Numerous projects have been instituted in healthcare to monitor hospital costs, services and insurance trends available to the people. Proposals entailing state involvement in the enhancement of social wellbeing of the citizens are a common practice in the upgrading initiative (Berkowitz, 2006). In 2005, a proposal was made towards the setting of a hospital complex for providing long-term care to veterans. With the relocation of the Regional Hospital, the vacated premises were left in the ownership of the county. An agreement was reached between the Federal Government and the Department of Veteran Affairs that the existing buildings would be renovated for the healthcare program. A 30-year-old lease was signed but problems emerged when the veteran officers breached the agreement. In 2006, an audit report on the project has revealed that were the state to abandon the facility and build another one, it would save $25 million. The state should abandon the former project and establish another one.
A counter argument raised towards this stand argues on binding power of the lease. The lease agreement contained all the terms and conditions that both parties needed to give their consent to before any signing in. It is a prudent practice to ensure that the all clauses are read and understood before further proceedings. Hence, the state’s action of signing the lease simply meant that they were in total agreement to all specifications provided. The legislative body confirmed that from the lease, the state had agreed to pay almost $40, 000 per month as rent with the additional purchase of liability valued at $13, 000 per month. In addition, $15.05 would be paid daily per patient for the food service operation. Hence, when the veteran officials showed up to collect the money for the operations, it was justified on the assumption that the state had been provided with perfect knowledge concerning the lease. However, this argument should realize that the preset rules were that the State was to offer its share of the building funds while the veteran officials would cover the operating costs and retain the title.
The State honored its share of the supposed agreement. First, it complied with the funding responsibility that it had agreed to. An initial advance of $3 million out of the $5 million pledge was offered towards the project. On the running expense, the State paid a daily amount of $15.05 towards the caring of the veterans. Secondly, the veteran officials failed in their planning and running aspects of the facility. This led to the lack of operational funds to the point that they had to turn back to the state for funding. In addition, their fee-for-service mode as opposed to the capitation mode should have been implemented with the initial opening of the facility to ensure a steady income flow towards meeting operational costs. Thirdly, the renovation and construction process proved to be costly and inflated when compared to other long-term care facilities befitting the same level. Renovating of bed space in the Regional Hospital cost $24, 000 more then the median cost of $44,000 in the other state-owned facilities (Henderson, 2008).
In addition, the food service operation of $15.05 exceeded the usual state facility value by $8.62. The building of a new facility in a different location would cost $4-7 million that would be able to save the State $25 million that they would lose if they were to go ahead with the lease agreement. The counter side’s argument is valid on the law binding elements of the clause. However, abandoning of the project by the State would save a lot of money that can be used somewhere else and it will entail the construction of a new facility that would be an addition to the number of existing care facilities. The State should therefore exit the project and put up a stand-alone structure on another area where they will own the title and run it accordingly.
Berkowitz, E. N. (2006). Essentials of health care marketing. Sudbury MA: Jones & Bartlett Publishers.
Henderson, J. W. (2008). Health Economics & Policy. Boston MA: Cengage Learning.