Developing a Business Case

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Feasibility and Cost-Benefit Analysis

Elizabeth Foster

School of Nursing and Health Sciences, Capella University

NHS-FPX6008-Economics and Decision Making in Health Care

Dr. Nicole Aclin

Thursday, July 22, 2021

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Business Case for a New Economic Opportunity

By establishing a separate chronic disease preventive service department, the facility will

be able to reduce the increased cost of providing care services. The initiative will also assist the

facility in lowering employee’s burnout. Over the past year, the facility has been experiencing a

huge number of patients who present to the clinic with chronic illnesses, which has significantly

impacted the organization. The facility has been receiving more than 500 chronically ill patients on

a weekly basis, which has led to a shortage of medical staff, and burnout of medical professionals

making the clinic employ more staff members (Akkoç, Okun & Türe, 2021). The proposal of this

initiative in the facility is to assist it in dealing with the increased number of patients that present to

the facility with chronic illness, which has made the facility experience an increased cost of

providing care services. The increased number of chronically ill patients in the clinic has made it to

experience increased cases of medical negligence and errors, making the facility face lawsuits that

are expensive to settle. The potential economic opportunity in this initiative compares to the

economic risks in that it will assist the facility in reducing the employee’s burnout and the

increased cost of providing care services.

Opportunities Associated with the Proposed Economic Initiative

By establishing a separate chronic disease preventive service department, the clinic will

focus on providing high-quality healthcare services not only for the patient with chronic illness but

also for the patients who present with other diseases. Establishing the department will aid the

facility to provide increased access to the healthcare services they provide. The department will

enable the facility to provide services such as screening for diseases, conducting tests, providing

counseling and immunization, and offering health education not only for the chronic illness but

also for the isolated and deprived population that may not have any means of accessing the

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services (Reynolds et al. 2018). The initiative will enable the clinic to assist patients in

comprehending their health condition and particular health problems they may be experiencing

since the department will have healthcare professionals who have specialized in treating and

dealing with different illnesses. This will enable the facility to focus on preventing chronic

illnesses using different methods such as educating patients on how to stay physically fit and

active, eat healthy diets, avoid the use of alcohol and smoking, just to mention a few. The chronic

disease preventive service department initiative will enable the facility to detect early not only

chronic illnesses but also other health conditions, which will make it easy to implement successful

treatment processes for the patients. This is because, through the initiative, the clinic will have

clinicians who can conduct the recommended screening activities that would enable early detection

of diseases such as heart diseases, blood pressure, diabetes, and cancer, among others.

This initiative will enable the clinic to have reduced wastage of the available resource in

the clinic. This is because, through the initiative, the facility will be able to detect the illness early

through the right screening processes and through experienced clinicians who can successfully

treat or manage the illness. With the right screening processes and experienced clinicians, the clinic

will be able to eliminate the cost involved in dealing with medical lawsuits resulting from clinical

negligence and medical errors in the facility. The initiative will enable the facility to deal with

adverse treatment results, but it also enables the facility to eliminate a new supply and demand

strategy that eliminates the shortage of staff members, which will reduce patient waiting time and

increase the clinic's efficiency (Rabarison, Bish, Massoudi & Giles, 2015). This new supply and

demand strategy involves hiring new clinicians who have specialized in providing healthcare

services such as disease diagnosis and a high rate of successful treatment, thus saving the clinics

resources. By establishing the chronic disease preventive service department, the various

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departments in the facility will be able to operate effectively since they will operate on another

patient with different diseases rather than focusing on those with chronic illness. This will enable

the various department in the clinic to operate more effectively, thus reducing the shortage of staff

members and eliminating burnout of the staff members, making the facility eliminate the need to

hire or employ new staff members. With the initiative within the five years, the clinic will be able

to establish patient-centered care that offers healthcare services based on the preference and

requirements of the patient, which will lead to a reduction of errors and wastage of resources in the

facility.

Risks involved With the Initiative and How to Address Them

The most potential risks that the facility is currently facing because of the increased number

of chronically ill patients have made the clinic experience increased cost of providing care services.

