Service lines are businesses that have proven to offer great help in the health care by providing specialized services. The orthopedic services need enough space and the current establishment does not have enough space. As such, various options exist, that can be employed in finding a new establishment. The options to be weighed in moving to a new establishment include building, buying space and leasing a building. All of these options have their difficulties. It is therefore crucial to weigh the various options, which are as below.
Advantages of Building Space
Building a space for a new orthopedic line is one of the options. The building costs amount to £600000 without adding the operation capital and the equipment for use. One advantages of building the orthopedic service line it that it will give the hospital ownership of the establishment and is not affected by payment of rent every month or having to be thrown out should they default on payment. A service line is usually specialized to offer various services and having one’s establishment provides an important link to the customers who easily access the facility because it uses its name and its location is definite (Zelman et al., 2009). Building space means that the company can choose how it will use the space to its advantage. It can establish another space adjacent to increase. As a result, the orthopedic service can have more space for improvement when compared to a rented space. Therefore, there are few or no limitations about building a space for one’s facility.
Disadvantage of Building
The high cost of construction amounting to £600000 when compared to buying space especially the building at £575000 and the operation capital at £125000, which is a cheaper option for the service line. The disadvantages of building a new service line are that it would be costly since it is an establishment that needs to be designed in such a way that it suits all people who come into it especially the patient. Building a new establishment may take more time and may face various hurdles and challenges associated with the building like the price of materials, weather among many others. The operations, therefore, have to delay until the whole hospitals are built (Birnbaum & Zimmerman, 2011). As such some doctors attached such a project will not earn anything from that project and have to wait until the project is finished. The doctors will not benefit from the people who need their help, as they will have to wait until the establishment is finished or access other hospitals. The hospitals during the period of a building will, therefore, miss customers and hence the establishment if not completed on time will make the establishment miss the much-needed revenue.
Leasing of Space
Advantages of Leasing
Leasing of space amounts to £1000000 and it is a triple lease that goes up to twenty years. The advantage of leasing of space can prove beneficial to the business. The leasing includes the initial costs that are not as expensive as building the space and inputting the various equipment and facilities that will be needed in the establishment. The establishment can start the business as quickly as possible. The healthcare facility can lease a space today and start its operation on the morrow or the day after. Leasing, therefore, enables the orthopedic facility to starts operations as quickly as possible when compared to building the facility first. Leasing also ensures that the patients who were being treated are not delayed and taken care of as soon as possible (Zelman et al., 2009). The facility is thus up and running and the various specialist working there can start earning without having to wait for the establishment to be built. Leases help reduce the payment on the taxable income because release amount is an expense. Another advantage is that the one who leases does not have to pay for maintenance of the building or space. Such maintenance tasks need a lot of time and expenses to make sure the building is maintained properly. Obtaining a lease is not complex is it does not need any requirements like a credit report. The process of leasing takes the little time, and one can take over space and start operations. Very many establishments that can be leased as compared to those can be sold putting the lease method at an advantage in regards to variability.
Disadvantages of Leasing
The disadvantages of leasing are that the establishment does own the property. The company can therefore not make any improvements due to the restrictions laid out by the owners. Also, the facility cannot be expanded to fit the needs of the health facility. Leasing also may introduce uncertainty since the owner may opt to change the premises at any time and usually needs to give notice to the occupants so that they can vacate. As such, the orthopedic service will not operate as specified in a free manner.
Leasing in the end can prove expensive since the many times one leases the more one uses that would otherwise have been saved if the management sought to build the space. The costly nature of the leases is further worsened by the annual increments, which increase the lease, and one had to dig deeper into his or her pockets to finance the lease. Since there is not ownership of the building as increments of the lease, do not provide the further increment in a capital. As such, the capital growth on the investment is not there. Using the space is very advantageous to the business. The business, in this case, has some money or can get additional funds to buy a premise that is already built and ready for use. Buying space provides a good location for the service line since the space is located near the hospital. It will cost a total of £700000 to completely build and start operations.
Advantages of Buying Space
The advantages of buying space are that one would not need to pay rent for the premises. Paying using a mortgage may include beneficial times like reduced monthly pay, which reduces on costs. When the final payments are made the business will not have to pay monthly (Swayne et al., 2008). One can benefit for tax deductions due to depreciation and the interests earned by the mortgages. One can further improve the premises and thereby reduce tax payments as a result. Buying space gives the owner more entitlement in an improvement of the establishment. One can make the various improvement at the present or in future without any hindrance. Another advantage is capital gains. The property gains as times go on and the value thereby increases. One can sell the building later at a higher price than he can, or she bought initially. One is not limited to the improvements he or she makes to attract customers and further improve service delivery. One therefore has total control over the premises.
Disadvantages of Buying Space
Buying the whole building is costly. The business in place should have more money and not use that which was intended for the daily operations of the company. The mortgage down payment is usually high and, therefore, require that one have enough money to continue further operations. When one owns a building, he takes on more responsibilities like maintaining the building and especially working on repairs, which can take additional time that would have been used in various operations as some of the rooms used for treatment are out of bounds during such operations.
The insurance and property tax usually rise leading to an eventual increase in cost. Such expenses can greatly decrease the cash flows in the business. Some locations cannot have a smooth flow of customers into the establishment and since the building cannot be, moved one has to do with the available but little inflow of customers. Getting the right building is another challenge since not all buildings will suit the plans of the business especially in provide unique settings and improvements that may further cost the owner.
For the facility to function well it needs to buy its space. It is better to buy space to ensure that the business is not limited in the options of having more space. The business can look at the market and find out a building that will provide the needed space for its operations. Buying an establishment is, therefore, an important step that will enable the business to own the business and further ensure that it reduces on the leasing expenses and the building. Expenses.
The building will take more money and time, in this case £600000, which deny the business time and energy in dealing with its normal operations. Leasing will cost £1000000, which will be for twenty years, and it will surpass the cost of both building and buying. Buying will be a better option because it will enable the business to continue its operations smoothly without stopping as the facilities are ready to be used immediately. Leasing in the end will prove more expensive and affect the cash flows of the business. The owners should, therefore, venture in ensuring that they consider buying since it has the more benefits as explained above.
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