Question

Part 1) Discuss the importance of understanding the time value of money from a healthcare organization's point of view. Why would a healthcare administrator need to conern themselves with this concept? What decisions might be made, based on the time value of money?

Part 2) Imagine you are the director of a large medical facility. You are asked to explain the different between productive time and nonproductive time to your Board of Directors. How will you explain that concept?

Answer 1

Part 1) Discuss the importance of understanding the time value of money from a healthcare organization's point of view. Why would a healthcare administrator need to conern themselves with this concept? What decisions might be made, based on the time value of money?

Every last one of us has money related needs and objectives. When the objectives are distinguished, we have to set objective qualities (targets). This implies we ought to be in a situation to change over the requirements/objectives into monetary terms. To do this, we ought to know about and comprehend the most significant part of 'Budgetary Planning' i.e., Time Value of Money (TVM).

Assume you were given the decision between accepting Rs 100,000 today or Rs 100,000 of every 10 years. Which choice would you rather choose? Plainly the primary alternative is progressively significant for the accompanying reasons:

•           Purchasing power: Because of expansion, Rs 100,000 can be utilized to purchase a bigger number of merchandise and ventures today than Rs 100,000 of every quite a while from now. Put another way, simply recollect what Rs 100,000 could get you 10 years back. For example : 10 years back the expense of one liter milk would have been state Rs 5, presently its Rs 30 and following 10 years, it could be Rs 100.

•           Opportunity Cost: A rupee got today can be contributed now to acquire intrigue, this can bring about a higher incentive later on. Sooner is superior to later.

•           Risk Vs Return: If you are giving your cash to be utilized by someone else/organization, that implies you are going out on a limb related with it, which is known as 'default hazard' (you might get back your installments). Along these lines, you expect return/enthusiasm to repay the hazard.

Time Value of Money : Compounding and Discounting

The essential standards of TVM are intensifying and limiting strategies.

Exacerbating : When we hear the word 'intensifies', the primary thing that rings a bell is GROWTH. That implies we anticipate that our speculation should develop and yield some arrival (or intrigue).

For example – Rs 10,000 put today in a bank fixed store at 9% dad loan fee for a long time can get you Rs 15,386 (how about we disregard tax collection part). So Rs 5,386 is the amassing of the intrigue and furthermore enthusiasm on the intrigue.

Limiting : Compounding is about the future estimation of the present speculation, where as limiting is the today' esteem (PV) of cash to be gotten later on (FV – Future Value). Present worth is determined by applying a markdown rate (opportunity cost) to the entireties of cash to be gotten later on.

For example – You need Rs 15,386 out of a long time from now and the predominant bank rates are around 9%. What is the sum that you have to contribute now to get Rs 15,386 following five years?

The estimation of Rs 15,386 is equivalent to Rs 10,000 in the present an incentive at a limiting pace of 9%.

In light of the above models, we can say that the parts of any TVM issues or estimations are;

•           Tenure (The all out number of exacerbating or limiting periods)

•           Rate of Interest

•           Present Value (PV) or Today's worth

•           Future Value (FV)

The fifth part is Periodic Payments (Pmt).

For example : If you gain a home credit of Rs50 Lakh @ 10% dad for a time of 20 years, your EMI (Equated Monthly Installments) would associate with Rs 48,000.

Along these lines, Payments (pmt) speaks to rise to intermittent installments got or paid every period. At the point when installments are gotten they are sure, when installments are made they are negative.

You can utilize Microsoft Excel to compute TVM based issues. Use FV, PV, PMT and so on., to figure you monetary objective sums and furthermore to break down your ventures.

You can likewise utilize ordinary or monetary number crunchers to tackle your Time Value of Money issues.

Part 2) Imagine you are the director of a large medical facility. You are asked to explain the different between productive time and nonproductive time to your Board of Directors. How will you explain that concept?

Productive Time

'Productive time' is the time that a worker spends treating the patient or on a real, profitable undertaking. For example, dealing with patient needs by directing bedside blood tests, overseeing medicine, and other basic undertakings. In like manner, a clinician may clean your careful rigging, for example, your headlights and different instruments.

A noteworthy hole between the necessary hours and real hours is a serious issue.

In a human services setting, there is a remarkably appeal for passionate work expected of staff. So the danger of stress, discouragement, burnout, and turnover is prominently high. The 'hours hole' can intensify that and bring about other extreme efficiency issues in your medical clinic.

Non-Productive Time

In human services, 'non-profitable time' incorporates all satisfied obligation hours, for example, get-away or occasion days, wiped out leave, staff improvement, preparing on new hardware, and inactive time.

Of non-gainful time, inactive time is of most elevated worry to clinics.

In those hours, the clinician isn't working nor is the patient getting treatment — however the emergency clinic is as yet acquiring an expense for these 'exercises'.

This inactive time incorporates 'repetitive' exercises, for example, a clinician looking out for another (who may find out about a particular instrument or programming) or taking part in "occupied work" (errands that don't further any objective, or produce any worth).