Angela Johnson HCS/405 4/20/15 Simulation Review David Catoe Axia College University of Phoenix

In my paper I will be providing information that pertains to how hospitals determine their revenue and expenses through using a simulation program. The information that is provided is based on The Elijah Heart Center and their results were carefully based on their analysis and decisions for staffing of the center, different types of equipment that is needed, along with their capital expansion, and any information that I may provide. Phase 1: Capital Shortage, in this simulation activity it has provided us with two different types of cost cutting options. The first was to minimize the amount of staff that the hospital uses. This decision was made because they knew that if the agency money would get more money if they hired additional staff from an agency and did not provide benefits. The agency personnel, that has been hired is already aware that at any given time they can be let go from their position and their position can be filled by a new hired person. Elijah heart Center may want to stop hiring agency contractor and start using the employees they already have. The cost cutting goal that needed to be reached had to be a cost savings of 750,000. The option that was selected has exceeded the amount of 811,249 just for the first quarter. This type of option was not a cost saving for Elijah Heart Center. Perhaps if Medicare reimbursement has been considered, then the option could have been different and the options could have been correct. The organization would have had enough revenue in the rest of the quarters due to the loan being paid off ahead of schedule. Phase 2: Funding Options for Equipment Acquisition. Although the options that were selected were not the right option for cost saving for the organization if did have a positive side. The high speed scanner (H-SCTS) selected was an option for a refurbish loan. This was selected because it would have a ten year useful life, and with the new H-SCTS and the refurbish loan it would have about five years remaining so that was a good option. Because the equipment can be quite costly the loan can be repaid off before a new H-SCTS can be replace. This is return is good for the organization as they could save 30-50% off a new H-SCTS. That money could be used for training their employees. That alone is a cost effective measure. Another expensive piece of equipment is the X-ray machine that was purchased under the new loan, because the useful life of years is so high and the change level is pretty low, this means the selection option for this purchase fits well within a reasonable budget level for that investment. The Ultra Sound System that was purchased using the operating lease was selected because it has a short useful life and it is a very costly piece of equipment that is much need within the Elijah heart Center. Although the Ultra Sound System technology is so high it only has a few useful expectancy years with the operating lease. Because this piece of expensive equipment needs to be replaced quite often, the organization has to be extra careful when investing large amounts of money. Which is why a lease option for equipment that is short lived the organization should think about replacing it in a timely matter knowing that there are certain limitations that has to be followed. Even though the options that were chosen were not the best for the organization there were still some good options that were chosen and the best one chosen was for the H-SCTS that was purchased using the refurbished loan, this appears to be the best option for Elijah Heart Center because of the ten year life expectancy. After looking over the balance sheet the X-ray machine could just as well provide a good amount of useful life years, but I do not think that it would be the best option for the organization. The X-ray machine should be purchased under a capital lease, the reason being is because it represents a higher present of value. With the simulation the Ultra Sound System was purchased by using the operating lease and that had appeared to be the best option for Elijah Heart center, the benefits would be lower upfront payment and lower monthly payments. Phase 3: Funding Options for Capital Expansion. The funding selection chosen appears to be correct and after comparing all three options there were a few years of maturity loans, although the option of interest was higher than others the maturity rate was slightly lower. It also had a flexible refinancing plan and repayment options that were made available. The main purpose for cutting cost and increase revenue, it is very important that the organization take their time and make the right decision for that organization, they also need to review their staffing and patient needs. When an organization is thinking about cutting staff that organization needs to think about whether or not they have enough staff to patient to make sure that all patients are receiving the best quality of care. Nursing in health care organization is the biggest challenge and there is always a high demand for nurses in health care facilities. Some organizations may want to consider hiring anymore agency cuts and keep and train the staff that they already have, this in the end can save them plenty of money. Using Medicare reimbursement and selecting equipment that has a great amount of useful years can benefit any type of heath care organization. In order for this to occur the organization has to plan and make revisions when needed to make sure that they are still making money, making good decisions for the organization, becoming successful, and providing the best equipment for patients. After working on the simulation the most important that I have learned about is selecting the right type of loan, paying it on time every month, and paying it off just like you would for any other loan that you would take out. The simulation was a good learning experience for me as it showed how important planning and budgeting is for any type of organization it takes a lot of hard work time, staff, equipment, and patience to run an organization.

Reference
Elijah Health Care Center Simulation (n.d.) retrieved on September 21,2014. http://ecampus.phoenix.edu