What planning benefits include improvements?

HCM542 (Operations Management): WEEK 2 Paper and Discussion Question

Week 2 Paper: Simplified Cost-Benefit Analysis

Simplified Cost-Benefit Analysis

You are a newly hired operations manager within Simi Regional Hospital. Prior to your arrival, based on customer feedback, the executive leadership team has developed an interest in the purchase, installation, and employment of a new radiology service line. Using a planning process to define a new radiology service line, a decision is being requested, but leadership feels they do not have a complete answer to proceed. Bear in mind that a decision matrix gave the new radiology service line a high priority.

Administrators want to evaluate its financial feasibility, but, as the newest member of the team, they first want to hear your input. Estimated fixed costs are $1 million, and the estimated net reimbursement level is $1,500 per procedure. Physicians and other providers’ salaries on a direct basis are $340 per procedure, and total operating expenses will add another $160 per procedure. Calculate the breakeven point for this potential new service line.

What planning benefits include improvements?

If      Simi Regional discovered a way to reduce the total initial investment to      $600,000, causing the average pricing level to fall to $1,200 and the      other assumptions to stay the same, how many procedures would be required      to break even?

Assuming      that the hospital conservatively estimates that it can deliver 1,000      procedures in the first year, which option should be chosen? Is it      financially feasible to purchase, install, and employ the new radiology      line? Or should the new radiology service be canceled?

Using the breakeven analysis, and your own research on the proposal, provide a written recommendation to the executive leadership team and the Board of Directors the benefit (or lack thereof) of proceeding with the purchase and further developing the service line for Simi Regional Hospital.

Your paper should be 3-4-pages (not including cover and reference pages) and should be supported by a minimum of three sources. These sources should not be more than 3-5 years old.

Module 2: Discussion Forum

1. Today, planning is essential to effective operations management in order to remain competitive and survive. By implementing evidence based practice, more effective planning can be achieved, resulting in better healthcare services.

Read this article – Rethinking priorities in hospital management: a case from Central Asia.

1. Answer the following:

Summarize the case study.

What planning benefits include improvements?

What limitations were involved?

• Describe the strategies and tactics used.

Describe any evidence-based practices involved in the decision-making.

If you were the CEO at an acute care hospital, how would you describe the business case for continuous operational planning to ensure better use of resources?

Where do you foresee the correlation of planning and competitive opportunities going in the future?

Be sure to post an initial, substantive response by Thursday at 11:59 p.m. MT and respond to 2 or more peers with substantive responses by Sunday at 11:59 p.m. MT. A substantive initial post answers the question presented completely and/or asks a thoughtful question pertaining to the topic. Substantive peer responses ask a thoughtful question pertaining to the topic and/or answers a question (in detail) posted by another student or the instructor.

Reference for Discussion Post: 

Kosherbayeva, L., Kalmakhanov, S., Hailey, D., Pazilov, S., Seiduanova, L., Kozhamkul, R., Jaworzynska, M., Bazhanova, A. E., Juraeva, N., & Jarylkasynova, G. (2020). Rethinking priorities in hospital management: a case from Central Asia. Health Policy and Technology, 9(3), 391–396. https://doi.org/10.1016/j.hlpt.2020.06.002