final submission

Discuss why is it more difficult for healthcare companies to get expansion financing in the current economic situation?

According to Steve (2013), healthcare companies’ expansion may be inhibited by poor results and are of liquidity. Financial institutions are afraid that liquidity of health care is tighter than other firm. It is difficult to convert goods and services in a healthcare facility to money. That means it is difficult for financial institutions to recover their investment. Financial institutions are afraid to lend their money to institutions that which has tighter liquidity.

Steve (2013) says that poor results emanate from the fact that the cash flows for a healthcare facility are difficult to establish. Cases where there is no there is no fixed cash flows it becomes difficult for financial institutions to lend users. Loans are repaid on a regular basis and fixed interest. That makes it difficult for financial institutions to lend institutions that have varying cash flows for they portray vases of being unable to repay the loan.

Explain the 2 major issues with the Caribbean expansion the turnaround company found and why do you think they were brought up?

Product development and product improvement are two turnaround strategies to achieve profitability (Steve, 2013). Products development involves creating a new product that did not exist. A new product gives a firm an advantage over its rivals. That means it has more streams of profits. More streams of profits mean that the firm can be able to have streams of stable income to repay the loan.

Steve (2013) says that product improvement involves making products better than before. Product improvement incorporates innovation. An innovative product attracts the more clients. The appeal goes beyond the existing customers to new clients. A wider market means there is an increase in cash flows. Cash flows mean that the firm can repay the loans comfortably.

Describe why healthcare companies need to look beyond their banks to secure financing?

The unreliable results and earnings in healthcare companies make them look beyond banks for secure financing. On the other side, the banks need a firm with stable income and revenues. The reason being that interest charges by banks are fixed and are done at a regular basis. The healthcare companies will be faced with a challenged of repaying the loans on a consistency basis over a long period. Liquidity of assets and services offered by a health facility is restricted meaning there is hardship in raising cash to repay a loan (Steve, 2013). A bank will be faced with a challenge when it wants to dispose of assets and services owned by a healthcare company.

Do you think the authors make a good case for expanding healthcare providers' methods of calculating break-even analysis? Why or Why Not?

Yes, healthcare providers' present a good case of expanding calculation of break-even analysis. The former break-even analysis only factored in fixed costs against revenues generated. Laskaris (2013) says that the method overlooked the variable costs that vary within a month. In real sense balancing of the fixed cost and revenues generated creates a false impression that the firm is operating at break even. In real sense the healthcare provider may spend more in terms of variable costs.

According to Laskaris (2013), Variable costs are those expenses which increase with increase in number of clients being attended. The numbers of healthcare employees taken on a temporary basis are amounts to variable cost. The costs are ignored by the firms as the firm calculates their break-even. In the calculation of break even the healthcare providers focus more on the fixed costs like the employees’ salaries and not wages. Hence, there is justification for the review of the calculation of break-even analysis.

Discuss non-financial factors do the authors believe need to be included in break-even analysis?

Some of the non-financial factors that should be included in the calculation of break-even analysis are volunteer reimbursement, petty cash book allocation, gifts and waivers. Volunteers are not employed and cannot be classified as wages or salaries (Laskaris, 2013). The volunteer reimbursement cannot be taken as variable or fixed cost. Petty cash book allocations cannot be treated as fixed and variable cost. The allocations are to support operations like tea for visitors. The costs should be treated as mixed costs that the healthcare providers should include in its break-even analysis. Waivers are costs that the firm incurs when bills of clients are done away with for the clients do not have ability to pay them. That is a cost incurred by the firm and it is a non-financial cost that should be included in the break-even analysis.

Explain how the Affordable Care Act affects break-even analysis?

According to Laskaris (2013), healthcare providers exist first of all to provide affordable medical care to citizens. That means at times the pricing of the services and products in the health sector may not meet the costs incurred. As a result a firm may end up having more expenses as opposed to revenues collected. The impact is that the healthcare providers may fail to finance the operations of services. Affordable care act should step in to finance the gap that exists where expenses are more than the revenues obtained. The reimbursement by affordable care act will sustain operations of the healthcare provider.

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