Question

Part 8 New Primary Care Practices in Jasper

Determine the costs to MCH of establishing two new primary care practices in Jasper. The analysis should include estimates of all costs (recruitment, compensation arrangements, facility, staffing, information technology, etc.) and assess the advantages and disadvantages of leasing or purchasing building space.

Answer 1

Every business has its own policies and procedures of budget analysis and these are effected by economic conditions of country which effect business internally and externally. In new business owner must carefully observe the factors which are effecting or can can effect its business conditions in future.

Every company has its own way of analysis.

In recruitment procedure one should check the cost of hiring whether internally or externally.  For example cost of advertisement of job portals, any kind of test procedure conducted by company, amount spend of recruitment fees, cost of salary.

Compensation Arrangements are any kind of payment whether direct or indirect a company is paying to its employees, directors, officers or staff in case of any legal arrangement. It is a cost bear by company in legal terms.

Facility, staffing and information technology :-

Any amount spent on New technology requires to study its life cycle cost analysis. Develop strategies so that one can decide the most appropriate technology regarding its requirement. While deciding this one should consider its rate, Brand, Cost, Specification. Vendor selection is also very important. After investing in technology, organization must have the staff and facility that can work on that technology, organization should train them, provide training facilities to staff and other facilities which are necessary. Safety measures should also be consider. And the most important thing is the cost factor which we are going to spend in these things. Investment in technology needs a big amount so invest it wisely after considering the above facts.

Besides these an organization should also consider there fixed cost, variable cost, direct cost, indirect cost.

• It should also evaluate whether the revenue will cover the cost.
• What will be the best way to share the cost within departments
• What are the cost drivers and there allocations
• Identify the key business activities.

Leasing or purchasing a building space has its own pros and cons. If it is a new business then business owner must carefully observe the pros and cons. Leasing provides more flexibility and availability of cash and free up the working capital. Leasing is less costly. Location of building also matters whether we can afford to buy or else go for leasing. In leasing there is no ownership over the building.

Where as in purchasing our own building we enjoy the ownership benefits and can generate the additional income by letting it out on rent. Purchasing a building needs a big amount of fund that could be use in any other way to generate more funds, that amount is blocked.