The MEZCOPH substance abuse clinic has a cash flow problem. Your consulting firm has been hired to help fix the problem, but clinic management...

 

The MEZCOPH substance abuse clinic has a cash flow problem. Your consulting firm has been hired to help fix the problem, but clinic management wants to know your approach before sharing their financial information. How would you approach this? 

 

Expert Answers
pnrjulius eNotes educator| Certified Educator

Without detailed information about the institution, it would be hard to give precise advice. But there are, broadly speaking, only three ways you can solve a cashflow problem:

* Improve efficiency: Reduce costs while still producing the same output

* Increase revenue: Take in more funds to pay for expenses

* Decrease production: Produce less output in order to reduce costs

Since we're a substance abuse clinic, we'd strongly prefer to avoid decreasing production---that would mean turning away people with substance abuse problems who need our help, and could carry severe public health costs later down the line. Yet if the cashflow problems are severe enough, we might end up having to do that. While undesirable, this is always feasible.

The best way is always to increase efficiency; if there's something we can do to reorganize our staff, or upgrade our equipment, or change our policies and procedures, that would allow us to help more people with less money spent, that's absolutely what we should do. Unfortunately, this isn't always possible, or it may require a setup cost that we can't afford. (If that's the case, we might be able to get loans to cover the cost of the investment; it's much more likely that we could get loans to support investing in efficiency than that anyone would want to give us loans just to pay for our expenses.)

Finally, we may need to raise revenue. My understanding is that MEZCOPH is publicly funded, so we could implore the local government to increase our funding, asking them to raise taxes if necessary. Alternatively there may be grants we could apply for, perhaps from the US government or from large charitable foundations. We could try soliciting private donations of our own. All of these methods carry their own costs, and none are guaranteed to succeed; but without ways of improving efficiency, they are probably the best way to solve the cashflow problem without decreasing the care we provide.

Access hundreds of thousands of answers with a free trial.

Start Free Trial
Ask a Question