HCS 405 Simulation Review Paper
Simulation Review
Alfredo A. Garcia Jr.
HCS/405 Health Care Financial Accounting
June 16, 2014
John Pi
A simulation review that was intended to show how a hospital may determine its revenue along with expenditures based on the information provided by the Elijah Heart Center (EHC) was utilized to make an overall decision with careful analysis of the system and employees of EHC. The following will show the information obtained from the simulation.
The simulation allowed two types of cost cutting options to play with. The first option was to minimize the amount of the agencies staff within the facility. The reason this option was chosen is because contract laborers require more money for hire. Normally the higher pay is offered …show more content…
This was chosen because the piece of equipment has such a very short amount of useful life years, and is rather expensive. While the technology level is very high, the technology for this certain piece of equipment is projected to change every few years, and there is only a few years of useful life remaining on the operating lease. The organization needs to be careful of investing large amounts of money on equipment that is going to need to be replaced often. Also, with a lease/rental on this “short-lived” piece of equipment, the organization is more apt to replace it on time, ensuring it always remains within new technology …show more content…
While this could be a legit purchase at a bargain price due to the amount of useful life years, this was not the best option for the organization. The X-Ray equipment should have been purchased under a capital lease. Taking this route, the X-Ray equipment holds a high present value or payments compared to the other purchase options.
The Ultrasound System equipment was purchased using an operating lease, and that was the best option for the organization. The lower upfront payment and lower monthly installments of an operating lease will benefit the organization. The upgrade option under the operating lease is also beneficial to the organization due to the high level changes in technology. Furthermore, while the organization may pay more over a period of time for an operating lease, they will always keep up-to-date with advancements in technology which is most important for quality patient care.
The funding option for capital expansion was private bank funding. While this option was not the best, and should have been HUD 242 Loan Insurance Program, there were fewer years of loan maturity. The interest on this option is higher than the other, but the maturity date was less. Furthermore, there is a flexible refinancing and prepayment option with no set period for using
Alfredo A. Garcia Jr.
HCS/405 Health Care Financial Accounting
June 16, 2014
John Pi
A simulation review that was intended to show how a hospital may determine its revenue along with expenditures based on the information provided by the Elijah Heart Center (EHC) was utilized to make an overall decision with careful analysis of the system and employees of EHC. The following will show the information obtained from the simulation.
The simulation allowed two types of cost cutting options to play with. The first option was to minimize the amount of the agencies staff within the facility. The reason this option was chosen is because contract laborers require more money for hire. Normally the higher pay is offered …show more content…
This was chosen because the piece of equipment has such a very short amount of useful life years, and is rather expensive. While the technology level is very high, the technology for this certain piece of equipment is projected to change every few years, and there is only a few years of useful life remaining on the operating lease. The organization needs to be careful of investing large amounts of money on equipment that is going to need to be replaced often. Also, with a lease/rental on this “short-lived” piece of equipment, the organization is more apt to replace it on time, ensuring it always remains within new technology …show more content…
While this could be a legit purchase at a bargain price due to the amount of useful life years, this was not the best option for the organization. The X-Ray equipment should have been purchased under a capital lease. Taking this route, the X-Ray equipment holds a high present value or payments compared to the other purchase options.
The Ultrasound System equipment was purchased using an operating lease, and that was the best option for the organization. The lower upfront payment and lower monthly installments of an operating lease will benefit the organization. The upgrade option under the operating lease is also beneficial to the organization due to the high level changes in technology. Furthermore, while the organization may pay more over a period of time for an operating lease, they will always keep up-to-date with advancements in technology which is most important for quality patient care.
The funding option for capital expansion was private bank funding. While this option was not the best, and should have been HUD 242 Loan Insurance Program, there were fewer years of loan maturity. The interest on this option is higher than the other, but the maturity date was less. Furthermore, there is a flexible refinancing and prepayment option with no set period for using