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Capital Purchase Justification

Executive Summary

Over recent years there has been an increase in the need to offer quality service to top patients, which in turn would affect the financial performance of the hospital, thus increasing its competitive advantage of the hospital in the industry. This proposal outlines the need to purchase a new state-of-the-art LASIK Surgical Machine for the hospital. Additionally, the new equipment will provide the hospital with valuable services to its patients, thus diversifying the service offered and revenue streams experienced by the hospital. This forms one of the justifications for the purchase of the new equipment. The hospital will consider various facilities at the hospital’s disposal, such as the compatibility with the existing network in the hospital. Additionally, the hospital will consider costs involved in purchasing the new requirement, such as initial costs, regulatory and compliance costs, utility costs, and even labor costs. The purchase of this equipment will be financed by selling bonds to investors as it will provide a considerable amount of money. A thorough review of the market has been conducted, and the selected equipment has been deemed the best option for the hospital based on its reliability, cost-effectiveness, and features. Implementing this new equipment will require the cooperation of various departments within the hospital, including IT and maintenance. This proposal recommends immediately implementing the latest equipment to ensure that the hospital remains at the forefront of medical technology and continues to provide high-quality patient care.

LASIK Surgical Machine, commonly referred to as Lasik, is a machine used to perform refractive eye surgery. Additionally, they use a laser to reshape the cornea and correct vision problems such as astigmatism, nearsightedness, and farsightedness. This medical device provides a long-lasting alternative to contact lenses and eyeglasses for most individuals. The device is similar to other surgical instruments that offer corrective procedures, which include LASEK and Photorefractive Keratectomy, with all of them representing advances over radial keratotomy in the surgical treatment of refractive errors of individuals. There are various issues to consider before investing in the hospital’s capital investment.

How to Locate a Vendor?

Identification of a vendor refers to searching for a potential supplier that will deliver materials or products required by the company, which in the case of the hospital, the LASIK Surgical Machine. There are various steps that the hospital can follow to locate a vendor. These steps include researching the type of equipment you need and the different brands available (Clark, 2020). Additionally, the hospital can look for reviews and ratings from industry experts and customers. The hospital can conduct networking which involves reaching out to industry associations, trade shows, and professional networks to get recommendations from peers and colleagues. Additionally, an online search can be vital, which involves using search engines and business directories to find potential vendors. Search for those with a good standing, experience, and a strong online manifestation. The hospital can then request quotes by contacting numerous dealers, invite quotes for the LASIK medical equipment, and compare the prices, features, and guarantees presented by each seller. Additionally, evaluation references are also important, which involves asking each vendor for references and following up with them to get an idea of the vendor’s performance, dependability, and customer service.

Negotiating the best Price and Contracting the Approved Vendor

Prices are not set in stone, and the hospital can find and enter a more desirable agreement through skilled negotiation. Some of the steps that the hospital can follow are to negotiate the best price and contract the approved vendor for the medical equipment supply. These steps include Preparation which involves defining the hospital’s requirements, budget, and key negotiation points (Gelderman et al., 2019). It also involves gathering market data and competitive quotes to leverage during negotiations. Initial negotiation involves contacting the vendor and initiating negotiations by presenting your requirements and budget, asking for their best offer, and being open to discussion. Counter-offer is also involved, founded on the vendor’s initial offer, making a counter-offer that considers the hospital’s budget and key negotiation points. The two parties involved in the negotiation should compromise and work to find a mutually acceptable solution that meets both requirements and the hospital’s budget. Finalizing the deal once the hospital has reached an agreement involves putting it in writing.

Consideration Involved in Obtaining new equipment

LASIK Surgical Machine is a new investment that the hospital will undertake. Obtaining a new piece of hospital equipment involves several facility considerations, including ensuring that the proposed equipment will fit in the chosen area and that there is adequate space for installation, process, maintenance, and storage (Clark, 2020). Electrical and mechanical systems should be considered as it involves checking that the equipment’s power requirements and mechanical systems are attuned to the hospital’s existing substructure. Additionally, the hospital should consider equipment compatibility that ensures that the new proposed equipment is compatible with other existing equipment and systems.

Purchase Justification

Investment in new equipment will have various benefits for the hospital. These benefits that will help the hospital’s Return on Investment include increased efficiency, leading to improved patient outcomes (Gelderman et al., 2019). Additionally, there is an increase in demand for services offered by the new proposed equipment, thus increasing income gained by the hospital, meeting the needs of its stakeholder. The new equipment help meet the hospital’s strategic goals and objectives of delivering high-quality patient care for its clients. Additionally, it will help the hospital upgrade its existing infrastructure and expand into new markets to offer new services, thus diversifying its income streams.

Operation Costs Consideration

When making the purchase, various costs need to be considered. Some of these costs include equipment costs, which refer to the initial cost of purchasing the equipment, including delivery and installation charges, maintenance costs involving contractor services, labor, and replacing parts (Clark, 2020). The hospital should also consider energy costs required to operate the new equipment, such as cooling, water, and electricity, and labor costs, which refers to costs associated with staffing needed to operate, maintain and support, training, and salaries benefits. The hospital should also consider regulatory compliance costs, which are involved in complying with relevant regulations, such as inspections and certifications.

Funding Source

To purchase the new equipment, the hospital should consider issuing a bond that works by issuing bonds to investors who, in return, get periodic interest payments and the return on their principal investment upon the bond’s maturity (Gelderman et al., 2019). One benefit of using such a financing mechanism is access to a large amount of capital that may not be available when purchasing the new product. Additionally, it is a long-term financing option that is useful for large equipment, as in the case of the new proposed equipment. Additionally, it is a low cost of capital compared to other financing mechanisms, such as equity financing.

In conclusion, the hospital should consider purchasing LASIK Surgical Machines from vendors that will be identified using the various steps discussed above. After identifying the vendor for the equipment, the hospital will enter into negotiations and contract with the vendor. Additionally, the hospital should consider its facilities when making the purchase which is justified by the return on investment the hospital will gain. The proposed funding source will be the selling of bonds to investors.


Clark, J. T. (2020). Medical equipment replacement planning. In Clinical Engineering Handbook (pp. 227–235). Academic Press.

Gelderman, C. J., Mampaey, J., Semeijn, J., & Verhappen, M. (2019). Self-justification for opportunistic purchasing behavior in strategic supplier relationships. Journal of Business & Industrial Marketing34(2), 451-462.


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