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Healthcare Management

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Words 1049
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Health Care Financial Accounting
La’Kesha Wright
HCS/405
10/01/2012
Sherida Douglass

Introduction Good cash flow is essential to every organization, including hospitals, where quality care of every patient is essential. A steady and consistent cash flow can help improve the hospitals borrowing power, which will increase and maintain the income level.
Capital Shortage My challenge was to decide on the best strategy to solve the cash flow problem at Elijah Heart Center (EHC). In addition, I had to implement two measures to achieve a cost saving target of $750,000 for the first quarter. In order to cover the remaining shortfall, I recommended “Reducing Proportion of Agency Contracted Staff.” Implementing this strategy will reduce costs drastically without any significant change in revenue. By reducing the number of contracted staff, EHC can save money on the premiums and management fees, which are paid to the agency in lieu of providing personnel. This implementation will reduce cost drastically, due to the hospital paying twice the amount to contracted staff, then personnel employed by the hospital. My next recommendation is changing the skill mix by hiring unlicensed assistive personnel. This is a good option for saving cost in the long run. The “Revenue and Expenditure Projections” indicates cost will increase in the beginning but it will increase the revenue significantly in the following months. Furthermore, this will save the hospital $811,249 by the first quarter, which will exceed the target set.
Loan Options Loan Option One was the best loan option to solve the working capital shortfall at EHC. EHC will receive $2,300,000 as payments from Medicare and other managed care companies in three months, solving EHC’s cash flow problem. Loan Option one will help in solving the current cash flow problem for the next three months. Though the

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