Elijah Heart Center

1520 WordsMar 17, 20117 Pages
Elijah Heart Center Toni Berthia University of Phoenix/HCS 405 Elijah Heart Center 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…show more content…
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. Phase III: Funding Options for Capital Expansion Since Elijah Heart Clinic patient inflow has increased, there are plans for a $75 million dollar expansion and improvement project to manage the patient inflow. The plan is to open a new facility with 100 private rooms and include the latest technology. Not only will there be new construction but the clinic will also renovate the existing facilities. I based my decisions on the focus of the clinic. The focus is to make sure that the changes will continue to provide patients quality care. Also when making my decision, I have to keep in mind that the strategy chosen will result in the success or failure of the clinic. To choose the best option, I had to analyze the cost of funding, the net present value, collateral requirements, prepayment limitations, and deadline for using the fund. The best funding option I decided to choose for Elijah Heart Clinic was HUD 242 Loan Insurance Program. With this option the Net Present Value of the
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