Question

Picture yourself as a member of the administration team of a 253-bed healthcare facility. The community where the facility is located has a large corporation moving to town that is going to bring in 7,500 new jobs. Building has started to accommodate the higher population in the community. The administration team has decided to expand the healthcare facility by 150 beds, including expansion of the emergency department and two new intensive care units in preparation for the increased population in the community. The healthcare organization needs to obtain funding for the expansion. What type of financing would you be looking for (equity or debt) and why?

Answer 1

Answer: Debt Financing

Step-by-step explanation:

Reasons to get Debt financing in this scenario:

• It will be easier to obtain than equity as this is a healthcare facility and operations are about to pick up.
• The increased population and standard of living from the new jobs will ensure that the centre can afford interest repayment.
• Debt financing ensures that the ownership of the facility will not become diluted or taken over by entities that may not have best interests at heart.