Capital Budget Project Essay
The amount of money that can be borrowed has many entities and factors that influence the capital budget of the hospital (Cleverly, Song, & Cleverly). The Allen Pavilion of NY Presbyterian Hospital (NYPH) is projecting that the purchase of an MRI machine for their facility will be a venture worth pursuing. The growth and demand of the small community of Inwood NY currently is transported or sent to other facilities or to the downtown campus Milstein. This increase in demand has taken over the capacity of what the Milstein campus can efficiently serve.The small community pavilion serving this neighborhood is an aging community.
The majority of the patients cared for at the Allen are reimbursed via Medicare. MRI’s serve to assure better quality of care for the patients and is an important advanced technology that is needed for this aging population whom is informed and demand quality healthcare services. The patients cared for at the Allen Pavilion currently have to be sent downtown for MRI’s via cab, ambulance, and at the cost of the hospital. Goals, Objectives & MissionNew York-Presbyterian Hospital is committed to excellence in patient care, research, education and community service.
To meet the objectives and goals of the hospital mission, NYPH MRI purchase for the Allen Pavilion will benefit the organization and community. Allen Pavilion presently has to discharge their patients to follow up with MRI imaging or have to transport them to the downtown campus (Milstein campus). MRI diagnostics can be lifesaving in many cases and would increase quality of care, support research and education and serve the community more efficiently and cost effectively.Strategically, the MRI diagnostic’s is the vision of the future to assure faster and accurate diagnoses. Early diagnosis leads to positive outcomes which will support and enhance the care NYPH promises and support the goals, objectives, and mission statement they abide by. Capital Expenditure Proposal Time value of money is to consider how long the capital assets will last. To make an effective decision one can compare the future cash flow to the present value once MRI imaging and diagnostics can be available to the Allen Pavilion community.MRI diagnostics will increase revenue down the line.
The future of the Allen Pavilion can attract patients that would otherwise go elsewhere for care and increase services available to the patients. The Allen Pavilion will be thought of a more advanced community hospital and a leader in healthcare services. MRI imaging can reveal further treatment needed for some of the patient clientele and will need further medical treatment at the Allen. These additional services provided by the hospital would have been lost to another facility if not for the MRI machine being in house.Doctors from the area of Bronx, Westchester and Yonkers will be able to refer their patients to the Allen Pavilion now that MRI capabilities are available.
The competitive advantages are impressive as well. An in-house MRI will attract more business for the Allen Pavilion as well as deter patients from utilizing local imaging centers in the area. There is revenue potential that the MRI can generate via Medicare and Medicaid reimbursements. Our market supplies a large number of elderly patients and the utilization rate on Medicare is low.It should be factored in that the doctors would now be able to refer their patients to the Allen would increase the utilization rate. The payment per exam can be divided by the fixed costs (equipment, space, staff, and maintenance) and minus the variable costs (supplies, fees and billing costs) to imagine the probable profitability opportunity of an in-house MRI and to assure that this is financially feasible. Financially speaking, this is a good choice of use of the hospitals resources considering the demand for MRI imaging in our community, an increase in utilization rate, increase in case mix index and overall customer satisfaction.The numerous advantages of the in-house MRI will increase the return on the MRI investment.
Financial Options Financial options for acquiring an in-house MRI are offered. Cash purchase is one option in which the hospital will own the MRI machine outright. Using available cash makes this purchase an asset on the balance sheet with no debt or liability. If there is no available cash, leasing is another option. This moves the funding to the operational budget (Cleverly, Song, & Cleverly 2011) which will minimize credit requirements.This can provide an equilibrium of the revenues to the expenses on a monthly basis. Another way to fund the imaging machine could be a bank loan. Line of credit has its drawbacks as well and must be considered reducing the ability for future capital if needed.
Magnetic Room Location The MRI has a very powerful magnetic field and space is an important consideration. The Allen Hospital has considered the patio space in the back of the building that will allow for the specific construction needed and will be able to contain the magnetic field safely to ensure patient and staff safety.Conclusion An in-house MRI can help meet financial goals and the growing needs of this community. Enhancing the speed and provide accurate diagnoses is an immeasurable benefit. The additional revenue that will be generated can be coupled with the accurate treatment of medical issues. A locations has also been considered and tested and will fit the needs and safety of the Magnetic room. Significantly, the benefits of providing quality care, efficiency and patient satisfaction will no doubt assist in the goals, objectives, and mission of NYPH Allen Pavilion.
Not only was the MRI purchase discussed in this proposal regarding how it will meet the organization’s needs, it was also explained how this purchase will affect the community and how the expense related to the goals are justifiable.ReferencesFinkler, S. , Kovner, C. , & Jones, C. (2007). Financial Management for Nurse Managers and Executives (3rd ed. ). St.
Louis, MO: Saunders Elsevier. Cleverly, W. O. , Song, P. H. , & Cleverly, J.
O. (2011). Essentials of health care finance (7th ed. ). Sudbury, MA: Jones and Bartlett Learning.