MHA 5006 Capella University Cost Benefit Analysis

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Xp180897

Business Finance

MHA 5006

Capella University

MHA

Description

  • Introduction
    In this assignment, you will continue on in your role as a new office manager for a successful medical clinic. The clinic is a conglomeration of physicians offering specialized care.One of the clinic's physician groups wants to purchase an MRI machine. Currently, clients who need an MRI must schedule an appointment at another facility. This adds time and cost to any treatment they need. The machine will be available for all physicians in the clinic. It will require additional staff to operate the equipment. In addition, the MRI will have to be housed in an office area within the clinic.Your task is to prepare a cost-benefit analysis for the clinic’s senior leaders, so they can make an informed decision about whether to proceed with the purchase.Instructions
    This cost-benefit analysis assignment consists of two parts.Part 1
    Complete the Cost-Benefit Analysis Template for the purchase of an MRI machine for the clinic.Part 2
    Based on your cost-benefit analysis, write a 3–4 page double-spaced summary. Address all of the following in your summary:
    • Explain how the cost-benefit analysis aligns with organizational needs and future growth.
      • In your explanation be sure to consider:
        • Non-monetary benefits, such as improved customer satisfaction, associated with the purchase.
        • Non-monetary costs associated with the equipment purchase. For example, productivity may decrease initially as people adjust to new policies and procedures associated with using the MRI equipment. At the same time, productivity is likely to increase once people adjust to the new policies and procedures.
        • Although these factors may be difficult to quantify, successful health care leaders are able to weigh nonmonetary and monetary considerations when making their purchasing and budgeting decisions.
    • Explain the concept of opportunity cost.
    • Recommend a plan of action consistent with your cost-benefit analysis.
      • Decide whether the clinic should purchase the MRI machine.
      • Be sure to reference specific aspects of the cost-benefit analysis.
    • Your final submission needs to include:
    • The completed Cost-Benefit Analysis Template (Excel spreadsheet).
    • A concise summary that provides (Word document):
      • Context for the cost-benefit analysis.
      • Rationale behind the recommendation.
    • Submission Requirements
      Part 1
      Format: Use the Cost-Benefit Analysis Template provided in the resources for this assignment.Part 2
    • Toggle Drawer[u06d1] Unit 6 Discussion 1
      Using Financial Ratios for Analysis
      Explain at least three financial ratios that are used to analyze the financial position of a health care organization. Which stakeholders would use these ratios, and why?Discussion Guidelines
      Discussion posts should address the question, be succinct, be substantive, provide new insight, and incorporate scholarly literature. Response Guidelines
      Provide substantive comments to your peers according to the Faculty Expectations Message discussion response guidelines, comparing their perspectives to yours. Ask questions to better understand their perspectives and expand the discussion.Resources
    • Discussion Participation Scoring Guide.
    • APA Style and Format.