Employees in the facility are also experiencing burnout, which has led to an increased number of

medical negligence and error lawsuits, making the facility to high costs in settling the lawsuits; this

will reduce clinician burnout. The initiative will allow the facility to have better duties among the

staff members and have those who will solely be operating the chronic disease preventive service

department. The initiative will enable the facility to focus on providing high-quality care services

for the patients who present with chronic illness and patients with other health conditions. Since

most of the neighboring healthcare facilities are also experiencing the same problem, the facility

can decide to work together with the neighboring facilities to deal with this issue. Most of the

neighboring facilities have not come up with a strategy to deal with this issue, and this creates an

opportunity to permit the facility to work together with the other facilities. This can also assist the

facility in acquiring specialized physicians who can establish better ways of treating and

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preventing chronic diseases and enable the facility to have improved relationships with the

neighboring healthcare facilities.

One way in which ethics and equality factor into this proposed initiative is the initiative

ensures there is a fair provision of an available staff members to eliminate the issue of burnout.

This initiative will also ensure the new policies have been established in the facility to ensures that

all individuals are treated fairly. Thus, the initiative will not be unfairly burdening or

disadvantageous to any specific group. The initiative presents a great chance of positively affecting

the community health care delivery since it will assist in reducing the increasing cost of providing

high-quality care services. Through this initiative, my facility will positively be affected, and other

facilities can also implement the initiative. This will empower the community to receive high-

quality care services at an affordable cost.

Cost-Benefit Analysis of the Initiative

Putting into consideration the first five years of the capital cost for this initiative, the cost

includes the cost for medical devices and sensors, communication platform, EMR, beds, beddings,

and clothing which are estimated to be around $ 513,000. In addition to this, there is an estimated

operating cost that includes salaries for the working staff and for the basic utilities such as the

internet, electricity, and gas. These resources will require maintenance of cost estimated to be

around $34,000 per year. Within the first year of working, the staff members will receive an

estimate of around $193,000 for physicians on full-time duty and $150,000 for practitioner nurses,

and $40,000 for those working as medical assistants per annum. Since the clinic will just have to

conduct training on their current staff members, there is no need to hire new staff members

(Agency for Healthcare Quality and Research n.d.). This gives the initiative an estimated capital

cost of $2,912,512.62, which is to be experienced within the first five years of establishing the

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separate chronic illness department. With this department, projected earning is estimated to be

$417,000 within a year. If the revenue grows by 2.5% every year for the five years, it is estimated

the facilities experience a total benefit of $2,478,842.46, and based on this total benefit, we can

conclude the initiative to be economically beneficial for the facility.

Appendix

Costs Current Year

(CY) CY +1 CY +2 CY +3 CY +4 CY +5 Total Costs

resources 513,000.00$ 34,000.00$ 34,000.00$ 34,000.00$ 34,000.00$ 34,000.00$

physicians 210,000.00$ ######### ######### ######### ######### #########

practioner nurse 170,000.00$ ######### ######### ######### ######### #########

medical assistant 54,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$ 40,000.00$

Total Costs (Future Value) 947,000.00$ ######### ######### ######### ######### #########

Total Costs (Present Value) 947,000.00$ ######### ######### ######### ######### ######### 2,912,512.62$ blank row

Benefits Current Year

(CY) CY +1 CY +2 CY +3 CY +4 CY +5 Total Benefits

estimated earnings 417,000.00$ ######### ######### ######### ######### #########

Total Benefits (Future Value) 417,000.00$ ######### ######### ######### ######### #########

Total Benefits (Present Value) 417,000.00$ ######### ######### ######### ######### ######### 2,478,842.46$ blank row Present Value Discount Rate 2%

PV Denominator 1.00 1.02 1.04 1.06 1.08 1.10

Net Benefit (433,670.15)$

End of Worksheet

COST-BENEFIT ANALYSIS TEMPLATE

Step 1: Enter cost amounts as future value (FV) expectations. The future value will be automatically converted to present value (PV). 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.

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Reference

Akkoç, İ., Okun, O., & Türe, A. (2021). The effect of role‐related stressors on nurses' burnout

syndrome: The mediating role of work‐related stress. Perspectives in Psychiatric Care,

57(2), 583-596.

O’sullivan, B., Leader, J., Crouch, D., & Purnell, J. (2020). Rural pandemic preparedness: The

risk, resilience, and response required of primary healthcare. Risk Management and

Healthcare Policy, 13, 1187.

Rabarison, K. M., Bish, C. L., Massoudi, M. S., & Giles, W. H. (2015). Economic evaluation

enhances public health decision-making. Frontiers in Public Health, 3, 164.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4478374/

Reynolds, R., Dennis, S., Hasan, I., Sliwa, J., Chen, W., Tian, D., ... & Zwar, N. (2018). A

systematic review of chronic disease management interventions in primary care. BMC

family practice, 19(1), 1-13.