Conduct a cost-benefit analysis using a template, and explain the concept of opportunity cost and how a cost-benefit analysis aligns with organizational needs.
Assessment 3: Cost-Benefit Analysis
Conduct a cost-benefit analysis using a template, and explain the concept of opportunity cost and how a cost-benefit analysis aligns with organizational needs. Recommend a plan of action based on the cost-benefit analysis.
INTRODUCTION
Note: The assessments in this course build upon each other, so you are strongly encouraged to complete them in sequence.
To deepen your understanding, you are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of your professional community.
What are the differences between variable and fixed costs? How do these affect financial forecasting?
What is the purpose of a cost-benefit analysis?
PREPARATION
The following resources are required to complete the assessment.
This resource includes information on writing a cost-benefit analysis.
Plowman, N. (n.d.). Writing a cost-benefit analysis. https://www.brighthubpm.com/project-planning/58181…
Use this template to complete the assessment.
Cost-Benefit Assessment Template [XLSX].
This tool provides a step-by-step guide with a real-world example.
Mind Tools: Essential Tools for an Excellent Career. (n.d.). Cost-benefit analysis: Deciding, quantitatively, whether to move ahead. https://www.mindtools.com/pages/article/newTED_08….
Use the Cost-Benefit Analysis Template linked to complete Part 1 of this assessment. Use the following scenario that continues the scenario from Assessment 2 as the foundation for this assessment:
One of the physician\’s groups in the clinic would like to purchase an MRI machine. Currently, clients who need an MRI must schedule an appointment at another facility, adding time and cost to any treatment they may need. The machine will be available for all the physicians in the clinic and will require additional staff to operate the equipment and the office area where it will be housed.
You must prepare a cost-benefit analysis to present to the physicians so they may decide whether to move forward with the purchase. Be sure to consider the non-monetary costs, such as productivity, as well as the non-monetary benefits, such as improved customer satisfaction. Although these may be difficult to quantify, they are important costs and benefits that must be considered.
REQUIREMENTS
Prepare a two-part cost-benefit analysis.
Part 1
Complete the cost-benefit analysis template for the purchase of an MRI machine for the clinic with estimated costs and benefits values.
Part 2
Based on the cost-benefit analysis, write a 2–3-page summary:
Explain the concept of opportunity cost.
Explain how the cost-benefit analysis aligns with organizational needs and future growth.
Recommend a plan of action that is supported by the cost-benefit analysis. (Should the clinic purchase the MRI machine, or not?) Reference specific areas of the analysis in your recommendation.
Submit both parts of the assessment at the same time. Please note that you will need to attach each part separately since they are different types of documents.
ADDITIONAL REQUIREMENTS
Include a title page and reference page for Part 2.
Number of pages: 3–4, not including the title page and reference page (Part 2 only).
At least two current scholarly or professional resources (Part 2 only).
APA format for citations and references used in Part 2.
Times New Roman font, 12 point (Part 2).
Double-spaced (Part 2).
COMPETENCIES MEASURED
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:
Competency 1: Develop financial strategies to address dynamic environmental forces. (L24.2, L24.5, L17.2)
Recommend a plan of action based on a cost-benefit analysis.
Competency 2: Analyze the cost and revenue implications for organizational changes due to environmental forces. (L18.2, L12.1)
Analyze the cost and benefits of purchasing equipment for a health care organization.
Explain the concept of opportunity cost.
Explain how a cost-benefit analysis aligns with organizational needs and future growth.
Competency 4: Communicate in a manner that is scholarly, professional, and consistent with expectations for professionals in health care administration. (L6.1, L6.2, L6.3, L6.4)
Write content clearly and logically with the correct use of grammar, punctuation, and mechanics.
Format citations and references using the APA style.
Resources: Additional Resources for Further Exploration
The resources provided here are suggested and provide helpful information about topics relevant to the assessment. You may use other resources of your choice to prepare for this assessment however, you will need to ensure that they are appropriate, credible, and valid. The MHA Program Library Guide can help direct your research.You may use the following optional resources to further explore topics related to competencies.This web page provides an example of a cost-benefit analysis.
Agency for Healthcare Research and Quality. (n.d.). Population Health: Behavioral and social science insights: The science of making better decisions about health. https://www.ahrq.gov/professionals/education/curri…
Cleverley, W., & Cleverley, J. (2018). Essentials of health care finance (8th ed.). Jones & Bartlett.Available in the courseroom via the VitalSource Bookshelf link.
Chapters 14, \”Cost Concepts and Decision Making,\” pages 334–359.
Chapter 15, \”Product Costing,\” pages 360–375.
Chapter 16, \”Management Control Process,\” pages 376–399.
Healthcare Financial Management Association. (n.d.). http://www.hfma.org/
Requirements: 2-3
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