Essay about Capital Justification

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Capital Purchase Justification Introduction According to the hospital’s five-year plan, an investment in capital equipment should boost the quality of services offered at the hospital. Many options of capital investments that hospital could invest in exist. However, this report recommends an investment in the MRI (Magnetic Resonance Imaging) equipment. This equipment involves a large capital investment upfront, but it can be profitable in the end. The hospital has considered factors such as the cost of this equipment, the facilities needed, and the return on investment of the equipment. The above factors are among some of the factors that are considered when buying large capital equipment for an organization such as a hospital (Keefer,…show more content…
This charge is also another revenue stream for the hospital and contributes to the ROI of the equipment. GE, which is the manufacturer of the equipment, indicates that the equipment has a viable life span of up to 15 years, but the warranty only covers the first 6 years of use (Price, 2011). The above figures are a clear indication that the MRI equipment can provide the hospital with an adequate return on investment. These figures, the machine’s lifespan, and the growing demand for MRI scans serve to justify the purchase of the equipment. Other factors that enhance the returns from the equipment include: Variety of clinical applications One of the biggest advantages of MRI equipment is that it can be used to diagnose medical conditions in the heart, breast, bones, spine, and brain. This is the only imaging equipment, which can be used to diagnose issues, in all the above-mentioned parts of the body. The equipment can be used to identify stroke and blockages in the circulatory system, cardiovascular conditions, tumors, and injuries. There is an excellent return on investment in the MRI because of the variety of uses it has in a clinical setting (Keefer, 2011). Higher quality imaging The MRI equipment uses technology, which enables high-resolution 3D imaging with a lot of clarity. This technology makes it easier to detect and diagnose conditions such as blockages in blood
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