ESSAY #2 – required for all students: Based on the LearnScapes Episode Equipment Purchase, you will
prepare an Excel spreadsheet and you will prepare a multi-part essay in Word answering the questions
described below. This essay need to be a minimum of 4 pages in Word not counting any questions you
copy below, plus an Excel spreadsheet. It should be more pages if needed to fully cover the issues
and explain your answers to the questions.
Navigate LearnScape Episode: Equipment Purchase
In this LearnScape, you are the CFO of small rural women’s health center within Bright Road
Health Care System. The physicians in the center have approached you to purchase a mammography
3D machine, at a cost of $500,000. The equipment is state-of-the-art and excellent for early
diagnosis, but the women’s health center has limited funds and currently does not have a large
incidence of breast cancer diagnosis. However, because the women’s health center is less than 50
miles from a metropolitan area, it’s possible that women might go to the larger metropolitan hospital
(not in the Bright Road Health Care System) for diagnosis, treatment, and follow-up care. The
physicians are arguing that getting the equipment would increase the center’s market share of general
mammograms and certainly assist in early detection. In addition to thinking about the impact of the
machine on early diagnosis and increasing revenue, you are keenly aware of the importance of
keeping the young physicians happy, as they are fairly new to the small community and could easily
move out of town. On the other hand, at the monthly meeting, the Board of Directors has indicated
they want to keep a tight control over frivolous spending, as they are uncertain how new federal (such
as PPACA) and state regulations will impact the solvency of the hospital corporation. You will need to
consider finance, authority of Board of Directors, public relations/marketing, wishes of medical staff,
needs of the community, and future implications when making a decision.
IN ADDITION TO THE FACTS IN THE VIDEO, YOU MUST ASSUME THE FOLLOWING:
The purchase and initiation of services for the 3D mammography machine requires the
grant of a Certificate of Need under Tennessee law.
The closest urban area is a county the size and population mix of Rutherford (but assume
this is about ONE hour away by bus). The closest 3D mammography machine is owned by
a group of private physicians in a diagnostic center called Best Women’s Health Clinic.
100% or the utilization of this machine is for patients who are either private pay or have
commercial insurance. They do not provide services to TennCare or Medicare patients.
Best Women’s Health Clinic will oppose the CON applicant for a 3D mammography
machine. It will argue that the utilization of its 3D machine is at 80% now, but it will
decrease by an estimated 20% if Bright Road gets approval because many of Best’s
patients drive from the surrounding rural counties.
Your other assumptions are as follows:
o Fees to obtain CON:
$20,000 first year only
$500,000 ($100,000 per year)
$150,000 first year only
$10,000 first year only
$210,000 per year
Miscellaneous: $5,000 - $15,000 per year
Female population over 50: 9500 (increases 5% annually)
Charges including tax:
Medicare (80% allowable)
Moore Radiology is the radiology group contracted to provide radiology services at
your rural hospital and for other hospitals in the Bright Roads Healthcare system. Dr.
Lien provides most of the radiology services for your hospital. Dr. Lien wants the new
3D Mammography machine and threatens to quit, purchase a 3D Mammography
machine and open his own surgery center a block away from the hospital if your
hospital does not agree to purchase a 3D Mammography machine.
LearnScape Characters – see the Appendix at the end
Additional Doctor: Dr. Lien – a radiologist with Moore Radiology who threatens to quit, purchase a 3D
Mammography machine and open his own surgery center, if the hospital does not purchase a 3D
Based on the video and assumptions above, prepare the following:
Excel Spreadsheet: Prepare this first. Create a five (5) year projection of revenue
and expenses using the assumptions above. In addition, create your own additional
assumptions where necessary and state those assumptions clearly and specifically. The
point here is to do a basic financial analysis to see if this project is financially feasible. It
does not matter your specific format as long as it is easy for the reader to follow and you
make reasonable assumptions and formulas. Save your file in Excel as Lastname-
Essay2.xlsx and upload it to the Final Exam Dropbox.
Essay in Word: This essay will have 4 parts (each part should be a minimum of
one (1) page) In your answers, you must include discussion of other materials you have
been assigned or that we have discussed, including articles, any applicable cases, textbook
readings, applicable videos, other CON applications, or discussions led by guest speakers
that you can use to relate to or support your points. You also need to add original research
you have found. You do not need to use a formal citation format, but reference all sources
and make it clear when you are referring to a source. Be sure to use quotes if you are
quoting from a source. Also, give me enough details about the source (such as title, author,
date, page number, weblink) so I can easily find it.
Part I: Perspective of the Doctors. Make the case for the 3D mammography
machine from the perspective of the doctors, clearly stating the ethical theory, ethical
principles, and virtues/values that best support the doctor’s argument. Be specific in
relating the facts to the ethical issues. Fully explain your rationale.
Part II: Perspective of the Board. Make the case against the 3D mammography
machine from the perspective of the Board, clearly stating the ethical theory, ethical
principles, and virtues/values that best support this argument. Be specific in relating the
facts to the ethical issues. Fully explain your rationale.
Part IIII: Certificate of Need/ Health Services Development Agency. Create an
analysis based on the four Tennessee CON criteria, including need, financial feasibility and
orderly development, and quality. Fully explain the criteria and fully explain your
rationale. Based on your analysis, state whether you think the CON will be approved by
Part IV: YOUR Recommendation as the CFO. Write a letter to Mr. Quinn Smith,
Chairman of the Board, in a formal letter format. Give your recommendation (approve,
disapprove, or hold/ reconsider*). Provide your specific rationale with the evidence from
the LearnScapes video, assumptions above, and your stated reasonable assumptions.
