Capital Purchase Justification (Essay Sample)

Capital Purchase Justification
NAME
INSTITUTION
COURSE AND PREFIX NUMBER
Capital investments aim to advance and improve operations as well as to promote the exploration of new investments, programs and projects. They involve purchase or modification of capital assets including land, major equipment and buildings. The healthcare sector is no exception to the adverse effects of the widespread economic recession. Such effects will include limit to access of capital with higher cost of capital and the investment returns will not subsidise operating performance anymore(Levy, Lawrence &Shiple,2009). Due to these effects, most healthcare facilities are delaying new investments. Prior to any new investments, the facilities should ensure they are efficiently utilising the existing investments and also must prioritise the investments so as to maintain the best utilization of the scarce capital. They should be fixated on maximising performance in all primary areas of capital investment.
Computerized Axial Tomography abbreviated as CT or CAT scan is a distinctive X-ray test that generates cross-sectional body images using computers and X-rays. CT was developed by Nobel Prize holders, Dr. Allan Cormack and Sir Godfrey Hounsfield (Washington &Leaver, 2015). These have continually been used to date to diagnose medical diseases. Medical practitioners use CT scans to help check the progress and success of a surgery or procedure and to review areas of the body including the brain, belly and the chest. For example, CT scan is used during biopsy to guide a syringe into the body.CAT scanning is painless, fast, non-invasive and accurate. It aids in saving countless lives by quickly disclosing internal injuries and internal bleeding during emergencies. The patient lies down on a table fastened to a CT scanner. It then slides into the scanner opening and moves during the scan to display necessary cross-sectional body images.
There are various manufacturers and CT scan equipment vendors such as Siemens, Toshiba, GE and Philips among others. There are also many different CT scan models and types. The factors to consider before budgeting and investing in a CT scan include; the facility’s physically accommodation capabilities, the strength of the CT scanner, and the expected number of patients, the regulatory requirements and the destined uses of the scanner. Philip CT scanners are well-regarded for affordability, image quality and efficiency. They also provide an option for new or refurbished purchases. The Philips CT scanners models include; Brilliance 64, MX 8000 IDT 16, Brilliance 40 and Brilliance 16(Crawford, 2015).With a combination of innovativeness, efficiency and affordability; the Philips Big Core 16 slice is a good choice of investment.
This Philips Big Core 16 slice has both refurbished and new purchase option. It has the following features; Rate Responsive technology, It can scan times of .4 seconds full gantry rotation ,Patented MRC x-ray tube, Spiral Auto Start, Philips Dose Wise, It has fast reconstruction and task automation and the special feature of the Brilliance workspace workstation. It has a patient couch assembly to meet precision and correctness requirements of oncology departments with up to 650 pounds/295 kilogrammes table capacity with full Z accuracy. When purchasing a CT scanner, there are extra costs for essential components such as staff training costs, service agreement charges and essential accessories such as needles and ECG motion triggers. The 16 slice CT scanners range between ninety thousand to one hundred and sixty thousand dollars including the installation costs (Pierce, 2017).
The price of the particular suggested model costs approximately one hundred and five thousand dollars for a refurbished model and approximately one hundred and ten thousand dollars for a new model. The additional costs for the model are approximately eighty five thousand dollars per annum. The service costs, however, range depending on the location, the model, parts, age of the unit, multiple systems and multiple years (Viscomi, 2014).The model can also be leased at approximately four thousand dollars per month for a five-year lease plan. The return on investment for the machine can be estimated by gauging the payer’s mix, the demand and the rate of use. CT scanners generate an internal rate of return of one hundred and three percent and payback over a period of seventeen and a half months.
The benefits of this investment outweigh any cons. To evaluate this, we weigh its eventual offering to this facility, logistics, management, marketing, total costs and its demand. First, CT is a commonly performed procedure not only used in X-ray/radiology departments but also in outpatient offices without requiring admission. It is evident that the initial investment costs are quite huge. This will, however, be countered by its widespread application and opportunities. The hospital will charge its patients a substantial fee to use the equipment. According to New Choice Health (2017), the national estimated charge for a brain CT scan is one thousand two hundred dollars. It costs a patient approximately three hundred dollars for a brain scan and approximately four hundred dollars for a chest scan. The estimated useful life of a CT scanner is approximately nine years or more.
The equipment fulfils the NEMA standard XR-29. This legislation affects its expected reimbursements. The logistics and transport charge for the machine is catered for by the supplier. The installation cost is also included in the purchase/refurbished cost. The site planning procedure for this CT scanner is simple and less costly due its special feature of Brilliance workspace workstation. It has multi-dimensional adaptive filtering that minimises blurring. The equipment will breakeven taking into consideration the cost-volume-profit analysis (Oriol., et al, 2009). The high total costs will be able to be countered by the expected high volumes hence higher profits/returns.
With the increasing need for CT scans due to the widespread applicability and usefulness, the demand for the equipment is undoubtedly high. In a study published in Radiology Today Magazine, Dolan(2011) cited data from the Centres for Disease Control and Prevention indicating that application of national CT scans increased from 2.7 million scans in 1995 to 16.2 million in 2007 and CT procedures for children increased from 330,000 to 1.65 million. CT scans have low-level radiation hence safe and preferred. The equipment has invaluable benefits. It has the advantages of speed, image resolution and patient comfort. CAT scan is most suitable for studying the lungs and abdomen and crucial in cancer diagnosis. CT imaging and CT angiography are invaluable in the detection, diagnosis and treatment of the rampant heart, stroke and vascular diseases. Also, it can be used to measure bone mineral density for the diagnosis of osteoporosis. It is the crucial equipment for emergencies and major trauma cases. These widespread applications and the prevalence of the mentioned conditions, it will see to high demand and many referrals.
It has image reconstruction and display, exposure control and application packages. These improved imaging capabilities make it fast hence larger volumes scanned at the s