Alternate Working Capitlal Policy

In: Business and Management

Submitted By mrsjons
Words 1209
Pages 5
Alternate Working Capital Policy
In the health care field it is extremely important to have available cash for contingencies because anything can happen in the health care field. For example, the changes in laws and procedures such as the Affordable Health Care Act, has caused some major changes for health care facilities, physicians, and insurance companies and the changes have put some hospitals at a standstill but they still must operate and cash on hand would help in this situation. “Good cash management should focus not only on the acceleration of receivables, but also on the complete cash conversion cycle” (Cleverly & Cameron, 2007). Elijah Heart Center (EHC) is a New York hospital that specializes in cardiac care with 140 beds. To provide full support for cardiovascular patients, EHC includes the following services: cardiac catheterization laboratories, ancillary equipment for radiology, nephrology, laboratory, surgical suites for open-heart surgery, pulmonology, and other cardiovascular services. EHC’s patient volumes and revenues are growing but profit is dropping (University of Phoenix, 2012). Elijah Heart Center is facing a potential working capital shortfall. This paper will discuss alternate sources of short-term financing, how accounts receivable and inventory affect EHC, discuss the importance of the cash conversion cycle to EHC’s working capital. As well as discuss EHC’s risks associated with the recommendations and how to adjust for risks, and explain how to evaluate the recommendations based on performance measures.
Alternate Short-Term Financing Reducing agency staff will reduce the shortfall by approximately one million dollars. Changing the skill mix by hiring unlicensed assistive personnel will reduce the shortfall by approximately $250,000 annually. Reducing EHC’s contracted staff is another alternative because by implementing this…...

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