Hospital Service Line Development Paper Example

Paper Type:  Essay
Pages:  4
Wordcount:  908 Words
Date:  2022-12-04

Before determining the construction of an institution, there are numerous factors which are regarded. These factors include having market research of the place, involvement of community during the study, advice from a specialized team, nonprofit factors in the location and the current trends in the healthcare system. This work offers a summary of the pros and cons of building, purchasing or leasing space for Trinity Community Hospital's new orthopedic wing. Also, the paper provides a well-elaborated outline of my recommendations for what Trinity Hospital should adopt. The construction of health facilities over the years have continuously struggled due to the limiting financial laws. Due to the financial declination of the Wall Street the building of hospitals has found itself positioned in a down streaming position. Also, to blame are the reforms, industry planning modes and experts there (Bazzoli et al., 2006).

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Regarding a hospital's five or ten years strategic plan, the institution should take into consideration the requirements of its clients, for instance, the customers who are the patients, the medical practitioners or the management team (Halvitigala et al., 2011). A hospital when looking on expanding its wing, it focuses on some various factors. The first is the quality and safety of the new place. Secondly, service excellence achieved after opening up a new wing. The performance of the workers after the new offices has been opened. Finally, the growth and profitability margin attained by the health institution after it has begun its new wing either through buying, leasing or building (Bazzoli et al., 2006).

Trinity Community Hospitals sets the construction expenses approximated to be at six hundred thousand dollars for five thousand square feet at $120per a given square foot. The first advantage of building option is that it allows the building to increase in value over some time. The monetary value of land and structure always increases and which in return results in the equity value for the health facility (Bazzoli, 2006). Furthermore, Trinity Community Hospital's acquires the right to retain the Orthopedics' structure design and modifications.

When it comes to leasing option, the costs are for a five thousand square foot office is at 20 dollars for a square foot. The hospital will cater to its repair expenses and taxes. Also, leasing will allow allocation of the funds to other projects plus it will minimize the risk of losing revenue through a building or purchasing the building (Chris, 1991). Renting compared to owning a property requires less paperwork compared to owning a building. The various investments by the Hospital would include advanced medical instruments and effective electronic media of record keeping. These costs would have preferably been used in the building or purchase of a new wing. The notable advantage is the minimal cash needed as compared to building or buying a new building.

When it comes to buying, the hospital will have the capacity to lease the other parts of the building not in use to other entrepreneurs and through this, acquire more revenue. By purchasing a commercial space, the institution will not be eligible to pay any rent, and through a mortgage understanding, the hospital will clear the cost after a specified time. Also, purchasing the adjacent building will be an advantage since the price of building appreciates and this will create more equity afterward. After buying, the modification will be limited to only licenses and not the landlord (Bazzoli et al., 2006).

There are numerous disadvantages relating to building a new hospital wing. First, it requires a considerable amount to implement this together with debt accumulation as a result of the funds needed for building. Also, it will be time-consuming before the orthopedic department to be opened since construction will take time and even surpassing the budget set. Leasing of the building adjacent has some disadvantages. First, there will be no equity accumulation by Trinity Hospital since the property does not belong to the hospital. Besides, the landlord will have set guidelines for leasing and therefore, minimizing modification or expansion of the leased space (Halvitigala et al., 2011). The con of building is that it will require a considerable amount of money to facilitate the purchase. Also, the transfer of property will take time due to the processes involved. Another disadvantage is buying a property includes the probability of credit inhabitations in the future due to the debt owed after the purchase of the new business (Bazzoli et al., 2006). This will inhibit the development of the hospital since capital held up in the property purchase.


As for me, I would recommend that the hospital lease the space required for a new orthopedic department. First, the amount set for leasing is upfront facilitating efficient planning of the hospital relating to opening the orthopedic department. Also, it will ease the timely opening of the service line. Notably, the leasing option cushions the exposure if risk by Trinity community Hospital compared to building or buying. Medical equipment and advanced technologies will be applied by the funds supposed to be pumped into building or purchasing of the hospital wing. They are ensuring efficient service delivery by hospital leaving all customers satisfied.


Bazzoli, G. J., Gerland, A., & May, J. (2006). Construction activity in US hospitals. HealthAffairs, 25(3), 783-791.

Chris, M. (1991). Leasing versus purchase of corporate real property: leases with residual equityinterests. Journal of Real Estate Research, 6(1), 79-85.

Halvitigala, D., Murphy, L., & Levy, D. (2011). The impacts of commercial lease structures onlandlord and tenant leasing behaviours and experiences. Pacific Rim Property ResearchJournal, 17(4), 560-583.

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