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The Phases to Financial Stability

Phase I

The first task that had to be addressed was the issue of Capital Shortage. After reviewing five different options that were mad available, I picked the Reducing the Agency Staff and Changing the Skill Mix. The decisions to reduce the agency staff was a fairly simple one, since I have already worked with contractors in the healthcare industry in the past and already know that their fixed salaries are exponentially higher than the other staff members. If the human resources department should decide that some of these positions are critical enough to consider a re-hiring, they can do so with more control on what the salary will be. My second decision to reduce the Capital Shortage was to change the skill mix. Hiring healthcare providers that had some experience, and yet were not licensed, was a huge savings. One of the board members was against changing the skill mix, Ms.Takeuchi stated “Changing the skill mix by increasing the

percentage of unlicensed assistive personnel will only increase costs. However, revenue might increase in the coming months” (University of Phoenix, n.d.). This measure would give the

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LPN’s and RN’s the ability to delegate the more trivial tasks to the unlicensed staff so they could focus more on providing critical care to their patients at EHC. As a result of these steps, the last three quarters saw a reversal in capital loss and a gain of $3.5 million dollars without an adverse effect on the patient care provided by EHC.

Phase II was somewhat perplexing as one the EHC board members, Dr. Lopez stated “we should not worry about the cost of new technology investment. Rather, we should acquire equipment with the latest technology advancements, which will help us in providing high quality patient care” (University of Phoenix, n.d.). Granted, the doctor is half correct, but that thinking is contrary to establishing control over the hospitals finances. The ultrasound system runs roughly $500,000, but with the technology changing every 5 years, I felt the only practical option was to purchase a refurbished system. A refurbished system is also the cost effective alternative and keeps up with the new technology rather than making a large purchase that is obsolete in a couple of years. I decided on the operating lease for the High Speed CT Scanner. What I liked about the operating lease is that since the technology on the High Speed CT Scanner is rather minimal, under an operating lease, the hospital will usually retain the equipment for a short period of time, then renegotiate the contract for another scanner, and with a life span of 10 years, the High Speed CT Scanner will always be functioning. With regard to the X-ray machine, the only real option was to go with the capital lease. Since the technology on X-ray machines has pretty much played itself out, any improvements will probably be cosmetic rather than improve the functionality, or performance of the X-ray machine. When the capital lease expires, EHC

will have the option to purchase the machine at a significant price reduction, but as always, the

question of finding parts in an industry that is constantly changing has to always be considered.

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Phase III discusses the funding options for the capital expansion of the Elijah Heart Centers new addition. I picked the HUD 242 loan Insurance Program which was clearly in the best interest of EHC, for the short term as well as the long term. This particular loan allows EHC to have the debt financed at a high end investment grade which will allow us to borrow at a significantly lower rate on the market, potentially saving us millions in finance fees. Another advantage to the HUD 242 loan is that if, and when the interest rates start to trend down, the board at EHC could buy the bonds and have their debt reissued at a lower interest rate that is more favorable to the hospital, again, another huge financial bonus for EHC.

Just this past Friday, I inventoried and placed an active inventory tag on 500 brand new fusion pumps. Although I’m certain that the V.A. purchases new equipment in a different manner than our public counterparts, the decision to make such a major purchase is a decision that is not taken lightly. I had no idea that there was so much risk and so many metrics to consider when purchasing equipment just to keep updated with the new technology, and still stay competitive with the other medical facilities. The wrong purchase decision, compiled with the wrong financial decision could bring a hospital to its knees, or even worse. To alleviate that type of scenario, if I had to sign my name off on a major purchase, I wouldn’t authorize it unless I had the signature of a fellow colleague who agreed that both the purchase, and the financial loan, were in the best interest of the medical facility. If I could redo the simulation, it would center around my equipment purchase. I didn’t read the loan descriptions thoroughly enough, and that resulted in a less than stellar decision with regard to the financing decisions I made. Since I am

involved with the hiring process, there is far more conflict, or at least controversy with regard to staffing issues that the simulation simply can’t portray. Department Chiefs are obsessively

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protective of their staff and are reluctant to allow anyone to enter their “fiefdom”, let alone terminate a staff members employment, even if it is in the best interest of the hospital.