Financial Indicators Simulation

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Submitted By Chavacano
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Financial Indicators Decision Making Simulation Form
Date: 2012

What cost cutting options were chosen? Explain why those were chosen? The two cost cutting options chosen were reducing agency staff and changing the mix skill. By reducing contract nurses and other personnel, the Elijah Health Center (EHC) will have a huge cost saving. The salaries of the agency staff are twice that of the regular hospital employees. Through reduction of agency staff, the hospital will also save on the premium it pays to the staffing agencies and their management fees. Changing the skill mix by hiring unlicensed assistive personnel is a good option for saving costs in the long run. This option allows nurses to delegate simple tasks such as feeding and moving patients to assistive unlicensed personnel in order to concentrate more on complicated tasks directly affecting patient care. Though there will be an increase in costs in the beginning, the revenue will increase in the following months. Unlicensed assistive personnel often called care assistants and patient care technicians, usually have 40 hours or less of hospital-based training.

Which cost cutting loan option was chosen? Explain why. To help solve the hospital’s current cash flow problem, loan option 1 was chosen. In loan option 1, the interest rate is 9.45% and there is no prepayment limitation compared to option number two which has 9.00% interest rate and has a prepayment limitation of 6 months. EHC will be receiving money from Medicare and other managed care companies in three months. The money received will enable the hospital to pay off the loan in three months. Which means that the total interest pay out will be $32,603 and the interest saved will be $45,283. EHC will generate more savings in loan option 1 than in loan option 2.

Which strategies for equipment acquisition were chosen? Explain why.…...

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