Course Work Project Assignment

Project Instructions

Implementing your capital proposal. Wanting to submit a successful proposal and earn a $2,500 bonus, you plan to do just that. Previously, you created a departmental budget that considered the costs and revenue associated with your capital budget item. For Milestone Three, you’ll go one step further and research the options for implementing your capital budget item(s). This research will culminate in a short paper identifying the capital item(s) you are proposing, describing: I. Impacts and Justification A. Short-Term Impact: What short-term impact will this request have on the overall financial statements used for decision making and on financial planning? B. Long-Term Impact: What long-term impact will this request have on the overall financial statements used for decision making and on financial planning? C. Cost-Benefit: What is the percentage increase in financial need? How does this balance with the potential value added by your requests? What is the cost-benefit of these requests? D. Strategic Planning: Provide an explanation for each budget request in your proposal, taking into consideration strategic plans. How do your budget requests show strategic planning and forethought? E. Conflicts: Describe the strategic impact and any potential ways in which your recommendations might conflict with the overall strategic vision. When discussing the benefits, indicate whether your proposal will affect each of the key healthcare operating indicators and why the proposal will or will not have that affect. Requirements of submission: Your paper must be submitted as a two- to three-page document with double spacing, 12-point Times New Roman font, one-inch margins, using APA for citations.

Now that you have your projects identified you will develop specific options for implementation. Some of you may have already identified your different options in a previous Milestone, which is just fine. This week you will flesh out the details and clearly identify the process you went through to gather information about your options. Here are some bullets that will help guide you through the Milestone using an example of a mammography bus. Your Milestone will be in the form of a 2-3 pg paper and include details to go along with each option / section. The outline below is designed to help you think about your project and show you what type of thought process I am looking for. Remember, spelling, grammar, and citations count!

Implementation Options

• Opt 1 – Purchase Mammo Bus and all associated equipment.
• Opt 2 – Lease Mammo Bus two days a week from UCLA (equipment included).
• Opt 3 – Equip each of VFCs 17 clinics with mammo capability.

Cost-Benefit of each option

• Opt 1 – Large impact on working capital (loss of cash), likely only project able to be undertaken this year. Benefit – complete control of bus, revenue streams,  schedule, and associated equipment / personnel.
• Opt 2 – Much smaller impact on working capital but also much smaller impact on patients and community. Benefits would include no maintenance or fees beyond lease payments. Very restricted in terms of use.
• Opt 3 – Significant impact on capital and lines of credit although reach would be much broader. Numerous equipment purchases would likely tie up budget for some time. Could potentially generate significantly more income in the future.

The rest of the paper would focus on where certain information comes from – perhaps some research on the impact of mammo busses / vans. I recommend searching through regular google but also Google Scholar. For example, I found this article on EHR costs / benefits where the author talks about cost savings of $1 Million in just the first year for a 59-provider practice. I also found an article titled Assessing the Value of Diabetes Education that I am attaching to this announcement.

While you don’t need to determine exact costs, researching articles from organizations like yours that have implemented similar plans can help you develop your organizational budget, final capital project budget and provide you with some important facts to support your assumptions. For example, patients who receive proper diabetic education cost about 5.7% less over the long-run. This represents a significant cost savings according to the authors of the paper I have included in this Clarifying Concept.

Remember – this is a basic intro to healthcare finance. The articles I have linked and that you will find will be much more detailed than I expect. Your Milestone is a 2-3-page short paper, not a 10 pg journal article. Find a couple of research points that integrate into your project idea, connect the financials to it, and develop some short paragraphs. This will meet the mark.

Article link https://smallbusiness.chron.com/capital-expenditure-planning-78715.html

DCA Vantage HbA1c Analyzer Purchase Proposal

DCA Vantage Analyzer Proposal

• Introduction:

“Effective diabetes management is key to reducing the personal and economic burdens of the disease, but for healthcare practitioners, delivering such care can be complex, costly, and time-consuming. Despite such challenges, products and scientifically proven strategies can help alleviate the burdens of diabetes for individuals, clinicians, and society at large.” (American Diabetes Association, 2018)

 Proposal options

1. Capital budgeting items: DCA Vantage HbA1c Analyze and installation of the vantage Analyzers.
2. Strategic goals: improving the efficiency of treating diabetes. Additionally, it leads to improved revenues from increased patients. This investment will also improve operational efficiency through its monitoring aspect of various medical issues.
3. The mission of the clinic is to prevent, treat and cure diabetes.

