hsc 571 week 1
Financial Indicators Decision Making Simulation Form
Date: 9/11/2013
1. What cost cutting options were chosen? Explain why those were chosen.
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. 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.
2. Which cost cutting loan option was chosen? Explain why.
Loan option 1 - it will allow EHC to have adequate cash flow in the next three months, provide them the opportunity to pay the loan within 12 months or less without prepayment penalty.
3. Which strategies for equipment acquisition were chosen? Explain why.
High Speed CT Scanner – Refurbished Equipment Loan – Useful life of 10 years would probably need to upgrade in about 5 years; low interest rate for refurbished equipment.
X-Ray machine – Capital Lease – Useful life is 15 years; Option of buying the equipment at a bargain price later
Ultrasound System – Operating Lease – Useful
Date: 9/11/2013
1. What cost cutting options were chosen? Explain why those were chosen.
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. 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.
2. Which cost cutting loan option was chosen? Explain why.
Loan option 1 - it will allow EHC to have adequate cash flow in the next three months, provide them the opportunity to pay the loan within 12 months or less without prepayment penalty.
3. Which strategies for equipment acquisition were chosen? Explain why.
High Speed CT Scanner – Refurbished Equipment Loan – Useful life of 10 years would probably need to upgrade in about 5 years; low interest rate for refurbished equipment.
X-Ray machine – Capital Lease – Useful life is 15 years; Option of buying the equipment at a bargain price later
Ultrasound System – Operating Lease – Useful