Healthcare Operations Management

Health care facilities management examines challenging key elements on whether to contract out patient care and quality management systems. Property development puts the focus on patient care but the management always ponders whether to ponder to buy build or lease space for a new orthopedic service line. This business plan outlines several factors to be considered before the hospital board can make a decision.

Advantages of building space for the new orthopedic service line

Building a new orthopedic service line permits a hospital to customize its space i.e. choose the right spot of imaging machines, inpatients, diagnostic, therapy, and outpatient(Hopp & Lovejoy, 2014). The hospital will, therefore, have full control on how the development of the space is carried out ensuring that the orthopedic line is designed in line with whatever the hospital deems fit. The hospital will also reap from a potential increase in the price of the space built in the coming years as the building value will in most cases grow as years go by. Therefore the cost will be lower in the long run when the building is viewed from a long-term perspective. Also, the building is also advantageous to the hospital in a situation whereby there is no adequate space for leasing or buying near the hospital. Building the orthopedic service line also makes it easier for the hospital to make expansion in future in case the hospital wants to make adjustments in future (Low & Rui, 2016).

Advantages of buying space for the new orthopedic service line

The hospital gets to enjoy the services of the orthopedic service line sooner rather than later than is the case with the building where they have to wait for construction to be completed. The hospital will thus gain the appreciation of the value of the building in the long run as it will own the property immediately and it will also enjoy tax advantages through writing off of the depreciation and mortgage interest if any against the tax liability. Also, the hospital can deduct off the maintenance, repairs, taxes and other related costs before taxation. Hospital improvements also come with depreciation tax advantages (Ozcan & Linhart, 2017).

Purchasing a space does not come with ever increasing rent and the hospital can get a fixed rate of up to eighty percent on a mortgage loan if any thus preventing escalation of monthly payments. There is also the advantage of refinancing at a lower rate that reduces the overall cost and when the mortgage is fully repaid, the hospital will have eliminated the monthly payments for good. Buying more space to the hospital means increased income and improved service delivery to the patients. It also offers the hospital space for further growth in future offering the hospital permanent location giving the hospital a chance to build and increase its value to the patients. Additional space can also be leased to other organizations that will generate extra income for the hospital (Denton, 2013).

Disadvantages of Building a space for the new orthopedic service line

It is very costly to build the space as there is need to take into account the location of the building on the hospital grounds or outside the hospital grounds for analysis. There is a requirement to follow all regulatory requirements and land development statutes including design management that entails hiring of consultants and professionals specific to the technology. These professionals need to have an understanding of the medical office layout including permits and license by the city and state the totality of all these makes the total cost to be expensive(Denton, 2013). The building must, therefore, be constructed in line with these regulatory approvals for health care facilities especially for orthopedics that needs to have departments like MRI buildings and day surgery that may end up being a cost disadvantage. If wrong decisions are made during constructions, then the penalties and fines imposed could be very heavy.

Disadvantages for buying space for the new orthopedic service line

The hospital will be forced to make sacrifices based on the location visibility and strength. This is because many of the ownership opportunities are in secondary properties that may be located further from the hospital. The hospital may be an inconvenience in its quest to move some of its departments and operations away from the hospital resulting in disruptions of service as they move to the bought space. The initial cost of buying space is high as compared to leasing and the hospital will have to pay for expenses that include property appraisals including accounting for a significant down payment in case of a mortgage (Low & Rui, 2016).

Recommendations for the best option for the facility

In conclusion, based on the analysis of the objectives of the orthopedic service line, impact on finances and impact on the patient service delivery and quality of care; it is more advantageous for the hospital to build the orthopedic service line than buying or lease as this comes with the advantageous of designing it the way it is required, it is within the hospital compound and it also comes with tax advantageous. The hospital is better off building the orthopedic service line (Langabeer & Helton, 2016).