February 21, 2011
Analyzing Financial Indicators for Decision Making Paper
Why are most hospitals in the United States economically susceptible? During the recession the health care industry was often faced with many obstacles. Government funding has been cut; people are not able to afford health insurance and just an all around downturn in the economy. The analysis of financial stability is directly involved with good decision making and planning. Hospitals have the challenge of making adjustments according to the economy, patient need, and quality of care. The analysis simulation showed some points on how to direct financials so that the Elijah Heart Center can make good use of funds to the best of the organizations ability. Capital Shortage for Elijah Heart Center
The cost cutting option selected was changing skill mix and reducing agency staff. The reason I choose changing skill mix is because, this method will help with the economic problems that is facing the hospital. Hiring unlicensed individuals will cut overhead cost “this option will allow nurses to delegate simple tasks in order to concentrate on more complicated tasks” (University of Phoenix, 2011, pp. 1-12). This aspect will help to navigate, and clear up loose ends. The skill mix will allow other personnel to cross-train and learn skills to assist with issues that may arise. The other cost cutting option I selected was reducing agency staff. My logic for this was because the organization would be adding more personnel there would be a need to reduce at some place. The agencies usually charges a fee for recruiting health professionals, if the company stopped using the agency, the company can save money and utilized the funds for other objectives. Agency staffing is a great tool to use by managers; managers usually use agencies to save time. Managers are busy and often times do not have time to recruit and interview perspective employees, so they hire agencies to do this. In some aspect the agency is good because of time management; however, it cost money and this is an aspect that I felt the organization can do without. The loan option chosen was option one. The reason I elected that one was because of the amount of interest saved and paid out versus option two. Option one had an interest rate of 9.45% with a total interest paid of 56,589 and an interest saved of 21,297. Though option two had a lower interest rate, the amount of interest saved was a little less than option one. My basic motivation for choosing option one was interest. If the interest rates are lower this can help the hospital to save money in that aspect, even though the savings are not that much, it adds up resulting in a better money management. My decision was the same as the optimal goal. Both the cost cutting measures and the loan option was the same. Funding Options for Equipment Requisition
The equipment option that I selected was operating lease for high speed CT scanner, x-ray machine, and ultrasound system. The focus of my choices was the liability cost. The options stated showed that the organization would have higher liability cost than operating lease. The operation lease has a 100% upgrade option. This can be important when purchasing equipment. Medical equipment is always changing, manufactures are always finding ways to make a product better, and sometimes there is equipment recall that would require an organization to change the machine anyway so my thoughts are it would be cost-effective for the organization to have the ability to upgrade without cost. What I did not factor was the annual maintenance. Annual maintenance is crucial to an organization such as a hospital. If an important machine was to stop working while in use this could cost the hospital unnecessary funds. Furthermore the government may have some sort of regulation that requires a hospital to have...