(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, project cash flow estimation and risk analysis, reporting profits; reporting assets, financing, and cash flows; analyzing financial condition. | PA R T I I I FINANCING AND CAPITAL INVESTMENT DECISIONS H ospitals need buildings and equipment to provide inpatient and outpatient services, while clinics and physician practices require similar assets to provide outpatient services. To obtain these assets, healthcare organizations need capital (money). A large hospital requires a large amount of capital (some hospitals have more than $1 billion of capital), while a small home health care business requires a small amount of capital. Chapter 8 discusses how healthcare organizations are financed. Two primary types of capital are available to healthcare businesses. Debt capital is borrowed money supplied by lenders, while ownership (equity) capital is obtained from owners of for-profit businesses and from the community at large for not-for-profit businesses. Because debt and ownership capital have different characteristics, managers must learn the impact of these differences on the financial condition of the business. Chapters 9 and 10 cover capital investment decisions: Once capital is in the healthcare provider’s hand, how should it be best spent? In other words, what capital investments (investments in land, buildings, and equipment) should be made? To make the best possible decisions, assessing the financial impact of proposed capital investments is necessary. This requires an understanding of discounted cash flow analysis, financial risk, and other issues related to capital investment decisions. 207 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 .
