Analyzing Financial Indicators for Decision Making
Phase I Capital Shortage
Capital shortage is one among the major challenges faced by any business sector especially related to medical field. The shortage can be encountered by either reduction of expense or expansion of profit. There have been many methods introduced into management area of studies with respect to capital shortage and its elimination. Cost cutting methods and loan options are used extensively utilized for facing capital shortage by contemporary business sectors.
Which cost cutting options did you select Why
The idea proposed by David Fillingham can be used in this perspective of cardiac hospital case. He, the CEO of Bolton Hospital says that Good quality costs less. (Graban, 2008, p.10). The enhancement of medical assistance in terms quality can help in reducing the expense of the hospital. The approaches to increase the profit can never always result in success. It is a fact that quality improvement is not accepted by everyone as an explicit method of cost cutting, but it remains factuality that ultimate result will inevitably be stated as reduction in expense. The service quality development will thus create a real shift as the case under consideration is related to a cardiac hospital which helps the society thereby turning out to be a boom for the society.
Which loan option did you select Why
When the situation of capital shortage occurs, working capital loan is the best option. The working capital loan can pump in the cash flow and fund the daily operations of your business. (Working capital plan, n.d., para.2). Here, hospital can undertake their requirements to cover up scarcity by availing a secured working capital scheme. Selection of the scheme for loan is based on the flexibility and lower rate of interest. Secured option is having easier procuring of loan with negotiable rates of interest payment having payback duration convenient for the client. Of course, banks forward working capital loans for any business launch in need of fiscal assistance at critical stages.
What was the outcome of your decision
The outcome of the decision obviously was success. The loan facility supported to pass the existing tight financial situation keeping a goal for quality enhancement which reduced the cost as its eventual output. The initial stages were a bit narrower which required certain essential most modern equipments to be installed for quality improvement supported by the loan amount acquired. While on track, every aspect turned out to be positive creating more and more satisfied customers and reduction in crisis leading to fame and name of the hospital.
Phase II Funding Options for Equipment Acquisition
The funding options available for equipment acquisition are having a wider range creating a choice for the firm to select. Usually there are three options for equipment acquisition procedure namely cash imbursement, financed acquisition and leasing. Cash payments involve payment of complete cost of the product leading to no payment further works on that procured device. Financed payment offers assistance with higher interest rates to buy required equipment while leasing is rental option in which the device is owned by leasing firm. For our cardiac hospital it would be better to buy by cash payment itself. Already a loan is availed utilizing which equipments can be bought eliminating further implications regarding equipment acquisitions. The only disadvantage regarding this method is capital distribution saying that the cost paid in full can be used for some other options.
Which cost-effective equipment selections did you make Why
The cost effective equipment selection opted for cardiac hospital is to select pre utilized equipments. There are equipments which can never become redundant due to usage. There will be many types of equipment accessible from certain leasing and financing firms which are used and in good condition for further usage. Such equipments will be better for the hospital in case of both aspects working condition and cost. The efficiency of huge equipment never reduce with usage but often any hospital opting for leasing will opt for newer ones keeping leasing people in an option to sell the existing equipments giving a chance for other hospitals to acquire equipments in good conditions itself. At times when a financed equipment is been ceased, it is put in sale itself. Also when a renovation procedure is carried out many of the equipments will be replaced after selling of existing ones. All these can be utilized for cardiac hospital by proper examination of those.
What was the outcome of your decision
The outcome of the equipment procurement procedure was good and appreciable. The cash payment was a bit redundant when crisis prevails but reduced cost for used equipments gave spirit for acquiring devices with no extra time and money expense in future. The equipments bought enabled to provide services with enhanced quality which contributed to cost cutting options. The selected choice turned out to be the best procedures for attaining sustained performance in the case of customer satisfaction as well as capital consistency. No additional involvement was necessary as entire equipments are owned and operated by themselves.
Phase III Funding Options for Capital Expansion
The funding options refer to the ways from the finance or the capital can be raised for performing the operations within a cardiac centre. Funds are mainly used to expand the business and carry out the operations in an effective manner by delivering high quality product and services to the target customers. Capital expansion refers to the availability of the fund to the firm for the purpose of making the products and services produced by them and by which it can be commercially offered to the public. These funds are mainly used in cardiac centre for developing their product and services by increasing the availability of fund. Mostly venture capital is preferred for the capital expansion in hospitals. Large cardiac centre requires huge investment in hospitals for employing latest technologies, improving their quality of services and to make necessary innovations in the hospitals. The increased rate of baby boomers and diversity among population has increased the demand for quality services. The amount of capital required to optimally deliver modern healthcare practices, adequately address and manage reimbursement issues, and effectively recruit and retain both specialized and primary care physicians will almost certainly drive continued consolidation of health care delivery entities whose nexus is the multi-hospital system. (Kennedy Sawchyn, n.d., p.5).
Which source of funding did you select Why
The availability of the funding options reflects the strong capital structure of the hospital. A strong capital structure is at the foundation of a systems credit strength, and as such, critical to the ability of a system to optimally fund organizational growth, drive profitability, and deliver enhanced health care services. (Kennedy Sawchyn, n.d., p.5). Before selecting the selecting the sources of fund the credit position of the organization has to be understood. The most important funding options that are available to the hospitals are as venture capital, hybrid, arranging debt finance, employing equity partner etc.
Among the various funding options venture capital is selected as the best funding option for the cardiac centre for the purchase of modern equipments and machines. It is an aspect of equity financing which is most frequently used by the enterprise those grow rapidly. In venture capital the funds are invested on a professional basis. The investments in the hospitals are huge and therefore the best method to be selected is the venture capital. The venture capital involves huge investment.
What was the outcome of your selection
The necessity to purchase new equipment in hospitals can be decided at any time. There are many benefits that are experienced by implementing the venture capital within the organization. This will enable the organization to generate large sum of equity finance. The availability of huge finance will enable the organization to bring wealth into the business, where by this will enable the health care centre to purchase modern technologies that can be used for delivering quality services to the peoples who use to visit the hospital for better treatment. It is the most important method which is used by most of the business concern that are planning to implement professional funding method. It has been used by Intel, apple computer and many other organizations. Venture capital is the easiest and the quickest way by which the funds can be generated and it is has the capacity to tolerate risk.
Summary and Conclusions
The simulation describes the financial accounting process that is carried out in an organization with respect to the Cardiac health care centre. It explains the various ways by which the working capital can be generated and also explains the various ways by which the shortage in working capital can be recovered are also discussed. This simulation depicts the available funding options that are required for equipment acquisition and what are the cost effective methods that can be implemented
From this simulation it is very clear that, which funding option will be better for the cardiac care centre. It is also clear that by using venture capital it is easy for the hospital to raise finance by which it will be helpful for them to increase the financial stability of the concern. This is to be considered that even though there are many other funding options, most of the organization which requires huge investment in their business usually adopts venture capital. The current learning is very much helpful to the current and future job performance. a clear cut idea regarding the various sources of funding has generated an idea regarding which method has to be selected.
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