Case For Project – Cost Analysis-An equipment acquisition proposal was being Question # 00603341 Subject: Education Due on: 07/27/2019 Posted On: 07/27/2019 04:24 AM Tutorials: 1 Rating: 4.5/5

Case For Project – Cost Analysis*

An equipment acquisition proposal was being
considered by a large health care organization. The array machine will enable
the hospital to perform autoimmunity tests (for immunoglobulins G, M, and A and
complements C3 and C4) in-house rather than sending them to a reference
laboratory. Test turnaround time is expected to decrease by 2 days. The array
machine costs $50,000, with a useful life of 5 years. The depreciation schedule
will be $10,000/year.

The expected volume for tests is one of
each of the five autoimmunity tests per day. Having the tests done by the
reference laboratory costs the hospital an average of $10/test. The hospital’s
average charge to patients is $20/test. If the array machine is acquired and
the tests done in-house, the costs of reagents would average $2/test.

The array machine can run a maximum of 40
patient samples and perform 20 different tests on each sample every 2 hours.
Except in extraordinary circumstances, tests would be run Monday thorough
Saturday.

The machine requires approximately 1 hour
of technician time (valued at $15/hour) each day to calibrate it, to conduct a
test run for control purposes and to perform general maintenance. This is a
fixed cost because it does not vary by volume. Technician setup time to run
tests is negligible. Beyond the five autoimmunity tests the laboratory wants to
perform in-house, the machine can also perform apolipoprotein cardiac profiles
that are currently done on equipment in the clinical chemistry department. The
array machine can provide a quantitative measure and not just the positive or
negative indicator that the clinical chemistry department’s current equipment
gives.

1. How many autoimmunity tests per year
will have to be performed on the array machine to break even?

2. Given the present volume of tests, would
there be an annual net contribution and, if so, how much?

3. If half of the patients have Medicare
coverage (DRG reimbursement includes all tests), would the laboratory break
even on the equipment? If not, should the equipment be acquired anyway?

The
response should be 8-10 slides including charts. Power Point is the preferred
format for this assignment.

The response should provide a rationale and
discussion regarding each step you take. Create a narrated PowerPoint
presentation (be sure to include a transcript of the narrated portion – or you
may include the transcript of the narrative in the notes section of the slide).
Be sure to let me know where the transcript is located if you decide to create
a narrated presentation.

Sometimes students have difficulty
uploading Excel spreadsheets into the Power Point. If this is the case for you,
please just upload the Excel Spreadsheet separately.

WebTycho will only permit uploading of 10MB
total in the Conference area. If you’re not too flashy with the slides you
should be able to do this okay.

*Longest, B.B., Rakich, J.S., & Darr,
K. (2000). Managing health services organizations and system. Baltimore: Health
Professions Press.