Alternate working capital policy
Elijah Heart Center (EHC) hospital built as an advanced coronary care unit in New York. It has 140 beads and 120, 00 square foot for this specialty. The EHC hospital provide full support of cardiovascular patients including catherization laboratories, nephrology, pulmonology, ancillary equipment for radiology, surgical suites for open-heart surgery and other cardiovascular services. On the other hand, according to University of Phoenix (2011) that the rapid growth in revenues and patients resulting in a drop of profits.
As a finance manager, need to discuss short-term finance to explore solutions. By doing this will need to reexamine accounts receivable, inventories, and cash conversion cycle that would affect the EHC policy and its importance in cash management. In an organization it is very important to discuss risks and how to minimize risk. Nonetheless, as a manager need to expand on how to ...view middle of the document...
However, purchase of resources, billing, collection, and service would be the factor affects working capital.
Accounts receivable, the service or product must be taken care off at the beginning of working capital management cycle; therefore, the EHC hospital will wait patient payments at the end of the cycle. According to Baker and Baker (2007) that the hospital may require larger financing amounts during times of sales increases because of longer periods of collections.
Inventories must be maintain to enable EHC hospital to meet the required procedures that the goals require (lack of supplies) would prevent the company from using their equipment and led to income loss and patient dissatisfaction.
Cash Conversion Cycle used to determine length of time to convert receivables to cash flow. This cycle it is very important in EHC hospital to measure its services or production process.
Risks and recommendations
Reducing staff and hiring unlicensed assistive personnel would be a risk because of shortages staff that may limit health care services toward patient needs. That may cost the organization because not enough health care professionals to take care patients and lack of quality service.
Hiring unlicensed employees need to go through training first and must be qualified assisting licensed professional health care personnel. The EHC hospital should hire enough health care employees based on financial conditions to avoid overstaffing.
Evaluations for performance measures and suggestions implementing policy
The EHC hospital should adopt financial strategic plan to improve cash management, quality service, and understand balance sheet. That would help the EHC’s financial managers to meet its performance measurement. Decreasing excess health care professional licensed employees and hiring qualified unlicensed employees would help to decrease financial expenses and also time management.
Baker, J. J., & Baker, R. W. (2006). Health care finance: Basic tools for nonfinancial mangers
(2nd ed.). Sudbury, MA: Jones and Bartlett.
Cleverly, O. W., Cameron, E. A. (2007). Essentials of health care finance (6th ed.). Sudbury
MA: Jones and Bartlett.