Service Line Management Essays

909 Words Aug 13th, 2013 4 Pages
Service Line Management Task 1 In order for a company to continue to grow and expand, it must have a need for additional services and customer satisfaction. To focus on patient care, one must engage in property development. There are multiple ways this can be accomplished. To begin, this writer will focus on the advantages and disadvantages of building, buying, or leasing property to establish a new orthopedic service line. First, the concept of building a Physical Therapy center should be considered. As the Chief Financial Officer (CFO) stated in the email, the cost of construction is $120 per square foot for 5,000 square feet. This would total $600,000 to build on hospital property. The advantage to this would be that the hospital …show more content…
The hospital would be risking any extra reserve they may have if this option was selected. The final option is to lease property. Leasing would be at a rate of $20 per square foot. For 5,000 square feet, that would total $100,000. This is by far the least amount. The obvious advantage to this decision is the cost. Another advantage is that it is still off campus and would save the property on campus for future projects if needed. The disadvantages of leasing would be that the hospital is still responsible for taxes and repairs. Also, when leasing, the hospital does not own the property. They are simply paying rent. That means they have someone who has the ultimate say in how they use the property. For a company trying to establish a new service line, it may be hard to do what needs to be accomplished by having a third party. Another risk the hospital would be taking is the length of the lease. What if the new service line excels and outgrows the size of the property? A company is contracted to the lease no matter how well or poorly the new service line performs. Also, the owner cannot claim depreciative value on a lease. This writer believes that option number two is the best option overall. Option two is buying the building adjacent to the hospital to establish the new PT center. This option allows the hospital to have the space for the new service line while maintaining the current property on campus for future projects. This option also allows the hospital the

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