hello there, here is the final draft i just finalised

Running Head: MANAGEMENT AND HEALTHCARE

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Student’s Name
Professor’s Name
Course

Date

Management and healthcare
Article Review #1
In the current situation, health companies may find it challenging to acquire an
expansive credit line. Due to a prolonged economic downturn, the rate of return
associated with such expanding financing becomes low. Credit lines eventually come
with higher interest rates and become more difficult to be obtained by health companies.
Increased regulatory requirements in daily operations and laws regarding expansive
activities may create difficulty in implementing such a strategy. There is also an
increased pressure to acquire new medical technology, but how to obtain funds for that
purpose is challenging with the cost factor in place.
Two issues that the Caribbean expansion company may have dealt with are the
capital investment decisions and the regulatory environment. They are crucial elements
that any expanding company needs to take into consideration before starting any
project. It is essential to understand what favourable capital budgeting decisions to
make that will enable a smooth transition and the regulatory environment, which is a
crucial component in the non-financial factors (Kaufman Hall & Associates, Inc,
2010).

Running Head: MANAGEMENT AND HEALTHCARE

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With increasing challenges in raising capital, health companies need to look
beyond banks to get finance to service their line expansions. An organization needs to
have an appropriate financing structure that will help maintain a long term strong
capital structure, which can drive the growth of the organization. Long-term debt like
bonds and taxable notes can provide alternative capital financing. The interest rate is
determined by the credit nature of the borrower and security provisions stated by the
holder of the bond. Leasing can be used as capital investment for health systems. It
enables hospitals to continue with their expansive projects, which may not be
financed by bonds or loans due to inherent challenges.
Article Review #2
The author made a good case when describing a break-even analysis for
expanding healthcare providers. It provides an essential tool for managers to decide
whether or not to continue with the project. This is elaborated in this discussion.
Break-even analysis is a formula used to determine a company is neither
incurring losses or profit. It happens when the total expenses are equal to the revenues
generated in a health company. Non-financial factors need to e included determining
break-even analysis of an entity. In the healthcare facility, factors such as regulatory
requirements required to operate a hospital are of paramount importance. Meeting the
quality health standards and health practices will determine the revenues generated.
The quality and experience of doctors offering health services will determine the
number of patients coming for medical treatment. Advanced technology and the
purchase of the latest medical equipment that can offer sophisticated procedures will
improve the health company's reputation, which is key to gaining customers' trust in
quality healthcare.

Running Head: MANAGEMENT AND HEALTHCARE

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Affordable Care Act enacted laws that changed the way health facilities operate
in the U.S. The Act has to lead to reduced costs associated with operations in health
facilities hence tilting the margins in their revenues. The non-financial elements of
these regulations have also played a key factor in break-even analysis. Improving
standards in basic healthcare providers increase service provision quality and lower
costs incurred in expected wastage. Building up a qualified workforce for now and the
future is a cost-saving factor that ensures companies save on costs associated with
recruitment and training new staff. The Act saw an increase in millions of
subscriptions in the health insurance for new users who were neglected. It means
hospitals will also see an increase in patient numbers, which will transform into
revenues and hence break even at the early stages of operation (Joan G.L, Charles R.
M, 2012).
Break-even analysis helps the health providers determine the volume of services
to be provided and the type of payment to estimate the expected profit or loss. Various
costs are divided according to their classifications to help apply the formula. Fixed
costs are differentiated from the variable costs and used against the average selling
price to determine the break-even point. After determining this point, companies can
make an informed decision to either plan for an expansion of drop off that plan. The
main advantage of this formula is that it shows the time when the health facility has
its lowest business activity, which is necessary to prevent further losses. It can be used
to guide in the optimal capital budgeting techniques to be applied in case of
expanding.

Running Head: MANAGEMENT AND HEALTHCARE

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Summary
Making a capital investment decision in a healthcare facility is crucial before a
project kicks off. A project can be prioritized if the projected return there is a
possibility of getting maximum value for the company. For proper expansion plan
methods such as; net present value NPV method, payback method and internal rate of
return, IRR methods are used to make such decisions. Taking this into consideration
and factoring the non-financial factors explained above will help management make
an informed decision on such expansive projects.
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