Balance the financial concerns, the authority of the Board of Directors, public
relations/marketing, the wishes of medical staff, whether you think CON approval will be
granted, and future implications when making a decision.
Also, clearly state the ethical theory, ethical principles, and virtues/values that best
support this argument. Be specific in relating the facts to the ethical issues. Fully explain
*Note, if you do not think the CON is likely to be approved, but otherwise you determine
the Board should approve the purchase, you should explain your rationale and advise the
Board to hold and reconsider at another date (and you can give the future date). You
may also decide to hold/reconsider for other reasons; if you do, just be sure to explain
Save this essay in Word as Lastname-Essay2.docx and upload it to the Final Exam Dropbox.
Jones & Bartlett Learning - Navigate 2 Scenario Report
Health Care Ethics: Equipment Purchase
1. Planning your Meeting
2. Discussion with Thomas Jenkins, M.D.
3. Equipment Purchase
4. Meeting with Maria Vasquez, R.N.
5. Discussing Capital Expenditures
7. Making Your Recommendation
100% (100 points)
Type your recommendation in the body of the email below
Board of Directors,
As CFO, I have been reviewing a proposal to purchase a 3D mammography machine for the women’s health center. I have discussed
this issue with Thomas Jenkins, Physician at the Women’s Health Center, Maria Vasquez, Director of Nursing at the Women’s Health
Center, and Quinn Smith, Chairman of the Board of Bright Road Health Care System to understand all costs and benefits of this
purchase. When reading this recommendation, I want you all to know that I have considered finance, authority of the Board of
Directors, public relations/marketing, wishes of medical staff, needs of the community, and future implications.
This type of mammography is state-of-the-art technology and you can detect breast cancer much earlier, but the Women’s Health
Center has limited funds. When detecting breast cancer earlier, it’s easier to treat and there’s a better chance of positive outcome.
After speaking to Dr. Jenkins, he made a good point about their mission as a women’s care facility to provide the best possible care to
women in our area. This is always out main concern when it comes to our patients. He says, “If we don’t provide 3d imaging to our
patients and refer them to other facilities, it’s a slippery slope for Bright Road to walk down.” When we think about our community and
providing them the best care, we need to realize what it is we are giving them. It would be nice to just have the equipment in our facility
than having to just refer them to another facility. Being able to detect breast cancer much earlier would do so much for our community.
This would help so much! We would have a much better chance of a positive outcome and who wouldn’t want that? I have also learned
from Dr. Jenkins that there’s a 7% improvement in cancer detection when using both 2D and 3D images together. So, with the FDA not
approving the 3D as a replacement, it would still be a good idea to have as an add on because of the error rates.
I have spoken to the vendor to get more information about this type of technology. They have previously given me a quote of $500,000
for the investment which I know is a large investment but that is why I have asked for more information. Some of the concerns I had
were, what happens when there is a major advance in this technology next year? If we bought a 3D imager from Healthy Tech. is there
a guarantee that they will provide technology upgrades or is it provided at an additional cost? What kind of financing is available? Can
we lease the imager? What is the error rate for 3D imaging?
The vendor got back to me answering all my questions which have helped me make a better decision. He said told me, “the 3D
imaging technology is moving very quickly. Their engineers plan for that as best they can, so that if you buy a 3D imager from them,
they will provide software updates and a warranty, but we still must pay for a regular maintenance fee. As far as financing goes, they
have several banks that work with to provide financing and they are not able to offer their 3D imagers for lease. The error rate for 3D
imaging is very low, as low as 5.2% for technologist who have a lot of training and experience. This translates into fewer requests and
much lower stress for our patients.”
After speaking to Maria, she made some pretty good points on why it is a good idea to invest in this technology. She is a cancer
survivor and she says how important it is to be able to know for sure that you have breast cancer or not. Her experience with getting
her mammogram done a 2D imager wasn’t conclusive and she had to go back for two additional mammograms before running tests. I
can see how this can be stressful for patients and why not be able to have the 3D imager? She made a good point as well by
mentioning when you catch breast cancer early, available treatments are much less invasive. When the treatment gets more invasive,
this is becoming more expensive for both the patient and the health care provider. This would be saving for both. Basically, she thinks
that buying this 3D imager would be great for us and would benefit the community. By offering this service that’s currently available in
more affluent and urban areas of our state will be positive for the Center as a whole, both for the bottom line and for patient outcomes.
She kind of makes a good point here and I think that it would be worth the cost. We would be heling the community out by a lot.
The last person I spoke to was Quinn Smith. I have asked him about major capital purchases, the financial impact of buying a 3D
imager, and how the return on investment (ROI) factors into the decision. He believes that the 3D imager is expensive, but I have told
him my opinions on why it would be a good investment. I explained to him how, using a 3D mammography imager along with a
traditional 2D machine increases the accuracy and allows us to detect breast cancer at an earlier stage. He believes that there would
be no ROI on this.
After careful consideration, I know that purchasing the 3D mammography machine is a significant capital equipment expenditure, but
this is the most advanced and current imaging technology available. This would allow Bright Road Health Care system to offer a
valuable service to the community and it would improve their chance of getting breast cancer. With the 3D imager, doctors would be
able to have a more detailed look at the possible abnormalities than they would see in a 2D imager. Why would we not want to provide
the best care to our community? This would give us a good name. Quinn mentioned that at the last board meeting, we were voted
down spending $275,000 on renovations for the canteen in the annex of the Center, well since the imager costs $500,000 we could
cancel the renovations and that money could at least pay for half of it and we could finance the rest. By purchasing the 3D imager
along with the traditional 2D imager, this increases the accuracy and allows us to detect breast cancer at an earlier stage. So not
having the patients getting false results and repeating tests, this would help them out a lot and save some money.
Purchase answer to see full