Cost-Benefit Analysis- 3 of 5

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Create a 5–6-page cost benefit analysis that supports a risk financing recommendation for a selected organization.

Questions to Consider:

  • What steps do you need to take in order to align a CBA with an organization's mission and strategy?
  • If you were to offer three alternative recommendations after a CBA, what types of elements would you consider to differentiate them from one another?
  • How would you substantiate a recommendation for reducing financial risks in a health care setting when the quality of care is involved?
  • What are the three parts of a CBA?



Suppose an issue has emerged in your organization that presents significant risks to the stakeholders involved. Your supervisor has asked you to conduct a CBA, make a recommendation, and present it to the board of directors. You are expected to consider the numbers within the context of the organizational mission, strategic direction, patient safety, risk-management issues, regulatory requirements, patient and stakeholder satisfaction, and the dynamics within the health care industry.

Select a relevant issue within your workplace (or one from the Suggested Resources) for which a CBA may be conducted. The CBA should include one of the following course-related topics:

  • Quality.
  • Patient safety.
  • Risk management.
  • Regulatory standards.
  • Compliance.
  • Patient and stakeholder satisfaction.


Step One: Identify Costs

Apply the process from Writing a Cost-Benefit Analysis article (from the Required Resources) to identify costs:

  • Make a list of all monetary costs that will be incurred upon implementation and throughout the life of the project. These include start-up fees, licenses, production materials, payroll expenses, user acceptance processes, training, and travel expenses, among others.
  • Make a list of all non-monetary costs that are likely to be absorbed. These include time, low production of other tasks, imperfect processes, potential risks, market saturation or penetration uncertainties, and influences on one's reputation.
  • Assign monetary values to the costs identified in steps one and two. To ensure equality across time, monetary values are stated in present value terms. If realistic cost values cannot be readily evaluated, consult with market trends and industry surveys for comparable implementation costs in similar businesses.
  • Add all anticipated costs together to get a total costs value (Plowman, 2014).
Step Two: Identify Benefits

Continuing with the CBA, proceed with the identification and quantification of benefits, per Writing a Cost-Benefit Analysis article.

  • Make a list of all monetary benefits that will be experienced upon implementation and thereafter. These benefits include direct profits from products or services, increased contributions from investors, decreased production costs due to improved and standardized processes, and increased production capabilities, among others.
  • Make a list of all non-monetary benefits that one is likely to experience. These include decreased production times, increased reliability and durability, greater customer base, greater market saturation, greater customer satisfaction, and improved company or project reputation, among others.
  • Assign monetary values to the benefits identified in steps one and two. Be sure to state these monetary values in present value terms as well.
  • Add all anticipated benefits together to get a total benefits value (Plowman, 2014).

Cost-Benefit Analysis

Enter the cost and benefit data you developed for the CBA in your preparation steps into the Cost-Benefit Analysis Template, linked in the Required Resources.

Then, write an analysis in which you do the following:

  • Describe the organizational, program, or departmental issue for which you have created the CBA.
  • Evaluate the cost versus benefit according to the general guidelines outlined by Plowman's 2014 article, which you read in the preparation for this assessment.
  • Make a recommendation as to whether the benefits are sufficient to outweigh the costs of the proceeding.
  • Describe the systems-based context for your recommendations, integrating the CBA within the organization as a whole.
  • Describe how the issue relates to the organization's vision, mission, and strategic direction.
  • Provide a rationale that explains how your recommendations are appropriate for your organization's capacity and strategy.

Your analysis should use proper APA style and formatting and include the following sections. Each section, except the title page, should include the appropriate section heading.

  • Title page: Use APA formatting and include the following:
    • Assessment number (Assessment 3).
    • Your name.
    • The date.
    • The course number (MHA-FP5014).
    • Your instructor's name.
  • Abstract: Include a one-paragraph summary of analysis content. This is not an introduction to the topic, but a summary of the entire analysis. Make sure to double-space.
  • Issue description.
  • CBA evaluation.
  • CBA recommendations.
  • Context for recommendations.
  • Relationship to vision, mission, and strategy.
  • Rationale.
  • Conclusion.
  • References.
  • Appendix: Attach your completed Cost-Benefit Analysis Template.

Additional Requirements

  • Written communication: Written communication should be free from errors that detract from the overall message.
  • Length of paper: 5–6 typed, double-spaced pages.
  • Font and font size: Arial, 10-point.
  • Appendix: Include your Cost-Benefit Analysis Template as an appendix to your analysis.

Plowman, N. (2014). Writing a cost-benefit analysis. Retrieved from


This article discusses how to value risk reductions in the context of benefit-cost analysis.

This article discusses a cost analysis approach in medical education.

This article describes the cost-benefit methodology in terms of criminal justice policy.

