Case 4 Questions. Vallejo

Victoria Vallejo 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 -40000 -20000 0 20000 40000 60000 80000 100000 120000 With New Marketing Program Incremental visits Total monthly revenue Total monthly costs Series4 Operating income (loss) Focus solely on the expected profitability of the proposed marketing program. How many incremental daily visits must the program generate to make it worthwhile? (That is, how many incremental visits would it take to pay for the marketing program, irrespective of overall clinic profitability?) Construct a break-even graph. For the clinic to not operate at more of a loss than they were before the marking program, an additional 26 visits per day are needed. The marketing costs of $7000 are paid for through the incremental analysis. 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 -30000 -20000 -10000 0 10000 20000 30000 40000 50000 60000 Expanded Marketing Program Incremental Analysis Added daily visits Incremental monthly rev Incremental monthly costs Series4 Incremental Operating income (loss) 5. The analysis has considered the clinic's near-term profitability—that is, an average month in 2022. Recast the pro forma (forecasted) profit and loss Copyright © 2022 Foundation of the American College of Healthcare Executives. Not for sale.

Victoria Vallejo I recommend that the walk-in clinic remain open without the implementation of the marketing program. Additionally, I recommend the following steps: Firstly, to identify areas of inefficiency and potential cost-saving measures. Implementing cost containment strategies, such as renegotiating supplier contracts, optimizing staffing levels, and streamlining administrative processes, can help reduce expenses without compromising the quality of care. Secondly, exploring opportunities to increase revenue streams. This could involve expanding services or specialties that are in high demand, improving billing and revenue cycle management processes to minimize revenue leakage, and enhancing marketing efforts to attract more patients to the hospital. Additionally, exploring partnerships or collaborations with other healthcare providers or organizations can help leverage resources and access new patient populations. Thirdly, it's crucial to focus on enhancing operational efficiency and patient satisfaction. Improving throughput times, reducing wait times, and enhancing the overall patient experience can lead to higher patient satisfaction scores and increased patient loyalty. This, in turn, can positively impact the clinic's reputation and bottom line. 11. In your opinion, what are three key learning points from this case? Break-even analysis is a crucial tool in the healthcare industry, aiding in financial decision-making and strategic planning. Three key learning objectives associated with break-even analysis in this sector include understanding the concept of fixed and variable costs, calculating the break- even point, and utilizing sensitivity analysis to assess the impact of changes in key variables. Firstly, grasping the difference between fixed costs (such as facility overhead) and variable costs (like medical supplies) is fundamental to accurately analyzing cost structures. