This is a proposal to equip the organization with new; storerooms, wheelchairs, storage cabinets, consultation rooms, and an office.
Rational for Purchase _the purchase will improve Joslin Diabetes Clinic patient handling capacity which will improve the organizational capacity.
Data to support rational the primary data to support the rational is the declining patient handling capacity which has a negative impact on the organization cash flow and long-term operations sustainability.
Risk if the item is not purchased failure to buy the above items the organization operation efficiency will continue to decline which will lead to the closure of the facility due to lack of sustainability.
How does capital purchase align with Strategic Goals?
1. The purchase of the items will increase Joslin Diabetes efficiency Clinic which will improve the standards of care in the facility.
2. Purchasing the items will expand the facility patient handling capacity which is in line with the organization strategic goal of state accreditation of the facility which will increase the public funds available for the organization.
3. The purchase of the items will improve the patient safety which will increase the number of patients treated at the facility which will improve the facility revenues.
Impact of purchase on current organizational resources
The purchase of the wheelchairs will increase patient movement in the institution.
The storerooms will be used to promote the management of the facility resources.
The new storage cabinets will promote the organization filing system which will improve information assessment.
The purchase of an office will promote the management and coordination of different resources within the organization which will increase efficiency in Joslin Diabetes Clinic.
Construction and equipping the consultation rooms will improve health diagnosis for the patients and improve efficiency.
Statements. The 2016 proposed operating budget shows.
Dec 15 YTD 2016 Budget Increase/Decrease % Difference
Revenue 12,480,000 16,800,000 4,320,000 34.62
4,800,000 6,000,000 1,200,000 25.00
960,000 1,760,000 800,000 83.33
0 1,296,000 1,500,000 204,000 15.74
2,880,000 3,600,000 720,000 25.00
1,850,000 850,000 -1,000,000 -54.05
24,266,000 17,650,000 -6,616,000 -27.26
0 3,842,280 3,950,000 107,720 2.80
$ 20,423,720 $ 13,700,000 -6,723,720 -32.92
$ 2,500,000 2,500,000 $ - 0.00
$ 800,000 800,000 $ - 0.00
$ 350,000 350,000 $ - 0.00
$ 180,000 180,000 $ - 0.00
360,000 360,000 $ - 0.00
2,770,000 2,770,000 $ - 0.00
45,000 45,000 $ - 0.00
$ 7,005,000 7,005,000 $ - 0.00
$ - 485,000 485,000 $ - 0.00
265,000 200,000 $ (65,000) -24.53
265,000 685,000 $ 420,000 158.49
$ - $ 250,000.00 250,000 $ - 0.00
$ 108,786 110,000 $ 1,214 1.12
152,288 153,000 $ 712 0.47
497,694 498,000 $ 306 0.06
506,984 508,000 $ 1,016 0.20
183,509 183,509 $ - 0.00
154,996 154,000 $ (996) -0.64
40,334 39,500 $ (834) -2.07
15,000 15,500 $ 500 3.33
80,000 80,000 $ - 0.00
$ 1,739,591 1,741,509 $ 1,918 0.11
$ 8,744,591 8,746,509 $ 1,918 0.02
Net profit $ 11,679,129 8,903,491 $ (2,775,638) -23.77
INSTALLATION PROPOSED QUARTER OF PURCHASE
ITEM REQUESTED PURPOSE / USE ITEM COST COST TOTAL COST 1st 2nd 3rd 4th
Floor Scrubber facilities $ 6,000 $ - $ 6,000 X
Tablet Counters (2) Prep room & radiology room 2 5,000 - 5,000 X
Filing Cabinet Staff Office 2,500 - 2,500 X
Scanner for Inventory Inventory cycle counts 18,000 1,000 19,000 X
Intercom System Replace outdated system 35,000 35,000 X
Add new item here
store rooms safe custody of the inventories 10,000 2,000 12,000 X
storage cabinets safe custody of the inventories 7,000 1,000 8,000 X
consultation rooms addition patient handling 80,000 5,000 85,000 X X
radiology room patient handling capacity 30,000 4,000 34,000 X
infusion room patient handling capacity 30,000 4,000 34,000
Office patient handling capacity 10,000 10,000 X
Wheelchairs patient handling capacity 10,000 10,000 X
TOTALS $ 243,500 $ 17,000 $ 260,500
The revenue includes _____________________ $ 11,679,129
Expenses. Expense increased/decreased related to ___increased by 260,500 dollars
The annual expenditure is expected to be __8,744, 591 + 260,500 = 9,005.091 dollars
These are related to _the purchase of store rooms, wheel chairs, storage cabinets, consultation rooms, and an office.
Reasoning. By supporting the mission to purchase storerooms, wheelchairs, storage cabinets, consultation rooms, and an office. The organization operation efficiency will improve as well as the safety of the services delivered to the patients. However,
The capital item will increase the organization operation cost (Brunzell et al., 2013).
Impacts and Justification
Short-term impact. The short-term impact on the organization's finances will include the increase in the operating costs which will increase pressure on the organization finances and necessitate the acquisition of external funds from creditors.
Long-term impact. The long-term impact on the organization's finances will be increased savings and total revenue due to the organization increased operational efficiencies as well as the increased capacity which will increase the number of patients who can be served at the Joslin Diabetes Clinic.
Strategic planning. Alternatives could be:
Not to initiate the proposal which would mean that Joslin Diabetes Clinic will be operating below capacity which will have a negative impact on the organizational efficiency and long-term sustainability. The clinic is already facing deficiency problems regarding equipment and the according to the financial report of the organization, and it seems like the facility is burning cash each year due to the ever-increasing unprofitable operations. According to Abor, 2017, any health facility regardless of its size can only be in the current situation for a short period. Within sometime it will start downsizing its staff. However, this situation does not have to reach that point. There are ways in which it can be turned around.
Select another alternative
Government accreditation to receive public funding
Limitations of the alternatives:
Government accreditation takes time- Government accreditation is a process that requires planning and investment. The current organization situation requires immediate attention regarding improving efficiency which will only be achieved through investment in equipment and management. Therefore, government accreditation despite the fact that it will expose the clinic to more funds in the short term it will be ineffective regarding increasing patient safety and operation efficiency needs a quick fix which will be in line with the organization long-term strategy (Andor et al., 2015).
Government accreditation has minimum requirements that would be difficult to achieve in the shortest time. The situation being faced by Joslin Diabetes Clinic requires immediate response to promote efficiency which will in the long term attract a government accreditation which will increase the number of funds at the clinic disposal to improve efficiency and patient safety.
Increased pressure on the organization expenditure. The overhead costs will increase if the organization chooses government accreditation because it will have to invest more on equipment and structures to promote patient safety and patient handling capacity which are amongst the minimum requirements for government accreditation (Burns et al., 2015).
Joslin Diabetes Clinic requires a quick fix to increase capacity and patient safety which is not possible within the shortest time possible if the organization settles for government accreditation.
Abor, J. Y. (2017). Evaluating Capital Investment Decisions: Capital Budgeting. In Entrepreneurial Finance for MSMEs (pp. 293-320). Springer International Publishing.
Andor, G., Mohanty, S. K., & Toth, T. (2015). Capital budgeting practices: A survey of Central and Eastern European firms. Emerging Markets Review, 23, 148-172.
Brunzell, T., Liljeblom, E., & Vaihekoski, M. (2013). Determinants of capital budgeting methods and hurdle rates in Nordic firms. Accounting & Finance, 53(1), 85-110.
Burns, R., & Walker, J. (2015). Capital budgeting surveys: the future is now.
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