Homework Assignment

Kaplan University School of Health Sciences

HS200 Assignment Directions HS440 Assignment Directions

Kaplan University School of Health Sciences

Unit 6 Assignment: Capital Budgeting Unit outcomes addressed in this Assignment:

 Describe the role of financial analysis in health care financial decisions

 Discuss the key elements in breakeven analysis

Course outcome addressed in this Assignment: HS440-4: Utilize financial analysis to inform management decisions. GEL-2.3: Solve real-world problems using mathematical skills. Instructions In unit 9 you will be submitting a recommendation on whether or not a new MRI machine is feasible. You will include both a detailed report that highlights some of the keys benefits and a cash flow analysis for the MRI machine. Part I of this assignment is for you to create the cash flow analysis. You will use the chart and information below to create your analysis. Please refer to chapter 10 of your text to see how a cash flow analysis is structured.

Payer # of scans

per week Charge per scan

Total Charges

Basis of Payment

Net Payment per Scan

Total Payments

Medicare 10 $1000 $10,000 Fixed fee $740 $7,400

Medicaid 5 $1000 $5,000 Fixed fee $700 $3,50

Private Insurance

5 $1000 $5,000 Full charge $1000 $5,000

Blue Cross

2 $1000 $2,000 Percentage of Charge

$840 $1,680

Managed Care

4 $1000 $4,000 Percentage of Charge

$750 $2,000

Self-Pay 1 1,000 $1,000 Full Charge $110 $110

Total 27 $27,000 $19,690

Average $1,000 $750

Consider the following information:

 The estimated average is $1000 per scan. 25% of this average is expected to

be lost on discounts to payers, charity care, and losses.

 Each scan will cost the physician’s network $40 to in supplies

Kaplan University School of Health Sciences

HS200 Assignment Directions HS440 Assignment Directions

Kaplan University School of Health Sciences

 The MRI service is expected to operate 50 weeks per year. 1.5 full-time

employees will be required with an annual labor cost of $70,000, including

benefits.

 There are no increased overhead costs associated with the opening as the

physician’s network has an existing building that is currently vacant. Annually,

the MRI machine requires $125,000 in maintenance costs.

 The long-term plan is to utilize this MRI system for five years. At this end of

this period, the physician’s network will sell the MRI for salvage for $750,000

(deducting any removal costs).

Submitting Your Work

For directions on how to submit your work and review your graded assignments, refer to the Dropbox Guide found on the Academic Tools tab. Make sure that you save a copy of your submitted work.

Unit 6 Assignment Grading Rubric = 100 points

Assignment Requirements Points

possible

Points

earned by

student

Includes correct cash flow analysis 80

Includes properly formatted cash flow

analysis

10

Proper Grammar, Spelling & APA formatting 10

Total (Sum of all points)

Points deducted for spelling, grammar,

and/or APA errors. (See Writing

Deductions Rubric in Doc Sharing)

Adjusted total points