Financing for Health Facilities (Coursework Sample)

Access to capital is among the most substantial barrier health amenities experience when striving to execute expansion and growth plans. This phenomenon shows the essence of understanding the disadvantages and advantages of equity and debt financing. The primary aspect that describes the development of investor ownership and multi-institutional systems is access to cash. Capital expenditures represent a small percentage of healthcare costs, but investment overheads regularly translate into higher operating outlays. Access to capital by health facilities is vital to the future and configuration of the healthcare system. Generally, it takes cash to make money but requires low-cost capital to last. This paper explains the best source of funding for a health amenity, parties to contact, the cash reserves needed, long-term debt, and the primary objectives for investment management.
Debt Financing
In this scenario, debt funding will be the best option for this health facility. The amenity is expanding by 150 beds. Also, the health amenity intends to upgrade its intensive care units and emergency department. Therefore, getting financing through debt will be easier. Debt financing has numerous advantages than drawbacks, making this source affordable and appropriate for the health facility.
Lower Interest Rates
Short-term loans, credit cards, and other debt funding are never helpful if the interest rates are sky-high (Cole & Sokolyk, 2018). However, this facility requires a loan with low-cost funds. With low and long-term rates, a business loan is a gold standard for health amenity financing (Hunter & Murray, 2019). Typically, there can be tax advantages to acquiring a debt. This situation will lower the overall interest rate the health amenity would pay when meeting its obligations with this option (Hunter & Murray, 2019). Therefore, it will help the organization to expand its bed capacity and the emergency unit while accessing the liquidity it requires. Yet, the facility must engage its accounting officers to ascertain that this advantage applies in their situations. This initiative will help the healthcare organization manage the challenging calculations that arise from such a circumstance.
Fuels Growth
Uses of long-standing debt comprise purchasing equipment, expanding, and hiring new employees (Hunter & Murray, 2019). Thus, acquiring such a loan with low interest will offer this facility the working capital required to expand the number of beds, helping it accommodate the increasing population in the community. This phenomenon will result in 7,500 new jobs and improved healthcare services. The debt funding will assist this organization in increasing efficiency and improving patient care by adding more beds and expanding the new intensive care departments and emergency units (Hunter & Murray, 2019). Also, the facility will avoid being fixed to a cash-strapped scheme that will never materialize into something helpful.