Unformatted Attachment Preview

COST-BENEFIT ANALYSIS TEMPLATE Step 1: Enter cost amounts as future value (FV) expectations. The future value will be automatically converted to present value Step 2: Enter benefit amounts as FV expectations. The FV will automatically be converted to PV. Step 3: Subtract the total PV benefits from the total PV costs to get the net benefit. Costs Total Costs (Future Value) Total Costs (Present Value) blank row Benefits Total Benefits (Future Value) Total Benefits (Present Value) blank row Present Value Discount Rate PV Denominator Net Benefit End of Worksheet Current Year (CY) $ $ - CY +1 $ $ Current Year (CY) $ $ - - CY +2 $ $ CY +1 $ $ - - CY +3 $ $ CY +2 $ $ - - CY +4 $ $ CY +3 $ $ - - CY +4 $ $ - 2% 1,00 1,02 1,04 1,06 1,08 atically converted to present value (PV). Total Costs CY +5 $ $ - $ CY +5 $ $ - - Total Benefits $ - $ - 1,10 8/22/2021 Cost-Benefit Analysis Scoring Guide Cost-Benefit Analysis Scoring Guide Due Date: End of Unit 6 Percentage of Course Grade: 20%. CRITERIA NONPERFORMANCE Analyze the cost and benefits of purchasing equipment for a health care organization. 20% Does not analyze the cost and benefits of purchasing equipment for a health care organization. Explain the concept of opportunity cost. 20% BASIC PROFICIENT DISTINGUISHED Analyzes the cost and benefits of purchasing equipment for a health care organization, but analysis contains errors and/or omissions. Analyzes the costs and benefits of purchasing equipment for a health care organization. Analyzes the cost and benefits of purchasing equipment for a health care organization. Analysis considers how the purchase aligns with the organization’s financial strategy. Does not explain Explains the concept of the concept of opportunity cost in opportunity cost. minimal depth and detail. Explains the concept of opportunity cost. Explains the concept of opportunity cost. Explanation addresses how the opportunity cost affects the organization’s profit margin. Explain how a costbenefit analysis aligns with organizational needs and future growth. 20% Does not explain how a costbenefit analysis aligns with organizational needs and future growth. Explains how a costbenefit analysis aligns with organizational needs and future growth, but explanation includes omissions and/or errors. Explains how a cost-benefit analysis aligns with organizational needs and future growth. Explains how a cost-benefit analysis aligns with organizational needs and future growth. Explanation also considers community needs and industry trends. Recommend a plan of action based on a cost-benefit analysis. 20% Does not recommend a plan of action based on a costbenefit analysis. Recommends a plan of action, but does not support recommendation with a cost-benefit analysis. Recommends a plan of action based on a cost-benefit analysis. Recommends a plan of action based on a cost-benefit analysis. Recommendation also forecasts sustainability and long-term outcomes. Write content clearly and logically with correct use of grammar, punctuation, and spelling. 15% Does not write content clearly and logically with correct use of grammar, punctuation, and spelling. Attempts to write content clearly, logically, and with correct use of grammar, punctuation, and spelling; however, lapses, omissions, and/or errors exist. Writes content clearly and logically with correct use of grammar, punctuation, and spelling. Writes clear, logical, and errorfree content. Summary includes relevant supporting evidence. Format citations and references in APA style. 5% Does not format citations and references in APA style. Attempts to format citations and references in APA format, however, omissions and/or errors exist. Formats citations and references in APA style. Formats citations and references in APA style, without errors. https://courserooma.capella.edu/bbcswebdav/institution/MHA/MHA5006/191000/Scoring_Guides/u06a1_scoring_guide.html 1/1
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Explanation & Answer

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COST-BENEFIT ANALYSIS TEMPLATE

Step 1: Enter cost amounts as future value (FV) expectations. The future value will be automatically converted to present value
Step 2: Enter benefit amounts as FV expectations. The FV will automatically be converted to PV.
Step 3: Subtract the total PV benefits from the total PV costs to get the net benefit.
Current Year
(CY)
Costs
CY +1
CY +2
CY +3
CY +4
MRI Machine
$1,300,000
Hiring Staff (Radiologist and 2 MRI technicians)
$324,000
$324,140
$388,180
$460,350
Coils
$384,000
$384,000
Building Structure and Maintenace
$150,000
$10,000
$10,000
$10,000
Staff training
$9,000
$9,000
Sound System and other necessities
$20,000
Increased Electricity
$3,000
$3,000
Outsourcing
$445,000
Total Costs (Future Value)
$ 445,000.00
$548,000
$337,140
$782,180
$482,350
Total Costs (Present Value)
$ 445,000.00
$549,500
$337,140
$782,180
$482,350
blank row
Current Year
(CY)
CY +1
CY +2
CY +3
CY +4
Benefits
Quick Results Turnaround
Increased patient access to care
Patient seen onsite (Copayment)
$96,000 ########## ########## $124,800
No outsource contract
$445,000
Insurance Reimbursement
$1,040,296 ########## $1,047,540 $1,050,370
Improved Customer satisfaction

Total Benefits (Future Value)
Total Benefits (Present Value)
blank row
Present Value Discount Rate
PV Denominator
Net Benefit
End of Worksheet

$
$

-

######### ######### ######### #########
$1,581,296
$209,875 $1,162,740 $1,175,170

2%
1.00

1.02

1.04

1.06

1.08

atically converted to present value (PV).

Total Costs

CY +5
$ 560, 390.8
$384,000
$10,000

##########
########## $

CY +5

3,550,560.80

Total Benefits

$134,400
$1,060,390

#########
$1,194,790 $

5,323,871.00

1.10
$

1,773,310.20


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