Cost Planning Case Study

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Stimulation Review Cost cutting measures are the first portion of the simulation. These measures are implemented by a company to improve profitability and reduce expenses. Cost cutting measures may include reducing employee pay, lay off of employees, downsizing to a smaller building, changing hours of service, or changing to a less expensive health insurance employee plan ("Investopedia", 2015). Gilbert Sanchez set a target for cost saving in the amount of 900,000 in the first year. The EHC will receive $2,300,000 from managed care companies and Medicare in three months, but the shortfall at the business must be resolved first. To achieve this, we must determine two cost cutting measures. A loan option must be identified as well. The cost cutting options we have at EHC are reducing benefits, reducing agency staff, downsizing staff, reducing length-of-stay, or changing the skill mix (University of Phoenix, 2015). To achieve a cost saving target of $750,000 for the first quarter the first cost cutting measure I selected is reducing a proportion of the agency contracted staff. Making a reduction in the number of contracted staff member will save the company on the premiums they pay to the staffing agency and management fees. Additionally the skill level of the contracted staff could not be compared to the employees of the hospital, which has been…show more content…
Operating leases are short term cancelable lease written by equipment manufacturers who expect to take back the leases equipment after the lease term is over ("", n.d.). This material is considered high technology and general has a useful life of up to five years. Operating lease has lower upfront payment and low monthly installment. The upgrade option under this contract will eliminate the technological obsolescence. While we may pay more for this option, in the long run, we are guaranteed to have the latest

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