The Financial Planning of the Hospital

The Financial planning of the hospital should lay down policies in respect of :

The amount of capital required at each stage
The sources, in general and particular , to be used to raise the required capital
The mix of different sources in total capital
The target cost of capital for hospital
Appropriation of profit during operating period
The policies relating to the grant credit and collection of receivables

The project proposal should give information regarding how much investment or fund are needed at each stage ort the project. During the gestation period, funds are needed to meet the cost of land and buildings, improvement to the land, promotional expenses , cost of machinery and equipment and salary expenses. During the operating period, the requirement of current assets and the arrangement of finance assume a prominent position. Current asset are estimated and monitored on a constant basis, keeping in mind the the occupancy levels or capacity utilization in the hospital. Though some current liabilities arise spontaneously, the rest should be planned in advance and procured on time. Investment us needed for keeping a certain level of material in stock, for granting credit to patients or clients and to pay some expenses . in advance. The expansion period resembles the gestation period because it involves investment in fixed assets or taking up another new project, but it is down during the operational period of the existing hospital. Estimation of cost for the expansion in mind the existing business and financial risk.

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