Capital Decision Making

this question is just a continuum of the last question (M044) just adding this to that citation and references are a must

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?

Answer preview

Capital decision making process

Capital decision making process can be divided into four interrelated activities which could also be referred to as stages. These include the generation of project information, evaluation of projects, and decisions about which projects to fund and project implementation and reporting. Capital decision making process in the health care facilities is complex. It is essential therefore for the independent decision makers to make a clear evaluation of the decisions that are to be taken. It should be noted that most of the decisions of the not for profit health care institutions do not involve a lot of financial criteria in comparison with the for-profit health care facilities. Even if so, financial factors are essential for both types of organizations (Cleverley, Cleverley, & Song, 2011)………………..

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