HCS/405 Health Care Financial Accounting
University of Phoenix- AXIA
Instructor Sherida Douglass
November 19, 2012
Simulation Review Essay
The Elijah Heart Center is facing the financial distress common in specialized health care organizations. This is the combination of the need for improved technology, a reduced income, and the demand for expansion. Without the needed technology and expansion, there is little that the hospital can do to improve the income. The financial situation requires a combination of strategies to reduce costs and to make the wisest choices regarding acquiring needed technologies and expansion. One of the main goals in this situation is to save $900,000 for the first year and to help improve the cash flow problem The Elijah Health Center is experiencing. The hospital can select two cost cutting options in an effort to obtain this goal. The five cost cutting options to choose from are downsizing staff, reducing benefits, reducing agency staff, reducing length-of-stay, and changing the skill mix. The two options best suited to alleviate the financial pressures on The Elijah Heart Center and obtain their goal are to reduce agency staff and changing the skill mix. Reducing agency staff can eliminate contracted staff salaries, which are two times more than the salaries of the other staff. In addition to eliminating the most costly positions, some of these positions are not going to be needed as is improving the workflow for the hospital. Eliminating contract positions is an approach that can significantly reduce expenses without affecting patient care or reducing revenue. Then, by changing the skill mix unlicensed assistive personnel can perform basic tasks and licensed staff can focus on that tasks that directly affect patient care. In addition to selecting cost cutting options, a loan option needed to be selected that is suitable for maintaining a proper/decent cash flow. The hospital is...