De’Anna Andrew
HCS/405
March 25, 2015
James Taylor
Simulation Review
Large health care organizations, particularly non-for-profit hospitals, come face to face with swelling difficulties handling cash flow every day. These struggles can be due to variations in economic climate and billing. Research tells us that the cash flow, hospitals would normally use for capital expenses, are frequently being used to pay for operating costs (Ziegler, 2008). Functioning as such, causes risky financial circumstances moving foward. With reduced funds accessible for capital expenditures, the need for a health care organization to thrive and keep up with the latest technology can become challenging. After reviewing the simulation for …show more content…
The facility needs to purchase three machines. The machines needed are: an x-ray machine, high-speed CT scanner, and an ultrasound system. There are a few different options when purchasing medical equipment and in this case they are buying new, refurbished, or obtaining an operation or capital lease. The best strategy for obtaining a high-speed CT scanner would be to purchase a refurbished machine. The useful life of this equipment is 10 years. Although the hospital may need to upgrade the technology for the scanner in five years, buying a refurbished scanner is the best option. The hospital can upgrade the equipment again at a later time extending the useful life of this device. This will be recording as an asset but at a lesser value. The loan is also low at a 9% rate. The best option for obtaining an x-ray machine would be to choose a capital lease. The payment values are a higher percentage than if the facility were to choose an operating lease or purchase a refurbished machine. This x-ray machine is expected a useful life of 15 years. Even though the present value is lower, the facility will receive more use out of this equipment. The best option for obtaining an ultrasound machine would be an operating lease. This technology is expensive and will only have a useful life for about five years. The upgrade payment is lower as well as the monthly installment rate. Once the machine is obsolete, the hospital can upgrade the device with this plan. The facility will be paying more but in the grand scheme it will be cheaper with the upgrading options. When choosing the best options for purchasing equipment, it results in lower costs and more profits when thinking future tense. This is true even if the costs were higher at this time. Having the latest technology brings in more profit, saves money in the long run, and provides the best care to