Capital Purchase Costing 5 000 Company Benefit  Essay

  • Length: 11 pages
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  • Subject: Healthcare
  • Type: Essay
  • Paper: #25264020

Excerpt from Essay :

capital purchase, costing $5,000, company benefit . Examples include a X-ray machine, MRI processor, software filing patient records, a research library, large item company . o Identify management goals expenditure support

Capital purchase

The health care field is becoming presented with more and more pressures in today's society. There are numerous changes in the social and economic environments, which become combined to generate new pressures for the health care providers. The life expectancy of the population increases, generating increased needs for medical care for several years. Then, the Baby Boomers are retiring, causing a demanding generation, used to financial resources and access to services, to turn to the medical care sector for more services. The policies regulating the field also change as do the demands and expectations of patients.

In such a context, the health care institutions find themselves in a position in which they have to be better managed and administered. In other words, by having to respond to numerous challenges from various environments, the health care providers must become more business oriented than ever before. The role of management in the administration of health care institutions is as such increasing.

In this setting, the current project assesses a capital purchase at a health care organization through administrative lenses. Emphasis is placed on the ability of the purchase to support the attainment of the managerial goals, to influence organizational economics, to support the organizational needs and goals, and also to provide a final, integrated justification for the capital purchase. The capital purchase considered is represented by a new MRI machine.

2. Support for managerial goals

The ultimate scope of any health care institution is that of providing quality medical services to the benefit of their patients. Still, in the context of the new challenges raised by the internal and external environments, there are also several managerial goals to be met by the medical institutions. These are listed below:

Operating based on a pre-established goal and operating in a manner in which the health care organization is self-sustainable. Additionally, it is hoped for the health care entity to become profitable; the profitability objective is quite uncommon within the medical field, yet, the institutions "must generate some level of profit to achieve their other goals. Whether for profit or not for profit, health care organizations need profits to invest in expansion of services so there is wider access to health care. They also need to earn profit on some patients in order to subsidize those patients who are unable to bear the costs of their services. Health care organizations need profits to acquire new technologies to improve the quality of health care. Further, health care organizations need to earn profit in order to money available should an emergency arise. Finally, profits are needed so that health care organizations can replace old buildings and equipment as they wear out" (Finkler, Ward and Calabrese, 2011).

Offering high quality services to patients, which in turn generate satisfaction and improve the reputation of the organization

Possessing a highly skilled and trained workforce, including all institutional personnel, not only the doctors

The integration of technologies within the medical and administrative processes, in order to support higher quality services and institutional competitiveness

Operating at high levels of efficiency, with the maximization of the results and the minimization of the costs

The purchase of the new MRI machine would support the health care institutions to provide better quality services for the patients, but also to better attain its managerial objectives. The means in which the capital purchase would support the managerial goals is revealed in the table below:


Means of attainment

Financial stability and profit maximization

The MRI machine would attracts more patients, which would in turn generate more revenues for the institution

Institutional reputation

The MRI machine would support a better diagnosis process, increasing the satisfaction of the patients and their unofficial promotion of the health care institution

Highly trained staffs

The purchase of the new MRI machine would materialize in the need for the medical staffs to become better technically trained in order to operate it

Technological integration

The new RMI machine represents a newer technology and improves the technological stance at the health care institution

Operational efficiency

The purchase and usage of the new MRI machine would result in diagnoses being set in a more efficient manner, with treatments being able to be offered sooner, and in support of the overall operational efficiency at the firm.

All in all, the purchase and integration of the new MRI machine is a positive action for the company since it helps it attain its multifaceted management goals.

3. Organizational economics

The managerial goals previously identified are mostly of an economic nature; still, the economic environment of the firm is impacted at a greater level since the purchase of the new MRI machine has the ability to enhance the economic environment at the health care institution.

On an initial level, it would be appreciated that the purchase of the new piece of medical technology would generate a significant expense for the organization, which would have to invest a considerable portion of capital in its purchase. At a generic level, the purchase of a new MRI machine could cost up to $300,000 (Absolute Medical Equipment, 2012). At an initial level then, the health care institution would have to raise the necessary funds, and then the economic issues would revolve around ensuring that the investment generates a suitable return.

In terms of the positive means in which the new capital purchase could impact the economic environment at the health care institution, these include the following:

The new MRI machine would attract more patients, who would generate more revenues for the health care institution. These new revenues would in turn lead to superior financial stability and would also support an increase in the institution's profitability rate. In other words, the capital expenditure would eventually support the attainment of the economic and financial goals of the hospital's managerial team.

Then, the new MRI machine would generate an overall improvement in the quality of the medical services at the institution, which would generate in an improved image of the health care provider. At an economic level, such an outcome would translate into an increased demand (and subsequently increased revenues), but also an increasing interest on the part of investors. In other words, by hearing about the developing hospital, prospective investors would become more interested in the institution and the availability of investments would increase.

Last, also due to the improved reputation and image, the health care institution would become more interesting to dedicated and talented staffs. The medical and non-medical individuals would be more interested to work in the hospital that integrates new technologies and is committed to development. At an economic level, this translates into an increase in the labor force offer as well as an increase in the skills and overall qualifications of the personnel employed in the health care institution.

All in all, the purchase of the new MRI machine raises some challenges at an economic level, in the meaning that it is necessary to engage the capital for the purchase, and then to develop and implement measures that ensure that the MRI is able to attain its economic objectives (namely, that it generates a suitable return on investment). Nevertheless, despite these challenges, the capital purchase is beneficial as it has the ability to improve the economic environment at the health care institution at the levels of patient attraction, investor interest and an increased access to more skilled and qualified staff members.

4. Support for organizational goals

Organizational goals are generically defined as the scopes towards an entity would strive, referring to the results it hopes to obtain. In order to achieve these results, the organized group will develop and implement a wide array of strategies aimed at combining resources (inputs) in a means in which the desired outputs are created (Daft, 2009).

The organizational goals differ from one institution to the other and these are individually set by the institutions. In the case of economic agents for instance, the common goal is that of attaining higher levels of profitability. In the case of not for profit entities however, the goal might be one linked to a social cause, but it could also include profitability objectives (at least for reasons of sustainability, as it has been mentioned before in Finkler, Ward, and Calabrese, 2011).

In the case of the current hospital, its objectives are two sided in meaning that they include both financial desires, as well as social desires to provide a high quality medical act. In this sense, the organizational objectives are summarized as follows:

The provision of high quality medical care to the patients

The provision of support to the community by helping people stay healthier

The prevention of disease through programs of community education

The ability to operate in a financially sustainable manner.

These objectives are obvious at the level of the entire institution, and…

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