Explain the steps of the cash conversion cycle for a hospital
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The cycle in a hospital from admission to collection of the billing can be broken down into the following phases: cash, purchase of resources, availability of resources, patient treatment, patient release, billing, receivables and collection. Explain these phases and what management can do to help shorten the overall time it takes to complete the cash conversion cycle.
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This question has divided the cash conversion cycle into eight stages, for each of the stage you are required to give your comments and state what action the management must take to speed up the cash conversion cycle.
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<br>There are some assumptions, which the question makes, first the question assumes that cycle can be broken down into separate parts, this is not true. The cash conversion cycle is a continuous process, for example the billing process is part of the patient release process and in several hospitals the patient release process is also the point of collection. Unless the collection is made the patient is not released. Second, the question assumes that the purchase of resources is a distinct stage from the availability of resources. This is not so in case of hospitals, where emergencies are a norm and each emergency leads inevitably to spot purchases which need instant cash.
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<br>Given below is a template to help you answer your question.
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<br>1. Cash: This is the cash in hand. This is dependent on the cash that has been collected from patients, the deposits or loans, which have been taken from the bank. If the cash has been taken in form of loan from the bank, then it is important to help shorten the overall time. MANAGEMENT can do two things to shorten the overall time it takes to complete the cash conversion cycle at this stage, it can speed up ...
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