Happy Hospital Scenario : Financial Recommendations

Happy Hospital provides a high quality of care, meets the needs of the community, and serves all people with dignity and respect regardless of their ability to pay (Finkler & Ward, 2006, p. 163). In 2008 Happy Hospital currently has 115 beds and a large amount of current assets however; the hospital is making poor fiscal decisions. In this paper I will discuss how could Happy Hospital use budgets and performance reports in their decision-making process. I will also discuss how must ethics influence their accounting decisions. To improve financial decisions, I will discuss what accounting information is most relevant for Happy Hospital to consider when making decisions.
According to Cleverley & Cameron (2007), to create incentive programs for employed doctors, many nonprofit health care firms have created taxable subsidiaries, such as OMMI, which permit them more latitude in structuring compensation programs that are not subject to the same issues of inurefment examined by the Internal Revenue Service in nonprofit firms (p. 164). In order to improve their poor fiscal decisions, they will need to review their current spending habits. Happy Hospital is recognized by the IRS as a 501(c) 3 Corporation and is therefore exempt from paying income taxes (Finkler & Ward, 2006, p. 163).
The hospital has $12.5 million in accounts receivable and have just over $800,000 in cash (Finkler & Ward, 2006, p. 163). The CEO of Happy Hospital, Mr. Harm O. Knee, for a while now has been talking about the need to automate some of the medical records and move toward an electronic medical record (Finkler & Ward, 2006, p. 163). Mr. Harm wants to invest in new technologies that can improve efficiency and help reduce medical errors (Finkler & Ward, 2006, p. 163). The hospital desperately needs advice on making the right financial decision.
Budgets and Performance Reports
Happy Hospital can use budgets and performance reports in their decision making process that will actually overall...