Additional Resources for Further Exploration

You may use the following optional resources to further explore topics related to competencies.

Risk-Management Textbooks
  • Kavaler, F., & Alexander, R. S. (2014). Risk management in health care institutions: Limiting liability and enhancing care (3rd ed). Burlington, MA: Jones and Bartlett. Available from the bookstore.
  • Youngberg, B. J. (2011). Principles of risk management and patient safety. Sudbury, MA: Jones and Bartlett. Available from the bookstore.
Risk-Management Professional Organizations

Unformatted Attachment Preview

1. Specify the focus and stakeholders for a cost-benefit analysis. Specifies the focus and stakeholders for a cost-benefit analysis and explains why the stakeholders would be interested in the outcome of the analysis. 2. Develop a value proposition for change management that incorporates quality- and risk-management concepts. Develops a value proposition for change management that incorporates quality- and riskmanagement concepts and cites appropriate current literature to support the proposition. 3. Describe strategies to influence and impact the needed changes for quality improvement. Describes strategies to influence and impact the needed changes for quality improvement and cites relevant sources in the literature to justify the strategies. 4. Conduct a cost-benefit analysis for a risk-management intervention. Conducts a cost-benefit analysis for a risk management intervention and describes the assumptions on which the analysis is based. 5. Identify relevant internal and external benchmarks, using a systems- based perspective. Identifies relevant internal and external benchmarks, using a systems-based perspective, and clearly identifies the source of each benchmark. 6. Use correct grammar, punctuation, and mechanics as expected of a graduate learner. Uses correct grammar, punctuation, and mechanics as expected of a graduate learner, conforming to all APA standards and guidelines. COST BENEFIT ANALYSIS TEMPLATE Step 1: Enter cost amounts as future value (FV) expectations. The future value will be automatically converted to present value Enter benefit amounts as FV expectations. The FV will automatically be converted to PV. Step 3: Subtract the total PV benefits PV costs to get the net benefit. Current Year (CY) Costs CY +1 CY +2 CY +3 CY +4 Total Costs (Future Value) Total Costs (Present Value) blank row Benefits Total Benefits (Future Value) Total Benefits (Present Value) blank row Present Value Discout Rate PV Denominator Net Benefit End of worksheet $ $ - $ $ Current Year (CY) $ $ - - $ $ CY +1 $ $ - - $ $ CY +2 $ $ - - $ $ CY +3 $ $ - - CY +4 $ $ - 2% 1.00 1.02 1.04 1.06 1.08 atically converted to present value (PV). Step 2: p 3: Subtract the total PV benefits from the total Total Costs CY +5 $ $ - $ CY +5 $ $ - - Total Benefits $ - $ - 1.10
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Cost-Benefit Analysis
Assessment 3
Course Number: MHA-FP5014


Maintaining Patient Privacy

The issue concerning patient privacy in hospitals has been a huge risk with large breaches being
on the increase. Policies and procedures should be developed to ensure the standardization of the
communication process between health care providers and the patients. This ensures that the
communication process remains secures and complies with the HIPAA privacy rule. Ignorance
of the privacy rules is not justifiable by the office of civil rights of the Department of Health and
Human Services (HIPAA, 2017). They will issue fines to a healthcare organization and the
involved personnel in the scenario of non-compliance regardless of whether the violation was
from willfull neglect or inadvertent (McKnight & Franko, 2016).
For an organization with access to electronic protected health information (ePHI), it is essential
to review the HIPAA compliance checklist. This helps to ensure that the healthcare organization
follows the patient privacy and security regulations that protect the confidential data of patients.
The healthcare organization, being a covered entity, is responsible for the implementation and
enforcement of the policies set up by HIPAA regarding privacy. The HIPAA security rule
defines standards that are to be used to protect electronic protected health information when
either in transit or at rest. This applies to any system or anybody who has access to confidential
patient data (HIPAA, 2017). Through ‘access’ it means anyone with the means to write, read,
communicate, or modify the health information or personal identifiers that can reveal an
individual’s identity.
Business associates are the people or organizations that provide a service to the healthcare
organization whereby in the course of provision of service, they end up having access to the
patients’ protected health information. Examples of business associates are accountants, lawyers,
billing organizations, email encryption services, cloud storage services, and IT contractors. It is a



requirement that a business associate agreement is signed between the covered entity and the
business associates before obtaining access to the protected health information. The agreement
defines the type of healthcare information that they will have access to, how it will be used, and
whether it will be returned or destroyed once its use is completed. The business associates have
similar obligations as the covered entity, to maintain patient privacy and data security (McKnight
& Franko, 2016).
To maintain patient privacy, the major costs will be in the development and implementation of
policies and procedures. This is to ...

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