ou have just been appointed to manage Valley Medical Center, a 120-bed, nonprofit community hospital in Valley City (population 120,000). There are two other hospitals in the community65 bed for-profit Prime Medical Center and 110 bed St. Theresa Hospital. You were appointed as the management team last week when the hospital defaulted on its bond payments and the creditors were understandably perturbed.

Your hospital operates at 40% capacity, generating $82 million in annual collections, and is currently incurring a 2% operating loss over the past 12 months.

As you convene your first management team meeting at 7:00 a.m. on Monday (your first day on the job), the operating room manager and your chief of the medical staff department of surgery come into your meeting room to advise you that your surgical implant and pharmaceutical vendors have refused to deliver goods needed for surgical cases scheduled this morning. The vendor representatives are on-site with the supplies and are willing to deliver the needed supplies, but only if paid for the goods being ordered (COD or "Cash on Delivery"). They are also taking the position that all future deliveries must be paid for at the time of delivery. When you consult with your purchasing manager to understand what is going on, you find that several other vendors have communicated similar demands on behalf of those companies.

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1. factors that may have precipitated this action on the part of your vendors.
2. the cash flow impact of such payment terms on your organization if you assume that the vendors demanding COD terms make up 35% of your supply spending, and supply spending total 20% of collections.
3. Develop a management plan to address this issue with the vendors and include your rationale for these action
4. any assumptions you feel necessary to support your proposed course of action.
5. the cash management strategy you will need to execute. State any assumptions you feel necessary and, of course, provide a rationale for your actions.