Simulation Review Paper |
HCS/405 Health Care Financial Accounting
My strategy will consist of three phases. These phases include: capital shortage, funding options for equipment acquisition and funding options for capital expansion. During these three phases I will observe the necessary financial statements and documents. From this information I will analyze the information and decide the best strategy for improvements. I will not only focus on the goals for the clinic, but long term budget goals as well.
Phase I: Capital Shortage
There were two options that I chose to cut costs. The two options that I chose was to reduce agency staff and changing the skill mix. I chose to reduce …show more content…
The focus is to make sure that the changes will continue to provide patients quality care. To choose the best option, I had to analyze the cost of funding, the net present value, collateral requirements, prepayment limitations, and deadline for using the fund. (University of Phoenix, 2011).
The best funding option I decided to choose for Elijah Heart Clinic was HUD 242 Loan Insurance Program. With this option the Net Present Value of the project is $221 million. This program “enables hospitals to have their debt financed as an investment grade which provides the lowest borrowing rates available in the capital markets. Without the guarantee, hospital debt is often treated as junk grade with associated high financing costs. Another advantage with these bonds is that they are callable after eight years. If interest rates were to go down, it would be profitable for Elijah Heart Clinic to buy back the bonds and reissue the debt at a lower cost. Since the bonds are callable after eight years, Elijah Heart Center will be able to profit from a fall in interest rates, if it were to occur in the first eight years. Also there is no deadline for using the funds Unlike Tax-Exempt Revenue Bonds and they do not have any foreclosure fees as in Private Bank Funding” (University of Phoenix, 2011).
In the summary that was provided, it noted that I did improve the cash flow situation at EHC, by managing the working capital situation. I introduced cost-cutting