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Health Care Accounting

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Health Care Accounting
Desiree Kelly
March 21, 2016
U of P

The hospital Elijah heart center is a 140-bed cardiac care hospital in New York this 120,000 square foot hospital has cardiac laboratories, radiology services, nephology, and pulmonology services to help those that suffered heart attacks, open heart surgery or any other heart-related illnesses. EHC is facing some financial problems such as capital shortfall, outdated equipment and the need for capital expansion.
I was hired to analyze these issues and determine how to help and submit a report of my decisions. Here is the report of my decisions for EHC.
Capital Shortage:
The cost-cutting options that I choose were to reduced agency staff. Using a third party source to hire staff to help during peak times was helpful but at this time needs to be cut out to save on costs. I also decided to change the skill mix, to have unlicensed assistants help do things such answer phones, file, and input information will help raise the revenue. The loan that I thought was best for EHC is the $1,500.000 with the 9.45% for a 12-month term. I decided on this investment because it allows for early payoff. If the loan was to be paid off in 6 months the interest that would be saved will be $21,297 and there would be saving of more if the option to pay off even earlier than the six months. These changes fixed that capital shortage with EHC, which is causing patient needing services.
Funding Options for the Equipment:
I decided that getting the all the equipment with the refurbished loan would be best due to that the loan payment total and the monthly payment was lower than getting the new equipment. The outcome was not the most optimal option for the EHC. If I would have chosen to lease the x-ray and ultrasound machine it would increase the value of the equipment and cut on the repair cost for the equipment.
Funding option for the capital expansion:
I decided to use the HUD 242 loan insurance program. This loan was the best choice for EHC. The HUD 242 has a loan term of no maximum loan amount, no cash needed at closing for companies that have sufficient equity and the FHA insures 99% of the loan amounts. This loan also offers taxable and exempt bonds. (“Office of the Hospital Facilities,”n.d) This loan enabled EHC to plan a $75 million expansion and improvement this is the largest in the history of this hospital. This expansion will include a new hospital with 100 new private rooms, women’s section, and development of the surgical suites, radiology, and the endoscopy services. This also includes new construction, reconstruction, and expansion of the existing buildings. The two rooms that are not in use any longer that will be destroyed to make new room for the expansion. When this development is finished, it will have five open heart surgery rooms, seven cardiac lab, and 20 critical cars rooms with the digital system that will be able to access the latest cardiac technology.
The things that I have learned in this simulation are that the financial part of any company is critical. If a company is paying out more than they are receiving this is going to cause the profits drop very quickly, and it is very hard for a company to operate this way. There are times that a business might need to get loans for improvements such as in the simulation, and the result is profitable if you make a right choice about loan options.
If I were to do this simulation again I would do the equipment loans differently, the choice to use refurbished for all the equipment was not the best option, this equipment didn't have very high value and high repair costs; if you are to pay the extra expense for new equipment you would have saved on the repair costs. The capital shortage and the funding I would not change due to the decisions I made we the best for the company.
At my current job, I can not apply what I learned to my job due to I am not in a management position currently. In the future, I hope to be in some leadership position where I will take what I have learned from this and apply it if needed to help outcome shortfall in the company.
In conclusion, every company not matter how big or small needs to watch the financial statement from year to year, and if needed cut back on unneeded spending. There are times that spending the extra money to do improvement ends up being profitable for companies also.

References
Additional Resources/U.S. Department of Housing and Urban Development (HUD). (n.d.). Retrieved March 19, 2016, from http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration/healthcare_facilities/section_242/additional_resources…...

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