A completed Capital Equipment Budget (Table 6-35)

• The line item stating "Depreciation over five years" should actually only include ONE year of depreciation to show how much it will depreciate each year over the next five years.
• Use the straight line depreciation method and assume a depreciation time of five years.

CASE STUDIES IN HEALTH INFORMATION MANAGEMENT o Capital Equipment Budget Instructions: Complete the HIM de department's capital equipment budget for the Note: The only major equipment request is to replace your current dictation Administration has distributed budget requests to each departmen Ing a due date of one month sach department at General Hospital with a memo indicat- Instructions state that the capital budoet is er based, requiring 14 expenditures. You have listed some justifications for a new digit Figure 6-3. You need to complete the capital expenditure approval forms administration with your budget. Based," requiring justification of any proposed capital acons for a new digital dictation system for the upcoming year in cure approval form shown in Figure 6-4 and return it to As the HIM director, you know that after administration's review of subm foreseen as most important will be approved and funded. For your capital budget as if it had been approved. nistration's review of submitted department budgets, only those be approved and funded. For this exercise, include the dictation system in TABLE 6-35 Capital Equipment Information Capital Equipment Item: New Dictation System Cost for system $ 65,000.00 Annual income produced $20,000.00 Depreciation over five years 356 Section 6 LEADERSHIP JUSTIFICATION FOR NEW TRANSCRIPTION SYSTEM couple of times per month The current dictation system is 15 years old. It requires service a couple of times per me The downtime of the system averages 50 minutes each time the serviceman comes out to serve The medical staff has complained of not being able to access the system due to getting buty sian Dr. Delinco complains that his operative reports are taking 1 to 1 weeks to be typed. Dr. Smith has complained that the current system does not allow him to call in and listen dictations as an alternative when the report is not available on the patient chart. Prioritizing reports among the transcriptionists is not as automated as newer systems allow, there consuming transcribers' time and impacting production FIGURE Justification for New Transcription System CAPITAL EXPENDITURE APPROVAL FORM Description: Budget Year: Type of Expenditure: Replacement: Briefly define function of capital expenditure: Budget Cost: $ New: Briefly describe why item is needed: Justification for new transcription system is attached Isee Figure 6-31 FIGURE 4 Capital Expenditure Approval Form CASE STUDIES IN HEALTH INFORMATION MANAGEMENT 357 Financial Analysis Annual Al Gross Revenue B) Less Depreciation C) Gross Profit D) Asset Cost E) Return on Asset F) Payback Years Requested by: (Department Manager] Approved by: Date (Operations Manager [Finance Manager) Date [Administrator) Date FIGURE 4 Capital Expenditure Approval Form (continued