the equipment totals to about $2.3 million. There are also some additional costs, which are incurred during the daily operation of the machine. With such enormous costs involved in the operation of the machine, there are other factors, which justify the purchase of this equipment, mentioned in the report. The charges on MRI imaging are quite high and are enough for the hospital to recoup its investment on the equipment. The other factors such as increased speed of performing scans, higher imaging quality and a variety of clinical