Expert answer:Health Care Financial Management course (Case stud
Solved by verified expert:Need help with part f of budgeting case study. I have part B completed, this document will be relevant to part f, I will attach it as a corresponding guide for you.
part_f_budget_case_study.doc
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Community General Hospital
Packet F
Community General Hospital has enjoyed a history of success in attracting and
maintaining solid patient volumes. Part of their success has been a balanced program of
capital equipment purchases to benefit both the care provided to patients and continued
new purchases and replacement of equipment.
The total dollars expend on equipment purchases for the last four years are as
follows:
2011
$3,500,000
2012
4,200,000
2013
4,050,000
2014
4,150,000
It is estimated by management that the amount of money to be spent on capital equipment
in 2015 will be $ 4,550,000.
A tentative list of requested equipment is presented in Exhibit A. Based on what you
have read and studied about capital budgeting:
1. How did the hospital management set the allotted dollars to be spent on
capital equipment in this budget year at $ 4,550,000 and
2. What process would be followed and completed in selecting the items to be
purchased in the 2015 capital budget?
a. What analysis might be used and how would this work.
b. What discussions would management utilize to make specific
equipment purchase decisions?
c. Explain the rationale behind each equipment purchase.
COMMUNITY GENERAL HOSPITAL
PACKET F
EXHIBIT A
Type of Equipment
Cost
1. Nuclear Medicine Camera
$ 325,000
2. MRI
1,500,000
3. Computer System Laboratory
285,000
4. Patient Information System
585,000
5. Pharmacy Distribution System
387,000
6. Clinical Information System Nursing
867,000
7. New Loading Dock – Materials Management
248,000
8. Air Conditioning – West Wing
489,000
9. Hospital Beds – 30
10. Echocardiogram Equipment
11. IV Pumps – 40
45,000
450,000
55,000
12. Communications Equipment
355,000
13. Chemical Analyzer – Laboratory
988,000
14. Transportation Vans – Food Service
75,000
15. Transport Containers – Food Service
45,000
16. Information Systems Equipment (Computers)
278,000
17. Operating Room Tables & Equipment
765,000
18. Contingency Spending
350,000
Total
$ 8,365,000
…
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