University of Phoenix/HCS 405
Elijah Heart Center
The finance department has reported that Elijah Health Center is facing a potential working capital shortfall which means the hospital may not have enough cash to sustain itself. The reasons for this shortfall is due to huge discounts given to managed care companies, higher wages given to contract nurses, low Medicare reimbursement levels, growth in current liabilities, and unused equipment. I will provide the best strategy in order to sustain the cash flow problem that Elijah Heart Center is facing. My strategy will consist of three phases. These phases include: capital shortage, funding options for equipment acquisition and funding options for capital expansion. During these three phases I will observe the necessary financial statements and documents. From this information I will analyze the information and decide the best strategy for improvements. I will not only focus on the goals for the clinic, but long term budget goals as well.
Phase I: Capital Shortage
The current working capital shortfall at Elijah Heart Clinic is an issue that has to be solved immediately. In order to improve the cash flow problem, I will implement two cost cutting measures and choose a loan option that will be suitable for the clinic. Even though budget is an important factor, patient care is as well. By making the necessary cuts, I will keep in mind that the quality of patient care will not be affected by the changes.
There were two options that I chose to cut costs. The two options that I chose was to reduce agency staff and changing the skill mix. I chose to reduce agency staff because “Reducing proportion of contract labor used to fill vacancies among patient care workers would reduce costs, staffing nursing units and other patient care areas. The salaries of agency contracted people are twice that of the other hospital staff. Reducing these personnel will tremendously
References: University of Phoenix. (2011). Health Care Financial Accounting Simulation. Retrieved March 1, 2011, from University of Phoenix, rEsource, Simulation, HCS405-Analyzing Financial Indicators for Decision Making. University of Phoenix. (2011). Week four simulation review. Retrieved March 1, 2011, from University of Phoenix, Week Four, rEsource, Chapter 9,13,and 14. HCS405-Health Care Finance.