Analyzing Financial Indicators for Decision Making

Topics: Cash flow, Investment, Lease Pages: 3 (1040 words) Published: April 29, 2012
Simulation Review

HCS/405 HealthCare Financial Accounting

The simulation states, “Many hospitals in the United States are financially vulnerable because of the reduction in Medicaid cuts, funding cuts, and cuts in Medicare payments” (University of Phoenix, 2009). This simulation paper will show what some hospitals have to do to keep costs down. In addition, it will analyze financial indicators for decision making. This simulation will also show the financial accounting from a Cardiac Care Hospital’s Perspective. It will show how to bridge a working capital shortage, evaluate funding options for acquiring medical equipment, and evaluate funding options for capital expansion. Capital Shortage

The working capital shortfall is a major concern and has to be priority. The cost-cutting that was chosen is to downsize staff and reduce benefits. Downsizing staff will give a moderate savings of $ 5,030.604 per year and control rising costs. Additionally, hospital staff will be given a 60 day notice. Laid off staff will have assistance in searching for new jobs. Highly skilled nurses and technicians will be retained to ensure patient care is not affected. Job responsibilities and skill utilization of licensed practical nurses, registered nurses, and nursing aides will also change. Reduction in staff benefits will also help reduce costs. Even though reducing staff benefits may not have as much impact as downsizing staff. It is a temporary measure. It is like a belt tightening measure for three months. The savings for this option is $2, 697.661. The reduction will include health insurance, retirement, salary increase budgets, bonuses, and paid leave benefits (Simulation University of Phoenix, 2009). These two costs saving measures together give an annual savings of $7,728.285. It is understood that the quality of patient care will be adversely affected, but as it will be only for three months, relief is in sight. The savings realized by...
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