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Stages of capital decision making process
Course:- Managerial Accounting
Length:
Reference No.:- EM13759185




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Established in 1987, ABC Community Hospital not-for-profit is an acute care hospital located in an east coast Metropolitan area. With a staff of nearly 200 physicians and specialists, 800 employees and 100 volunteers, they offer a full range of healthcare services. They are accredited by the Joint Commission on Accreditation of Healthcare Organizations. The hospital has been profitable for the last 5 years with a profit margin of 3-4%.

In March 2012, XYZ Healthcare System, a private, for-profit health care chain, took over management of the 400-bed ABC Community Hospital. In May 2013, officials began to discuss a proposal to build a new wing devoted to a Cancer Center and ancillary services devoted to the treatment of Cancer. The new wing would have 30 acute care beds, four surgical operating rooms, intensive care unit and extensive support services, including physical therapy and Hospice care. All patient rooms would be private. There is no Cancer Centers within a 200 mile radius of the hospital service area.

The board has come back with more question that they want you to add to the original paper:

- Compare and contrast the kinds of decisions that are made in the Cancer Center capital investment decision analysis for the for-profit and non-profit healthcare facilities using the four stages of capital decision making process.

- What information is needed by the CFO to evaluate the Cancer Center capital investment project?

- Who, internally from the healthcare system and externally, should be involved in the capital investment decision process to determine the feasibility of the Cancer Center?

Answered:-

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•Compare and contrast the kinds of decisions that are made in the Cancer Center capital investment decision analysis for the for-profit and non-profit healthcare facilities using the four stages of capital decision making process.

The decision making relating to the capital investments and its formation is relatively of wide importance and the same is expected to contain a wide range if functions which would go along with the assurance of a well planned and integrated governance system which is also in line with the major requirements of capital formation.

It is essentially important on the part of the business and the development of the same to ensure that the key considerations and the management initiatives are well controlled and the same is managed in light of changing requirements and also the process of capital formation. It is essential for the firm to first identify all the processes and outcomes and the overall nature of the capital development.




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