Situation: You are the new Chief Financial Officer (CFO) of a non-profit hospital. MRI volumes over the past 5 years have increased dramatically to the point where the demand exceeds the capacity of the single MRI that the hospital is currently operating. A request has come from the director of Imaging to purchase an additional MRI. There is space available but the room will need to be shielded after the MRI is installed. This project has been on the long-term strategic plan for the past four years. As you understand, each year the CEO has told the CFO to postpone purchasing the MRI. You have a need to access capital funding and analyze the financial impact of purchasing a new MRI.

Complete and SBAR that describes the request as follows:

Situation Describe the situation of the MRI request

Background Discuss issues that may have stopped the CFO and Administration from purchasing the MRI in the past.

o Include a summary or outline of the capital budget request process

Assessment/Analysis - Provide the financial analysis that supports (or doesnt support) purchasing the MRI this analysis will include

o Expected life of the MRI

o Cashflow analysis of the MRI over that expected life (Hint: dont forget to include the initial purchase of the MRI in year one)

o NPV Calculation

o IRR Calculation

Recommendation What is your recommendation based on the analysis and background discussion

After reading Chapters 11-13, assuming that you do recommend purchasing the MRI, describe how you would access capital to pay for this purchase and why you chose this option.

Compare and contrast the follow methods to pay for the purchase of the new MRI

o Bond Issue

o New Loan or Line of Credit

o Using Cash Reserves

o Philanthropy

o Would raising revenue to increase reimbursement be an option, why or why not?

Reiter, K. & Song. (2021). Gapenskis Healthcare finance: An introduction to accounting and financial management. (7th ed.). Chicago, IL: Health Administration Press.