September 8, 2012
Analyzing Financial Difficulties
Within the stimulation review of this particular healthcare facility, many difficulties are taking place. The stimulation review asks that capital shortage, funding options for acquiring medical equipment, and evaluating options for capital expansion to be reviewed and based upon the options provided; seek out the best choice for the facility. In reviewing all of the options provided, the team will then decide if the choices made are good cash flows for the facility itself. The choices that must be chosen have to provide improvement within the cash flow as a whole and increase revenue in the near future. After evaluating and deciding what options were best for this facility, the performance was reviewed by highly trained professionals and decided if the options picked affected the hospital more. In the following paragraphs, it will explain why certain options were not the best and which options should have been picked.
Capital shortage is the amount of money that needs to be saved and reduced within the facility. The options that was chosen was to reduce agency staffing and then to reduce the length of stay. The loan amount that was selected $1,678,400.00 with an interest rate of 9.00%. This was the lowest interest rate out of the options provide and the facility needed to save as much money as they could. The entire monthly installment was $146,779.00 which took 12 months. In providing this loan amount, it increased the prepayment limitation of 6 months. The outcome of these cost cutting options highly affected the shortage. Reducing the agency staffing was a good choice for the facility because it reduced costs drastically without dipping into the revenue budget. It saved the amount of money on premiums for paid staffing as well as management fees. Reducing the length of stay didn’t change the revenue or expenses. In the amount of time stayed at the facility, ECH brings in money the first two days from patient care. What option that should have been taken into action was to change the skill mix. This meant that if the facility could either combine skills of physician as and nurses then it would save money on certain departments that could be taken out of the facility. Option 2 of the loan repayment was a terrible choice because of the loan prepayment amount. Option 1, would have been the best choice because it had no limitation to prepayment.
There was a need for three different types of equipment for EHC facility which included high speed CT scanner, x-ray machine and ultrasound system. The first machine which was the high speed CT scanner, the option chosen for this particular machine was operating lease as well as for the x-ray machine. Both equipment leases were based upon a lease that allowed you to lease the equipment while using it. It also had the lowest rate on this particular lease. The ultrasound system was to have a capital lease. This choice was based on a lease that involved takes place from standpoint. This means that from the time the owner or leaser will lease the equipment it is considered to be an asset on the balance sheet. After being reviewed by the performance team, it was considered bad choices for the hospital. The following equipment should have had leases that all operate as assets on the budget. The high speed CT scanner should have had a lease of refurbished equipment loan while the x-ray machine should have had a capital loan which is what brings in the most capital for this particular facility. The ultrasound should have had an operating lease, which is considered to be a short term lease. All of these leases greatly help to increase revenue and increase quality patient care.
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