Building Space for the new orthopedic service line

Buying the building will assist the hospital in planning the ideal location for the orthopaedic service line where clients will have easier access to the facility. The hospital will continue to be the building's sole manager, so there won't be any rent or other fees associated with it. Additionally, the organization will be free to use the orthopedic building space anyway they see fit without outside influence. The net worth of the building is expected to appreciate over the long-term, indicating an advantage in the cost of the hospital.
Buying space for the new orthopedic service line
No extra costs will is incurred as compared to the hospital leasing the area for the orthopedic service line. The hospital can purchase the field for the orthopedic service line even if the construction is underway without having to buy any extra material for the process of development (Haynes, Nunnington, & Eccles, 2017). Similarly, space will appreciate in value over time, resulting in added benefits to the institution if they are to sell the same. In addition to this, the hospital will remain as the sole owner of the property, thus eliminating the costs of renting the same space.
Leasing Space for the new orthopedic service line
If the hospital is to lease the space for a short time, then they will pay less for the lease. The area can be hired for a short-term period to test whether the orthopedic service line will be successful or not, thus benefiting the hospital in deciding whether to continue with the line or not. The process of leasing will be quicker and will involve less paperwork than buying the building, thus reducing the time spent in the consultation process for the same.
Discuss the disadvantages of each of the following options:
Building Space for the new orthopedic service lines
The process of construction will take up more time than the other two options, and within the process, competition may increase, or the economy may drop, posing risks to the hospital over the period. The delay in construction will result in the organization failing to provide the intended services for a long time. The location of the building may not be convenient for the orthopedic service line if it is far from the main campus, thus increasing the risk of profitability.
Buying Space for the new orthopedic service line
The cost of purchasing the space is $100,000 more than buying the building, hence being a disadvantage to the hospital. The extra financing required for the purchasing of the area may limit other activities of the hospital such as maintenance, purchase of equipment and compensation of the staff members.
Leasing space for the new orthopedic service line
Leasing will ensure the hospital is liable to the owner of the area, and thus there is a risk of the owner opting to increase the fee for the space leased. On the long-term, the price incurred in the lease of the property will have adverse effects on the financial outcomes of the organization (Haynes, Nunnington, & Eccles, 2017).
Recommend what you consider to the be the best option for the facility
The best choice among the three is to lease the property for a short term. The approach will ensure the hospital identifies if the orthopedic service line will be successful or not, then the organization can purchase the entire space. However, if the hospital is convinced of the success of the service line, then purchasing the building will be efficient especially considering the price required of $600,000, which is significantly lower than the cost for buying the space for $700,000.













References
Haynes, B., Nunnington, N., & Eccles, T. (2017). Corporate real estate asset management: Strategy and Implementation. Taylor & Francis.