HSA6175 Financial Management of Health Systems essay solution

HSA6175 Financial Management of Health Systems essay solution

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HSA6175 Financial Management of Health Systems

HSA6175 Financial Management of Health Systems

Case 2

MODULE 5 SPRING

Dade General Hospital opened the Doral Urgent Care Center in January 2016. The center has been operating with losses for the first two years and the 2018 projections still show losses for the year. Hansel Padrón, the CEO of the hospital, is concerned about the financial status of the center and has approached you, the administrator of the center, to recommend whether it should be closed or remain open. If the latter decision, then what is the plan of action to make the center profitable.

You ask your manager, Ellen, to provide you information on the financial statements, any other financial and operational data. She comes to you by the end of the day with exhibits A, B and C. With information in hand, you forward the information to Janice and Elliot, the hospital’s marketing director and financial analyst, respectively. You also schedule a meeting early next morning with them and Ellen to discuss this project.

During the meeting the next day, Janice explains the marketing program and the success it had at the other urgent care center. She also discloses that the Doral center has different demographics and therefore she cannot guarantee the same success.

You asked Elliot about the hospital allocation, but he explains that the allocation cannot be changed based on hospital policy. It is also a way to fully price each service. It is based on number of visits and the allocation increases approximately 3% every year.

After some discussion, the four of you agree that you need to prepare the following for the CEO:

1. Break even analysis for the following scenarios:
2. With no marketing efforts, what is the number of visits the center needs to have in a year to break even? Will it happen within the next three years?
3. What is the number of visits needed to break even, if the marketing effort is undertaken? Will it happen within the next three years?
4. How many additional visits will the center need to cover the cost of the marketing efforts, regardless of the center’s overall profitability.
5. Recommendations for actions to take to improve the center’s financial performance
6. Prepare a document or power point presentation which includes: executive summary, summary of the analysis performed and conclude with your recommendation to either close the center or remain open and substantiate your decision. (300 – 350 words plus Exhibits)

Case should be presented in a professional manner as a document that you would give to your CEO.

Rubrics:

Problem 1: 30%

Problem 2: 10%

Problem 3: 50%

Case Format: 10%

See following pages for Exhibits A, B and C

Exhibit A

Exhibit B

Exhibit C

20162017Inc% Inc

2018

Projections

Number of Visits14,235 15,330 1,095 7.7%16,909

Net Revenues$540,930$597,870$56,94010.5%$667,906

Expenses:

Salaries and wages$145,250$156,870$11,6208.0%$169,420

Physician fees195,000 204,000 9,000 4.6%214,200

Malpractice insurance32,820 38,580 5,760 17.6%41,666

Travel and education3,500 7,224 3,724 106.4%9,727

General insurance7,850 9,028 1,178 15.0%12,615

Subscription252 265 13 5.2%278

Electricity11,153 12,924 1,771 15.9%14,131

Water1,150 1,668 518 45.0%2,208

Equipment rental2,500 2,500 – 0.0%2,500

Building lease168,000 173,040 5,040 3.0%178,236

Total Expenses$567,475$606,099$38,6246.8%$644,981

Contribution margin($26,545)($8,229)$18,316$22,925

Allocation from Hospital$106,763$110,3763,613 3.4%$125,126

Net Profit or Loss($133,308)($118,605)$14,703($102,201)

Gross Margin-24.6%-19.8%-15.3%

Dade General Hospital – Doral Urgent Care Center

Statement of Operations

Actual for the years 2016 and 2017, Projections for the year 2018

Additional Operating and Financial Information

Doral Urgent Care Center

The Center had an average of 42 visits per day in 2017 and is projected to see an

average 46.3 patients per day in 2018. The center has a capacity to have 80 per

day.

Cancellation of the lease will incur a penalty of 6 months of rent, or $89,118

Incremental volume would incur additional medical supplies and administrative

supplies as shown in Exhibit C

Staffing is currently budgeted for the projected volume. Additional volume will

incur the costs as shown on Exhibit C

Janice provided information on a similar marketing campaign for another Urgent

Care Center of the hospital as presented in Exhibit C

The hospital will continue to incur same expenses whether the center closes or not.

Per visit01-1011-2021-3031-40

Variable costs:

Medical supplies4.25

Administrative supplies1.10

Total variable costs5.35

Semifixed costs:

Salaries and wages$4,800$5,900$7,000$8,100

Physician fees12,500 12,500 15,000 16,500

Total monthly semifixed costs$17,300$18,400$22,000$24,600

Fixed costs:

Marketing assistant’s salary$3,000$3,000$3,000$3,000$3,000

Advertising Expenses4,000 4,000 4,000 4,000 4,000

Total Fixed Costs$7,000$7,000$7,000$7,000$7,000

Number of additional visits per day

Dade General Hospital – Doral Urgent Care Center

Monthly Incremental Cost Data

RUBRIC QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points:  Student failed to submit the final paper. 20 points out of 50:  The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50:  The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately.  Elements of the required response may also be lacking. 40 points out of 50:  The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples.  The answer is complete. 50 points:  The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples.  No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points:  Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points:  Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points:  References to scholarly sources are occasionally given; many statements seem unsubstantiated.  Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points:  Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented.  APA 6th Edition is used with only a few minor errors.  There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points:  Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented.  APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points:  Student failed to submit the final paper. 5 points out of 20:  The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors  10 points out 20:  The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20:  The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points:  The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points:  Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements.  The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.
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