• Implementation Option 1: Purchase the Vantage HbA1c Analyzer

Option 2: Lease the Vantage HbA1c Analyzer

• Financial Research

1. The cost-benefit of the option of purchasing the HbA1c Vantage analyzer POC testing will be as follows

• Increased revenue by $450,000
• There will be an increased cost from purchase of $71000 including implementation costs.
• POC testing significantly improve efficiencies, with a potential cost savings of $24.64 per patient. “POC testing reduced the number of tests ordered per patient by 21%, follow-up phone calls by 89%, follow-up letters by 85%, and patient revisits by 61%.” (Abbott, 2018)

1. Budget Statements: the implementation of the proposal will impact the capital budget for purchasing the Analyzer and the operational budget due to the impact of using the Vantage Analyzer in the day to day operations of the clinic.
2. Budget Expenses: there will be a varied impact on the various expenses incurred by the company:

• Salaries will increase by $40, 000 to incorporate the expanded capacity needed
• The increased capacity will require more supplies to the tune of $60,000
• The equipment costs will increase by $71000 including the installation costs of the Analyzers.
• Overall the implementation of the proposal will increase the total expenses by $559,000.

694. Reasoning: In 2018 Joslin Diabetes Center had a Revenue of 80 129,694. In one year after implementing the use of the HbA1c Analyzer it will generate an additional revenue of 1 000,214. “POC testing eliminates the burdensome step of a separate lab appointment, and the risk of patients being lost to follow-up, by enabling providers to test patients during regular office visits and immediately identify those with HbA1c values outside the optimal range” This simple 3 min test will not only increase the efficiency and compliance of patients, but it will be profitable to the clinic as patients will not have to go to the laboratory to have this test done.
695. Ratios: the clinic will use various ratios to assess the performance of the organization as a result of the new investment. These ratios will include:

• Return on Investment which will show how much the clinic has received as a result of investing in the new assets
• The current ratio, which will indicate how well the clinic is managing its liquidity flows, is calculated by dividing the current assets with the current liabilities. A current ratio that is higher than 2 would indicate that the clinic had enough liquidity to cover any arising obligations
• The gross margin based on operational expenses and income
• The net income achieved by the clinic that will show how well the clinic is doing financially

1. Ratios Calculation

• Return on Investments, in this case, is calculated by dividing the net income with the total investment. However, for this case, we can assume that the increase in revenue of $750,000 has resulted from the investment of $71000 then the ROI would be 105%.
• The current ratio for 2017 was 0.96 and trending up in 2018 to 1.5 which is reassuring, but still below 2. The organization has to be very cautious with their investments.
• The gross margin, in this case, is given by netting the net revenues. In this case, the total revenue is $7,900,000 while the cost of sales that includes the salaries and supplies amounting to $4,680,000. The gross margin is, therefore, 40%
• Net income is calculated by subtracting total expenses, in this case 6 659,786 from the total revenue, in this case 7 900,000. Net income once the capital budget is implemented will be 1 330, 214.
• Organizational Resources

1. Training of staff on using the HbA1c Vantage Analyzer
2. The hiring of an employee to be in charge of the asset who is qualified in using the Analyzer.

• Communication

1. The use of emails to notify the employees of any changes and training schedules.
2. Use of social media platforms such as Facebook, Twitter, and Instagram to raise awareness on the improved operational capabilities.
3. Using the clinics, Bulletin board for urgent messages.

Reference:

Abbott, G. (2018, September 10). Point-of-Care HbA1c Testing. Retrieved from http://www.clpmag.com/2018/09/need-point-care-hba1c-testing-diabetes/

Joslin Diabetes Center. 2019. About Joslin. Retrieved from: https://www.joslin.org/about-joslin.html

American Diabetes Association. (2018, October 09). Checking your blood glucose. Retrieved
February 7, 2020. www.diabetes.org

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