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Capital Cycle for Healthcare

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Prepare a paper responding to the following:
•Explain why healthcare executives need to know the capital cycle.
•Determine how the capital cycle impacts the operational (day-to-day) budget.
•Explain the typical approval process for capital. Does it only go through one person (i.e., the CEO), or is it more involved? Provide examples to justify your thoughts.
•Identify the essential characteristics of a financially successful organization. How should healthcare managers apply these traits in understanding the capital cycle of their organization?

Support your paper with a minimum of five scholarly resources. In addition to these specified resources, other appropriate scholarly resources, including older articles, may be included.

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In compliance with BrainMass rules this is not a hand-in-ready paper but is only guidance.

Healthcare executives need to know about the capital cycle because the budget of their department or unit directly impacts them. These executives cannot exceed their budget without further sanctions. Also, if the budget is exceeded within the time duration the executives are likely to be questioned about the higher expenditure, corrective action is likely to be taken, and some of the important tasks are likely to be delayed before further allocation (1). Also, the executives may be required to shorten the working capital cycle. They may be required to collect claims earlier from the insurance companies and other payers and at the same time delaying payments to creditors.

The capital cycle impacts the operational budget in two ways. If the budget is large the size of the working capital cycle related to net current assets and current liabilities gives adequate time for collection of payments from insurance companies (2). In addition, the capital cycle impacts the time duration in which ...

Solution Summary

The answer to this problem explains capital cycle for healthcare management. The references related to the answer are also included.