Elijah Heart Center Essay

1519 Words Mar 8th, 2011 7 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
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I chose changing the skill mix because “Changing the skill mix by hiring unlicensed assistive personnel will offer an effective means of addressing economic realities. This option will allow nurses to delegate simple tasks in order to concentrate on more complicated tasks” (University of Phoenix, 2011). To solve the cash flow situation at Elijah Heart Center, the loan option that I selected was loan option 1. For option 1 the loan amount is $1.5 million at an interest rate of 9.45% with a monthly installment of 131,490.00 for a 12 month term with no prepayment penalty. I chose option 1 because there was no prepayment limitation. The outcome for my decision was that “the working capital shortfall problem at Elijah Health Center is solved and the patient volumes are also increasing” (University of Phoenix, 2011). Prior to cutting costs, the working capital shortfall was close to $2.5 million and after the cuts, the working capital shortfall decreased to $1.5 million.
Phase II: Funding Options for Equipment Acquisition
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

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