Section I of the Capital Project

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Section I of the Capital Project
Denise Cody
February 2, 2015
Professor Thienkim Doan
Section I of the Capital Project
The capital purchase project is for a request that proposes the purchasing of continuous bedside pulse oximeters for the New England Baptist Hospital (NEBH). Pulse oximeters are a specialized piece of equipment that non-invasively measure the oxygen saturation in patients. The management goal that supports this expenditure is based upon the quality assurance that the organization is providing the best evidence-based care to the patients. The management team does demonstrate that this capital purchase will enhance the economic environment of the organization. The organizational goals are identified and do support the need for this purchase. The organizational need to acquire these bedside pulse oximeters is explicitly stated. This acquisition process is explored and does indicate that the management goals are achieved by getting the approval for this capital purchase.

Capital Purchase
The New England Baptist Hospital is a specialty referral hospital that focuses on orthopedic surgery and the care of musculoskeletal disorders. The hospital performs a minimum of thirty inpatient surgeries each day. The total number of inpatients bed are one hundred and twenty.The organization operates annually with a two million dollar budget allowance for capital purchase. This budget is reviewed and adjusted every three to five years. This multi-year capital budget is coming up for review for the fiscal year 2015. The finance director is in the planning phase for this budget review as it is scheduled for the first week in February. In order for a line item to be considered a capital purchase, the item has to cost two thousand dollars or more. The policy at NEBH states,” that a capital equipment expenditure shall be considered as one in which a depreciable asset is acquired”. This statement can be found in the policy and procedure manual viewable through the organizational intranet. The policy goes on to state, “that a depreciable asset has to have an estimated life of three or more years and a historical cost of at least $2,000 for a single item”. The director of the finance department categorizes the capital budget into three groups. The first group is for informational technology, and the second group is for facilities, and the third group is for clinical equipment. The purchasing of continuous pulse oximeters falls in the group of clinical equipment. The director identifies the major projected projects when establishing the capital budget. This is part of the strategic plan for the organization. Sometimes, the priorities change and projects may get deferred. Each manager has to complete a Capital Request Prioritization Form. This form requires a description of the equipment requested. The form also requires the approximate unit cost, the number of units requested, the total request in dollars, is it a replacement, upgrade or new technology item, the equipment age if a replacement, and the priority. The manager must score each priority for each of the requests as the number one is low, two is medium and three is a high priority. The priority questions addressed are; quality or a safety requirement, does this item supports ongoing clinical operation, is this for programmatic growth requirement/revenue enhancement, is it for cost reduction, is this a regulatory or compliance requirement, is this for patient satisfaction, is this for employee satisfaction? Then a weighted average is calculated, and the prioritization form is reviewed by the Finance department. The finance director and her team review the capital request prioritization form. In terms of priority, the director pays special attention to the weighted score for the quality or safety requirement and the regulatory or compliance requirement. For instance, the pulse oximeters ranked fifteen percent for quality or safety requirement...
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