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Peter Butler Case Summary

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. What steps can Peter Butler take to determine the financial areas of concern in the case? Peter Butler should examine first the financial statement of the hospital and look for any red flags that may give him the clue on why the hospital is experiencing cash flow crisis, where the problem lies and have a better understanding. Second, he should look for any options that he can use to help him to make major decisions on the financial areas of concern. Third, convince the CEO and the board of trustees of the best option/s that they can implement in the coming year to make the hospital in black position and have enough cash flow to make the necessary improvement, be more competitive and attract more physicians and patients.
2. What risks issues are involved in using the various options to meet immediate cash needs? …show more content…
Long-Term financing options: 1. Issuing revenue bonds- this will provide a long term of cash that will answer the cash flow problem of BCH. However, it needs the approval of the citizen of the community which other government organization failed to achieve. The board of trustees is very vocal against this. A problem may occur if the hospital does not have enough income to service the bond. 2. Borrowing from deferred compensation funds- the hospital can use this to meet its financial obligations. They can withdraw funds without paying any penalty and need minimum funding, but the hospital needs to include this in their asset and liability. 3. Deferring payments to the pension plan - Not funding the employees pension plan will meet the cash problem. However, the employees may thing that the hospital is taking advantage of them and may cause dissatisfaction, resentment resulting to lower performance score, inefficiency, absenteeism, employees resigning and may decrease retention which will be more costly to the organization.

B. Working capital

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