Capital Project

According to exhibit # 2, in order to break even annually, the clinic will have to cover the total operating expenses of $690,000. That means that the clinic will have to perform 986 scan per year, or approximately 4 scans per day to achieve this goal. Considering that the equipment in the clinic is capable of much more, this operation should have no problem in reaching and exceeding its goal daily if proper measures are put into place.

Purchasing new MRI scanners would be a good investment for the hospital. If one takes into consideration, operating costs along with repairing and purchase of the product alone. Many hospitals may consider wanting to purchase refurbished items but that would not be a good idea considering the costs to maintain and longevity of the product itself. Purchasing a brand new MRI scanner is just like the purchase of a brand new, high end car. Although it may be very expensive to purchase, there will not be so much high maintenance done in the beginning. Once the product gets very old within about ten years, then the high maintenance repairs will need to be done. All equipment

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:

According to Duford (2009), high dollar radiology costs, which have a twenty percent annual growth rate, are now the fastest rising medical expense. The author also stated, according to a report by the Association of Health Insurance Plans, one hundred billion dollars a year are spent on imaging services in the United States and expects to double in four years (Duford, 2009). Completing the task is overwhelming because there are many providers to reach and convince to reconsider his or her way of using high dollar radiology. Completing the task is overwhelming on the member side as well because there is education to provide to members as to why his or her benefits will not cover any high dollar radiology services until other course of treatment have been tried and failed. The task is difficult too because consumers are demanding these high dollar radiology services for prevention as well as diagnosis purposes (Duford, 2009).

hospital’s leadership and physicians total asset control. Customization of the facility and control of the facility is a definite advantage. Appeal While renovating existing facilities should be more cost effective, it is still a short-term solution. A newly designed facility is a long-term initiative. New facilities bring in future concepts and all kinds of opportunities for new services. One of the other primary advantages to a new facility is that it has appeal to physicians, future recruits, current employees, and potential hospital donors. New facilities appeal to community investors as well. Financial According to one commercial real estate acquisitions and marketing manager, the assumption that leasing real estate costs less than building or buying real estate assets is completely fallacious. Because hospitals use different

Due to the technological advances in the medical industry, the clinic has decided on advanced medical equipment to provide quality care to the patients. The equipment that will be purchased is a High- Speed CT Scanner, X-Ray Machine, and an Ultrasound Machine. This equipment will allow more quick and efficient test and treatment. The options that can be made include: buying new or refurbished equipment with an option of a loan, acquiring on capital or operating lease. During this phase, I chose the most cost effective option to acquire the equipment. To acquire the equipment, I chose the operating lease. Since there are always potential advances in technology, buying the equipment may not be a good idea. In the long term, the equipment that was purchased will likely be replaced by newer technology in a few years. Due to the decisions of acquiring new equipment, the clinic is now doing well and the profits are growing which allowed growth for the clinic.

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

Many healthcare organizations set goals and objections and write mission statements that reflect the way they want the public to see how healthcare is provided. This is done to guide how their healthcare providers practice daily. In order to meet these goals and objects it is necessary to have in place processes and procedures to ensure the results will be what is expected which is a positive patient experience and outcome. In order for our organization to reach this goal there is a coaching and execution package that will provide step-by-step processes and procedures to ensure that everyone is doing the same thing at the same time

Also, x-ray machines last for a long time, the average life-span 15 years. However, it would have been better for EHC to purchase under an operating lease an ultrasound machine instead of a capital lease. An operating lease has lower upfront payment and lower monthly installments. Having more upgrade options with an operating lease, that will help take care of technological obsolescence.

The facility is also in need of new equipment to make sure patients are receiving the proper care and to reduce costs in the long-term. The facility needs to purchase these machines. The machines needed are as followed: high-speed CT scanner, an x-ray machine, and an ultrasound system. There are a few different options when obtaining medical equipment and in this case the facility is purchasing new equipment, purchasing refurbished equipment, or obtaining an operation or capital lease. The best strategy for purchasing a high-speed CT scanner would be to purchase a refurbished machine. The useful and usual life of this equipment is approximately 10 years. Although the hospital may need to upgrade the technology of the scanner in five years, at this time buying a refurbished scanner is the best option. The hospital can upgrade the equipment at a later time extending the usual life of this device. This will be recorded as an asset, but at a lesser value. The loan rate is also low at 9%.

The first expense I will start with is the expense that is considered the overhead costs. There are no overhead costs because your company has a vacant building that will be perfect for housing the MRI machine. The next expense will be the purchase price of the MRI machine which is two million five hundred thousand dollars. The next expense to take into account is the annual maintenance costs of one hundred and twenty five thousand dollars. The annual maintenance costs needs to be multiplied by five years, which means the cost for the maintenance comes out to six hundred and twenty five thousand dollars. The next expense associated with the MRI machine is the site preparation, site and installation cost of five hundred thousand dollars. The next expense associated with having an MRI in your network is the labor costs. The annual labor cost including benefits for the one and half employees is seventy thousand dollars. The annual costs of the staff have to be multiplied by five years and that equals out to be three hundred and fifty thousand dollars. The final expense to include is the supply costs for five years of running an MRI machine. The supply cost per scan is forty dollars. The MRI machine will be running for fifty weeks annually with twenty seven scans being done every week. When configuring the amount of supplies used annually you need to multiple twenty seven

As it relates to the textbook, this describes some of the scope of the hospitals; which refers to the range of activities which the firm performs internally, the breadth of its product and service offerings, the extent of its geographic market and its mix of businesses. But unlike with the electric company, no regulator caps hospital profits. To the extent that author Steven Brill found any consistency among hospital charge-master practices, this is one of them: hospitals routinely seem to charge 2V2 times what expensive implantable devices cost them, which produces that 150% profit margin.

The following section will show the ratios and percentages figured by using these two companies’ financial statements. A comparison will be used to compare the companies to one another. People will always needs cars to get around whether it’s for education, work or tourism. By comparing these companies we will know which company maybe the best to invest and to determine which companies will survive in the future. Take a look at Table 1 below as it provides a full listing of

1. How should PDVSA finance the development of the Orinoco Basin? Can you define project finance? Is Petrozuata a project? What are the costs and benefits of using project finance instead of the traditional (debt) finance – as Mr. Bustillos said, PDVSA could have finance the debt internally (p.7 of the case)?

As the administrator of the Radiology Department, I am not only in charge of managing day-to-day operations, but also have to develop the capital budget. Upon developing the capital budget, it was decided that the budget for the fiscal year would be one million dollars. As well as developing the budget, the task falls upon me to decide where the money will be allocated. Within an organization there are several budgets that arise such as, an expense budget, a revenue budget, and the one at hand, the capital budget. Unlike other budgets, the capital budget is one where one has to “select long-term assets, whose useful life is greater than one year… items typically include…routine capital equipment.” (Pg205). Two requests were submitted from the Mammography department, as well as the MRI department. Being placed in charge of making this decision, I now face the challenge of having to decide which departments request will be approved. Approving both requests would exceed the capital budget, due to the fact that both requests individually cost eight hundred thousand dollars. In order to come to a decision, as an administrator it is critical that I