Verified Document

Budgeting And Cost Control In Healthcare Term Paper

Related Topics:

Budgeting and Cost Control Health Care Budgeting and Cost Control in Health Care:

What is Present Value Analysis and how is it useful in determining the most cost effective choice among purchase-lease alternatives?

Strictly from the point-of-view of a businessperson, the net present value method, or NPV, of evaluating a potentially major project allows the businessman or woman to consider the time value of money. The time value of money is the value of money of a particular endeavor, in today's dollars. Thus, the calculation of NPV or net present value, gives the present value of the future cash flow, allowing a comparison of the amount of a project's yield or profit, with the amount of money needed to implement the potential project. "If the NPV is greater than the cost, the project will be profitable...NPV analysis is generally used to evaluate the project's cash flows, rather than the income from the project." (Business Owner's toolkit, 2004). A profit may be high, but is of little value if met with even higher costs, in other words.

The income from a potential...

Income statements, unlike present value analysis, however, do not take into consideration factors such as depreciation, which is not an out-of-pocket expense. "For instance, if revenue of $10,000 is reduced to $7,000 of income because of a $3,000." (Business Owner's toolkit, 2004). This is one of the main reasons why NPV is useful in calculating lease and purchase alternatives. If one purchases a particular item or property, one is financially responsible for what happens to that product in the future and must take into account the depreciation of the property or equipment that occurs.
For instance, if a hospital were to purchase several defibrillators, the hospital would have to take into consideration the long-term damage done to the defibrillators, if they were frequently used by the hospital. The accountant would have to consider the likely use of the equipment, if such equipment was frequently used by the staff, and if it had a high rate of replacement by the staff because of depreciation due to use. It would also consider if…

Sources used in this document:
Works Cited

Net Present Value Analysis." (2004). Business Owner's Toolkit. Retrieved on February 27, 2004 at http://www.toolkit.cch.com/text/P06_6530.asp
Cite this Document:
Copy Bibliography Citation

Related Documents

Budgeting and Cost Control in Healthcare
Words: 631 Length: 2 Document Type: Term Paper

Budgeting and Cost Control Health Care Budgeting and Cost Control in Health Care: Significance of Diagnosis-Related Groups and Defenders and Critics of the Current DRG system Diagnosis-related groups, otherwise known as DRGs, are considered to be one of the building blocks of the modern healthcare and hospital system, for better or, some would say, for worse. DRGs are present in America as well as Australia, and the United Kingdom and are thus

Budgeting and Cost Control in Healthcare
Words: 3341 Length: 13 Document Type: Term Paper

Budgeting and Cost Control in Healthcare One of the most critical issues facing healthcare facilities and organizations is the rapidly increasing cost of providing services. Cost control and budgetary issues are the first consideration for many healthcare facilities. According to statistics, the "single most important thing on the minds of healthcare decision makers is cost management and containment." (Lawson, 2004). In fact, more than 95% of respondents to a survey concluded

Budgeting and Cost Control
Words: 1536 Length: 5 Document Type: Term Paper

Budgeting/Cost Control New Budgetary Need for the HSO -- Additional Hotline 'Crisis' Staff is Warranted, Especially During Exam Time One new budgetary need that might and in fact must be addressed in an overall HSO (Health and Safety Office) budget request is additional volunteer, but more particularly additional paid student work study counseling staff during exam time for the University 'crisis' hotline. Description Statement providing an overview of the request The request is as

Healthcare Home for Veterans
Words: 2706 Length: 9 Document Type: Research Paper

Introduction This business plan is for a care home for veterans. The home will be a new facility, a new business, and will serve the needs of the local community. In terms of positioning, the veteran's care home will serve a slightly premium market. While recognizing the role that government agencies have as payers, the home will also be able to cater to the needs of veterans whose families wish to

Healthcare System in the Netherlands
Words: 4143 Length: 10 Document Type: Term Paper

Specialist doctors will normally examine only those patients who have been referred to their clinic by a general practitioner. (U.S. Department of State, n. d.) The Government of Netherlands is not responsible or the ongoing management of the healthcare system on a daily basis which is offered by private healthcare service providers. However the government is charged with the accessibility and ensuring appropriate standards of the healthcare. A new healthcare

Healthcare Finance
Words: 410 Length: 1 Document Type: Term Paper

Healthcare Finance: What is the break-Even analysis approach and its application in health care organizations? Unfortunately, hospital and health care budgeting of resources has become increasingly important in this cost-conscious era of health care. The last decades of cost-controlled medicine have required fiscally conscious approaches to the healthcare for many organizations, often at the expense of patient services. A financial analyst must strive to minimize this, yet still keep the organization

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now