Should the Clinic Purchase a MRI Machine?
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The paper discusses the management goals for this project of purchasing a MRI machine and then examines the direct and indirect economic impact of the MRI machine. Next, the paper considers the organizational goals that would be supported by the purchase of an MRI machine, that include improvements in patient care, cost containment and improving competitive advantages. The paper shows how the MRI represents a means by which a strong new source of revenue can be acquired, delivering a high contribution margin to the clinic that can be used to fund other ventures and help achieve other goals. The paper concludes, therefore, that the purchase of an MRI machine for the MEI clinic makes financial sense, it makes strategic sense, and it makes sense in the context of organizational and managerial objectives, improving all of the measures that matter.
Needs of the Organization
Needs of the Organization
From the Paper:"There are a number of management goals against which the viability of any capital project must be evaluated. The agency theory of management holds that management acts as agents for the shareholders, and Milton Friedman (1970) argued that the sole responsibility of business is to increase its profits. Therefore, management's primary objective in its actions should be to maximize shareholder profit. With respect to capital projects, this means choosing a project that has a high net present value - that is to say a project that delivers a higher revenue (adjusted for time and cost of capital) than its cost.
"While the shareholders are the most important stakeholder, they are not the only one. Indeed, the ability of management to meet the needs of other stakeholders often impacts on the ability of management to improve profits. Improving patient outcomes, for example, is a critical management objective because this enhances the facility's reputation and increases its revenues. In addition, improving patient outcomes reduces the costs associated with malpractice suits and other high-cost legal action.
"Employee development and facility improvement are two objectives that are also worth considering. Facility improvement refers to the quality and modernity of the services offered by the clinic. Better facilities not only attract patients, they also improve the working environment for the staff. Physicians and other practitioners are more efficient and more effective with working with modern machinery, and this improves their intrinsic job satisfaction."
Sample of Sources Used:
- CompareMRIcost.com (2010). Compare MRI cost. CompareMRIcost.com. Retrieved September 24, 2010 from http://www.comparemricost.com/
- Friedman, M. (1970). The social responsibility of business is to increase its profits. New York Times Magazine. Retrieved September 24, 2010 from http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
- PCH4 (no date). The growth in diagnostic imaging utilization. PHC4. Retrieved September 24, 2010 from http://www.phc4.org/reports/fyi/fyi27.htm
Cite this Analytical Essay:
Should the Clinic Purchase a MRI Machine? (2013, April 30) Retrieved January 28, 2022, from https://www.academon.com/analytical-essay/should-the-clinic-purchase-a-mri-machine-152835/
"Should the Clinic Purchase a MRI Machine?" 30 April 2013. Web. 28 January. 2022. <https://www.academon.com/analytical-essay/should-the-clinic-purchase-a-mri-machine-152835/>