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hHCS 405 WK Individual Assignment Essay

Reducing agency staff, I choose this budget cut because it leaves more positions open for the facilities own staff and this form of help is a high cost, twice as high a regular hospital staff but each open job is continually monitored to determine if that position needs to be filled. Changing the skill mix, this option allows for unlicensed assistive personnel to address economic realities. This cost cutting choice option allows for nurse to be able to delegate minor jobs in order focus on more complicated ones (University of Phoenix, 2013).

Which loan option did you select? Why?
Loan option 1, this loan actually allowed for a longer period of repaying the loan, even if it has 9.45% interest rate, as option 2 does not give you the ability for the three month loan closure and it needs to be repaid in six months’ time. Being that this is a facility which needs flexibility option 1 provides the best possible alternative for achieving substantial financial grounds (University of Phoenix, 2013).

What was the outcome of your decision?

The outcome for my decision was that it was in good health for EFC. The decision to reduce a portion of agency contract staff was good because it decreases outflow of cash through expenses without hurting or decreasing the facilities actual revenue by saving on premiums it pays to staffing agencies and their management fees so it is a huge cost saver. Changing the skill mix made for a good budget saver for Elijah Heart Center because it helps save the company money in the long haul.

There will be an increase in costs in the beginning in regards to the less o hospital training, but overall workers can assist with the registered nurses with simple tasks like, feeding and the moving of patients. Licensed nurses can focus more on the more complicated task such as those directly affecting or related to patient care. As for my loan option it was the best choice for solving the hospital’s capital shortfall because EHC will receive $2,300,000 as payments from Medicare and other managed care organizations within three months. This will undoubtly solve Elijah Heart Center cash flow problem, were as option two could not be prepaid in six months (University of Phoenix, 2013).

Phase II: Funding Options for Equipment Acquisition

Which cost-effective equipment selections did you make? Why? High speed-CT Scanner Refurbished Equipment Loan, this option I felt was best because the technology advancement for this machine is not expected to change much and the cost is high to buy new $750,000 and its life expectancy is around 10 years if brought new.

Therefore buying new can greatly affect the hospital’s finances and getting equipment that is refurbished is much more cost saving with a 30 – 50 percent cheaper sale tag and it decreases staff training costs. X-Ray Machine-Capital Lease, seems to be the best option for this equipment because the likely hood of needing to be upgraded or changed is low and it life expectancy is 15 right around years the cost of this machine is 320,000, so a capital lease just makes more sense than the rest plus this form of leasing allows the company to be able to have the option to purchase the equipment at a bargain purchase option and the; lease itself is transferred at the end of the lease automatically.

& Ultrasound System-Operating Lease, this is the best option for this equipment because this can be a device equipment that can have an technical advancement or change in the long run and using other methods could make purchasing this equipment worthless in the future event of advances in technology so it would be a loss cause or investment to have reflect on the balance sheet or to buy new or refurbished. This form of obtaining the equipment is treated s a rental and is not included on the balance sheet as with a capital lease and there is no bargain purchase option either (University of Phoenix, 2013).

What was the outcome of your decision?
The outcome of my decision was the best possible choices for the company as the high speed CT scanner being refurbished allowed for the equipment to be purchased cheaper than being brought new. As for getting the x-ray machine on a capital lease makes this the best option because higher present value compared to the operating lease or buying refurbished equipment and the business has the option of buying the equipment at a bargain price or taking up a new lease and with the life expectancy of this machine being 15 years with little or low possibility of change it makes for a good investment and means of saving finances in the long run. Last on the list is the ultrasound system getting an operating lease is best suited for the company because it allows for an upgrade. The option of the operating lease helps in taking care of technological obsolescence (University of Phoenix, 2013).

Phase III: Funding Options for Capital Expansion
Which source of funding did you select? Why?
HUD 242 Loan Insurance Program I choose because the hospital can payoff this loan before its time without precautions and it allows the facility to be able to do this after eight years. Although its rate were cheaper than a private bank loan and higher than the tax-exempt and revenue bonds it allowed for a year advantage of loan payoff over tax-exempt, as well as not putting a limit on the period of use for the funds interest rate is lower than both other options setting at a 3.90 percent and tax-exempt is 4.18 percent, and private bank funding is 4.50 percent (University of Phoenix, 2013).

What was the outcome of your selection?
The outcome for my decision was that this funding option was a healthy choice, as well as the best possible option for Elijah Heart Center (EHC). Benefits were that the option was callable after years instead of tens and that if the interest rates were to decrease it would be possible for the organization to buy back the bonds and reissue the debt making it more
profitable for Elijah Heart Center (University of Phoenix, 2013).

Summary and Conclusions

What did you learn from this simulation?
I learned that buy choosing the best options for the business I am able to better provide equipment, workers, and finances for acquiring equipment, expansion and staffing of the facility.

What would you do differently if you performed the simulation again? If I were to reduce this again I would not change anything as the other options badly affected the budget and other mixtures were not good ones they decreased cost but keep dipping as months went by, which would ultimately affect the overall finances for the business thus creating issues such as down-sizing being a reality and or the reduction of benefits to staff and reducing length of stay really does not have an effect on saving or benefiting the company at all.

How will you apply what you learned at your current or future job? I could apply what I have learned at my future job by keeping the result and notes for my simulation as a guide for planning and determining how to spend revenue earned or needed to keep my business operational. As well as being able to suggest possible ways and ideas for saving my current business money were equipment and loans are of use. In my future job/business I plan on running my own CMA/CNA facility this can help me with determining the best loans to get for equipment, supplies, and materials needed to run a fully functioning and profitable business.

I can sue this simulation to decide on the best way to get those supplies, equipment by determining the cost for leasing or buying new or used equipment. I will be allowed to make a more clear and informed decision about my current and future business ventures. Once I get into a medical facility and staff thoughts and decisions are taken into consideration for future changes I will be able to give an realistic suggestion or idea for changes that can affect staff’s jobs, future positions, benefits, and care and treatment of patients.


University of Phoenix. (2013). Analyzing Financial Indicators for Decision Making [Multimedia]. Retrieved from University of Phoenix, HCS/405 Health Care Financial Accounting website.

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