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Homework answers / question archive / Healthcare is expensive
Healthcare is expensive. It takes an enormous amount of capital to secure the necessary resources to finance the care delivery continuum. The cost and sources of that capital is critical to being able to understand the cost of conducting business in general and also forms the basis on which future projects can be evaluated on a quantitative basis (e.g., capital budgeting, lease financing, etc.). For this week’s discussion, please review this article:
Arduino, K. (2019). How to advance projects amid rising capital costs. (Links to an external site.) Hfm (Healthcare Financial Management), 58–59.
Once article has been read, relate a personal or known (project) event (used and documented in the media for example) in responding to the scenario. Use the prompts below in addressing it:
Healthcare
Financing healthcare projects have increasingly become expensive due to factors related to the volatility of interest rates and the increased associated costs in essential aspects like staffing. Many healthcare facilities find it challenging to access capital financial aids like loans due to increased market risk. Rural hospitals like Fillmore County Hospital in Nebraska have been continually attempting to access bank loans to finance their operations due to the effects of the pandemic, which has led to a surge in patient volume and reduced revenue. Unfortunately, many banks decline their requests terming them as ineligible. As a result, the county hospital has been surviving on its "190 employees, 20 acute care beds and a 10-bed geriatric inpatient behavioral health unit" to support its community (Kaplan, 2020). This is happening since the hospitals are not gaining from the federal government's PPP loans to cushion them during the pandemic.
Healthcare facilities are experiencing continuous increment in operating costs. Issues like the need for many employees have been a challenge since the revenue margin is continuing to dwindle and reduce; hence, there is a need for bank loans (Arduino, 2019). the county hospital cannot access ban loans under the PPP regulations since the Act only provided assistance to private hospitals. Therefore, the health facilities are forced to lay off some of their employees due to inadequate capital (Kaplan, 2020). This is, therefore, a substantial financial crisis to healthcare facilities in the full glare of the pandemic.
Joe Machin, West Virginia's senator, assured the facilities that he would push a legislative amendment to the PPP funding to ensure that the rural hospitals get the portion of the non-risky government loan to fund their operations. This exercise has provided me with knowledge concerning the financial challenges that face healthcare. It is apparent that healthcare projects are increasingly expensive, and the facilities have to borrow loans to fund the projects since their revenue is always insufficient. Nonetheless, the prevailing conditions and regulations put in place by financial institutions increase the risk of borrowing, thereby making the public hospitals shin away from such capital financing ventures.
