Satisfactory Essays
Cost cutting can help in bridging working capital shortage. Cost cutting is the process used by companies to reduce their costs and increase their revenue. Elijah Heart Center has various options for cutting cost. These include reducing agency staff and implementing a variation in skills mix. Downsizing has recently become a popular concept in cost cutting interventions. Downsizing entails reducing the number of agency or organizations staff. By reducing the number of contract employees, EHC will save on wages, premiums, management fee among other staff related expenses. This intervention will in turn help in bridging capital shortage; the amounts saved can be invested in other projects earning revenue.
Elijah Heart center can also change the organizations skill mix by hiring unlicensed assisting personnel. This is a prudent move as it will not only help in cost reducing but also boost the organizational efficiency in the end. The unlicensed personnel cost of hiring and maintaining will be low as compared to hiring competent personnel to perform simple tasks that can be performed by unlicensed personnel. These tasks include moving and feeding patients. The unlicensed personnel can perform the tasks without compromising the quality of health care provided and at the same time assist in cost saving. The registered nurses can supervise the unlicensed staff and perform complicated tasks.
Obtaining a loan can also help Elijah Health Center bridge a working capital shortage gap. An attractive loan option should not only offer low interest but should also be easier to service. The loan option is flexible in terms of payment as it allows for an earlier repayment. In spite of high interest rate, loan option 1 enables EHC bridge its capita...

... middle of paper ...

... financed as an investment grade that offers the lowest rates available in capital market. This is important in achieving the cost saving objective as opposed to high financing costs. The issuer can redeem the option prior to its maturity and there is no deadline for using the funds. EHC can therefore have an ample time to plan and avoid flaws.
Prudent cash management and knowledge of various fund sources is important. Different conditions and benefits are attached to various medical equipment and expansion funding option. A health facility should thus choose an option that enhances cash flow, reduces cost, and enhances efficiency. The simulation does not include the impact of the options on the staff; this should be accounted for in the simulation. Knowledge of different source of funding options and impacts is important in day-to-day management of health facility.