TAILIEUCHUNG - Ebook Fundamentals of healthcare finance: Part 2
(BQ) Part 2 book "Fundamentals of healthcare finance" has contents: Business financing and the cost of capital, capital investment decision basics, project cash flow estimation and risk analysis, reporting profits, reporting assets, financing, and cash flows, analyzing financial condition. | CHAPTER 8 BUSINESS FINANCING AND THE COST OF CAPITAL T H E M E S E T-U P S TARTING A N EW M EDICAL P RACTICE A few months ago, six primary care physicians in Seattle met to discuss the feasibility of creating a new group practice. Of the six, four were operating solo practices, while the other two were just completing family practice residencies. Although a solo practice offers some advantages, such as complete control, it presents numerous disadvantages. Perhaps the largest disadvantage is that the business’s administrative and clinical overhead costs must be borne by a single physician, while larger group practices can benefit from economies of scale (the spreading of fixed administrative and clinical costs over more patients). Also, solo practitioners are, in effect, always on call for handling medical emergencies outside of regular working hours. Finally, by forming groups, physicians increase their bargaining power with third-party payers. The bottom line here is that more and more individual physicians are joining together to form groups. The trend toward multiphysician practices was recognized by the six physicians, who agreed to form a new business, Puget Sound Family Practice. 209 210 Fundamentals of Healthcare Finance The start-up of a new group practice is not an easy task. First, legal issues must be settled, such as what type of business organization to establish (the physicians decided on a professional corporation) and who would have the greatest say in running the practice. Next, space has to be rented and equipped. Then, clinical and administrative staffs have to be hired and trained to ensure that the practice runs smoothly and that patients receive quality care in a timely, patient-friendly setting. All of these start-up tasks require capital. In fact, the initial analysis of capital needs for Puget Sound Family Practice indicated that about $ million was required to get the business up and running. The next steps in the start-up .
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