Heart of the Matter
Angela Duell
Paul Herskovitz
HCS/405
April 29, 2013

Every hospital or doctor’s office has to be able to make money to be able to be open for business. Without the necessary funds they cannot purchase equipment that may be needed to perform certain test or check for broken bones. Setting up that capital is not an easy thing to accomplish unless you do your homework and choose what is best for your business. I will not only focus on the goals for the clinic, but long term budget goals as well. In health care today there are many organizations that are facing financial hardships. Health care on average revenues $1.5 trillion a year. The tasks are to bridge a working capital shortage, evaluate funding options for acquiring new equipment and evaluating funding options for capital expansion
Phase 1 Capital Shortage The cost cutting that was choses was to reduce benefits and to reduce agency staff. By cutting back on how many employees you have will cut back the amount that you pay out in either salaries or by an hourly wage. By making the necessary cuts, I will keep in mind that the quality of patient care will not be affected by the changes. It is hard to pay out payroll when you do not have the funds or if you did not make your budget for the week or the month. By reducing staff it may hurt a little because, there will be longer waits between patients, and the shortage can stress out the other staffs that have to pick up the slack, but it will save you money in the end, by not cutting back on the payroll taxes that you have to cover on that employee. The loan option that was choses was option 2. The interest rate is better and even though the terms were the same you will pay less interest and thus by making the amount you pay backs a smaller amount. This is the way to go to solve the cash shortage that is being felt. The outcome of the choices that were made seems to be a good decision to save money, even though the repayment amount is quite high, you are still saving capital. Trustees can ensure their hospital's future financial viability by asking key questions and by participating in the development of a long-range financial plan (US National Library of Medicine National Institutes of Health).

Phase 2 Funding Options for Equipment Acquisition Choosing to buy refurbished and new equipment and taking out loans for these machines was the best way to go to get our money’s worth. With certain equipment it was smarter to buy new to lessen the chance of needing expensive repairs possibly down the road. What should have been done was to do a capital lease on these pieces of equipment instead of buying new. These are three very expensive pieces of equipment that were needed to do the job right in treating the patients that come through the door every day. By making the decision that was made to revamp existing equipment by looking at the balance sheet and the cash flow statement and then making a choice on which way to go.
Phase 3 Funding Options for Capital Expansion It was chosen to go with a private bank instead of the Loan Insurance Program. It was felt that in the long run it would save more money with a smaller interest rate to go this way. What should have been done was to look at the HUD 242 loan and get more information on the difference between the two and then choose the best for your outcome and repayment plan. By looking at the outcome of the decision it was proven that going with a private bank was the best choice for the expansion of the hospital and by going the other way would have been more of a risk. When you are trying to acquire additional funding that is needed you have analyze what kind of impact this will have on hour books. Overall, doing this simulation was a very good way to make you think about the choice that you may make in the future if in this situation. What I took away from this was to make myself think about what would be good for the hospital and how to produce a better way to save money and not have a cash shortage in the case of an emergency where cash was needed for problems that may arise. If I had to do this simulation over again I may have taken more time and really gave it more thought in which way to go for better results. I actually did go back and do it over again, but I still stuck with the same choices I initially made and still came out thinking that these were good choices. Using this information in my current job really would not do me any good since I work retail, I do understand the necessity of cutting back hours to save money, but I do not have any say in anything else, like buying new equipment for the business. The people who think about what the cost will be and will we make our money back in the end; buy utilizing the equipment to helping customers with their needs. I do believe that this was something that helped me and I will defiantly take this with me into the next class and into the future, if and when the moment arises when this will come in handy to choose what is needed to be done. When you do these kinds of activities you learn how to maintain a business no matter what kind it is whether it is health care of something else. You learn that the financial accounting will achieve a good outcome in your business.

References:
National Library of Medicine National Institutes of Health