Service Line Management

Topics: Real estate, Renting, Need Pages: 3 (905 words) Published: August 25, 2013
Service Line Management Task 1
In order for a company to continue to grow and expand, it must have a need for additional services and customer satisfaction. To focus on patient care, one must engage in property development. There are multiple ways this can be accomplished. To begin, this writer will focus on the advantages and disadvantages of building, buying, or leasing property to establish a new orthopedic service line.

First, the concept of building a Physical Therapy center should be considered. As the Chief Financial Officer (CFO) stated in the email, the cost of construction is $120 per square foot for 5,000 square feet. This would total $600,000 to build on hospital property. The advantage to this would be that the hospital owns the property and does not have another owner overseeing daily operations. The hospital would not be dependent upon anyone else as they would if they were leasing. A major disadvantage and risk of the hospital to this solution is that the CFO also stated that the hospital is running out of space to extend on campus. This leads this writer to believe that an off campus option may be better, but the benefits and risks need to be considered.

Next, buying the building and lot adjacent to the hospital should be given thought. The total cost of this, according to the CFO, would be $700,000. This includes the building and the lot. The advantage to this is that the hospital would not be expanding on campus because property supply is limited. Another advantage to this and the above option is that the depreciable life is 20 years. A lot can change over 20 years and this is stating that the hospital should not have to worry about a depreciable value for 20 years at least. However, at that time, the depreciation value can be claimed. The most noticeable disadvantage is the cost. The CFO stated that the hospital needs to maintain capital reserve just in case they want to implement all three program options in the strategic planning....
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