Many hospitals lose tens of thousands of dollars every year, appear older and in need of capital improvement by leaving equipment that should be disposed of on their fixed asset ledger. Maintaining clean records of assets being purchased and being disposed of is time consuming, and many hospitals don't have the staff available to focus strictly on this issue. So, many hospitals choose to bring in valuation experts to help organize their records, says Michael Staunton, a Director at Principle Valuation.
When a hospital purchases a new MRI or CT Scan, the old equipment, if disposed, must be removed from the hospital's books to reflect what the hospital currently maintains, not a cumulative record of the hospital's historical assets. When the records aren't updated, hospitals may be paying insurance on obsolete assets that don't even exist, says Mr. Staunton. A thorough inventory is needed to identify obsolete items and remove them from the hospital's books to ensure they have the proper insurance coverage.
When hospital employees fail to remove depreciated equipment from the books after it has been disposed, the hospital appears to be older on paper than it really is. This can be problematic for hospital executives looking to refinance existing debt or raising new capital for expansion. Principle Valuation recently worked on a project with a large medical center that had $31 million in cost and accumulated depreciation on their record that were identified as disposals which, resulted in a 10 year drop in the average age of plant.
Related Articles on Principle Valuation:
3 Best Practices for Hospital Asset Recordkeeping
5 Ways Hospitals Suffer From Inaccurate Recordkeeping
Michigan's McLaren Health Care Corp. Revenue Up 4%
When a hospital purchases a new MRI or CT Scan, the old equipment, if disposed, must be removed from the hospital's books to reflect what the hospital currently maintains, not a cumulative record of the hospital's historical assets. When the records aren't updated, hospitals may be paying insurance on obsolete assets that don't even exist, says Mr. Staunton. A thorough inventory is needed to identify obsolete items and remove them from the hospital's books to ensure they have the proper insurance coverage.
When hospital employees fail to remove depreciated equipment from the books after it has been disposed, the hospital appears to be older on paper than it really is. This can be problematic for hospital executives looking to refinance existing debt or raising new capital for expansion. Principle Valuation recently worked on a project with a large medical center that had $31 million in cost and accumulated depreciation on their record that were identified as disposals which, resulted in a 10 year drop in the average age of plant.
Related Articles on Principle Valuation:
3 Best Practices for Hospital Asset Recordkeeping
5 Ways Hospitals Suffer From Inaccurate Recordkeeping
Michigan's McLaren Health Care Corp. Revenue Up 4%