Financial Management

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%. The mission of ABC Community
Hospital is to provide accessible and comprehensive healthcare services in a convenient and cost-effective manner to the people who live in our community.
At the last Board meeting, hospital administration and the Board of Directors 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.
Now, the Board of Directors has come back with more questions. Answer the questions below in detail.
Compare and contrast the kinds of decisions that are made in the Cancer Center capital investment decision analysis for ABC Community Hospital.
What information is needed by the CFO to evaluate the Cancer Center capital investment project? Use the classification of capital expenditures and
justification of capital expenditures for this project, and include working capital management.
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?