GRADING RUBRIC MUST BE FOLLOWED
READING PREPARATION SECTION
Conduct a cost-benefit analysis using a template, and explain the concept of opportunity cost and how a cost-benefit analysis aligns with organizational needs. Recommend a plan of action based on the cost-benefit analysis.
Questions to Consider:
- What are the differences between variable and fixed costs? How do these affect financial forecasting?
- What is the purpose of a cost-benefit analysis?
Use Plowman's Cost-Benefit Analysis Template to complete Part 1 of this assessment. Use the following scenario that continues the scenario from Assessment 2 as the foundation for this assessment:
One of the physician's groups in the clinic would like to purchase an MRI machine. Currently, clients who need an MRI must schedule an appointment at another facility, adding time and cost to any treatment they may need. The machine will be available for all the physicians in the clinic and will require additional staff to operate the equipment and the office area where it will be housed.
You must prepare a cost-benefit analysis to present to the physicians so they may decide whether to move forward with the purchase. Be sure to consider the non-monetary costs, such as productivity, as well as the non-monetary benefits, such as improved customer satisfaction. Although these may be difficult to quantify, they are important costs and benefits that must be considered.
Prepare a two-part cost-benefit analysis.
- Complete the cost-benefit analysis template for the purchase of an MRI machine for the clinic.
Based on the cost-benefit analysis, write a 2–3-page summary:
- Explain the concept of opportunity cost.
- Explain how the cost-benefit analysis aligns with organizational needs and future growth.
- Recommend a plan of action that is supported by the cost-benefit analysis. (Should the clinic purchase the MRI machine, or not?) Reference specific areas of the analysis in your recommendation.
The following resources are required to complete the assessment.
This resource includes information on writing a cost-benefit analysis as well as a spreadsheet template for a simple cost-benefit analysis.
This tool provides a step-by-step guide with a real-world example.
The resources provided here are optional and support the assessment. They provide helpful information about the topics. You may use other resources of your choice to prepare for this assessment; however, you will need to ensure that they are appropriate, credible, and valid. MHA-FP5006: Health Care Finance and Reimbursement Library Guide can help direct your research. The Supplemental Resources and Research Resources, both linked from the left navigation menu in your courseroom, provide additional resources to help support you.
Additional Resources for Further Exploration
You may use the following optional resources to further explore topics related to competencies.
This web page provides an example of a cost-benefit analysis.
These textbook chapters contain information on cost concepts and decision making, product costing, and the management control process.
This is a website of the leading association for health care finance leaders with links to industry initiatives, education, forums, and publications.