Green Valley Medical Center Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Green Valley Medical Center Case Solution

Green Valley Medical Center

Along with that, Green Valley issued municipal revenue bonds on several occasion like whenever hospital had to finance for expansions and improvements

Green Valley is not only regional hospital that serves regional patients, but one of only two in the state, with facilities in cardiology, oncology, and neurology. Green valley also has a specialty in the field of teaching and research as well as cliental care. In fact, the hospital was extensively regarded for the innovative work and research conducted by its medical community.

Green Valley Medical Center has already built its name in the industry. In addition, this hospital has no problem in generating the revenues. The hospital wants to get more success; therefore, they made a decision regarding their capital budgeting process.

Capital budgeting Process

Green Valley Medical Center (CVMC’s) hired financial officer Allen Klein as the new CFO of the Green Valley. Therefore, he decided to make a capital budgeting process. The steps he took are as followed:

Step one: Submit equipment request to the department heads

Step two: The department heads review and rank the new request than and they ranked against previous request

Step three: Any request not deemed worthy from this updated list are dropped

Step four: All the requests are documented and submitted to the hospital’s fiscal affairs department

Step five: The board of trustees approve the master list.

However, he is aware of the common practice used by the private sector and certain techniques were familiar. As the result, he is considering a system that would be much more objective than what had been typical at Green Valley. Klein hopes that he will be able to achieve a better balance of information for decision-making with regards to capital budgeting, which would result in approval of capital budgets by different departments.

This way, he can easily compare projects of similar nature and cost. After checking the 130 requests for complete information, he developed four groups and evaluated these capital requests on the basis of largest administrative support and most expensive and decided two proposal; one is the Positron Emission Tomography (PET) and the other is laundry. The total investment of the PET proposal is $5.5 million and the total investment of the laundry proposal is $ 1 million.

Green Valley Medical Center Case Solution

Problem statement

The given capital budgeting process was highly subjective nature for deciding the equipment requests. Now Green Valley Medical Center quantities approach will adapt in dealing with capital budgeting decision.

Quantitative analysis:

The new CFO used the return on investment, payback period, and net present value approaches as quantitative analysis in order to enable him to make a better decision for capital budgeting...............

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