Trinity Community Hospital Case Study
Trinity Community Hospital has a five-year strategic plan for the hospital that includes creating a Regional Orthopedic Center. (Trinity Community Hospital, 2018) In the following summary, there will be a brief explanation on the advantages and disadvantages for building, buying or leasing space for this center. In conclusion, I will give my recommendation.
1 - There are many advantages to building, buying or leasing space for the Orthopedic Center.
a. First, building on the hospital property will provide easy access to the hospital for patients coming to the orthopedic center that could need same day surgery. It would make it more convenient for the patient to be escorted within the hospital for the surgery. In addition, based on the …show more content…
Next, let’s talk about the buying space advantages. When buying a space for the Orthopedic Center would give the hospital more land which would add value to the hospital assets. It will also give the hospital additional tax advantages such as the interest from the mortgage loan, the depreciation for 20 years as well as the monthly payment would be under the loan payment expense which would reduce the profit margin for less tax due. In addition, it would be easier for patients to get in and out of the center as parking would not be an issue on the new property. (Trinity Community Hospital, …show more content…
First, the disadvantage of building a space would use space that was already mentioned to be limited on the campus of Trinity Community Hospital. The time it takes to get building permits and inspections will affect when the construction on the center would begin. In addition, the weather is a factor that must be considered when preparing the construction timelines. (Trinity Community Hospital, 2018)
b. Next, the disadvantages of buying a space is the added cost for the purchase of the lot that the building was sitting on. The price does not include any renovation that maybe necessary to give the center the prestigious appeal for patients, investors and staff. Although an inspection before purchase would be conducted, there is no guarantee that the age of the building would not be a factor for future unexpected expenses.
c. Finally, the biggest disadvantage to leasing is the triple net lease. In addition to the $100,000.00 lease price expense, the lease includes the hospital paying for the real estate taxes and any repairs costs. (Trinity Community Hospital, 2018) Repair cost can be high, for example, in the southeast wintry weather is typical; however, extreme freezing weather that drops below freezing can be unexpected. When the proper precautions are not taken, pipes can freeze, burst, and cause major damage to an office building. In this triple net lease, these expenses would be full cost to the Trinity Community
1 - There are many advantages to building, buying or leasing space for the Orthopedic Center.
a. First, building on the hospital property will provide easy access to the hospital for patients coming to the orthopedic center that could need same day surgery. It would make it more convenient for the patient to be escorted within the hospital for the surgery. In addition, based on the …show more content…
Next, let’s talk about the buying space advantages. When buying a space for the Orthopedic Center would give the hospital more land which would add value to the hospital assets. It will also give the hospital additional tax advantages such as the interest from the mortgage loan, the depreciation for 20 years as well as the monthly payment would be under the loan payment expense which would reduce the profit margin for less tax due. In addition, it would be easier for patients to get in and out of the center as parking would not be an issue on the new property. (Trinity Community Hospital, …show more content…
First, the disadvantage of building a space would use space that was already mentioned to be limited on the campus of Trinity Community Hospital. The time it takes to get building permits and inspections will affect when the construction on the center would begin. In addition, the weather is a factor that must be considered when preparing the construction timelines. (Trinity Community Hospital, 2018)
b. Next, the disadvantages of buying a space is the added cost for the purchase of the lot that the building was sitting on. The price does not include any renovation that maybe necessary to give the center the prestigious appeal for patients, investors and staff. Although an inspection before purchase would be conducted, there is no guarantee that the age of the building would not be a factor for future unexpected expenses.
c. Finally, the biggest disadvantage to leasing is the triple net lease. In addition to the $100,000.00 lease price expense, the lease includes the hospital paying for the real estate taxes and any repairs costs. (Trinity Community Hospital, 2018) Repair cost can be high, for example, in the southeast wintry weather is typical; however, extreme freezing weather that drops below freezing can be unexpected. When the proper precautions are not taken, pipes can freeze, burst, and cause major damage to an office building. In this triple net lease, these expenses would be full cost to the Trinity Community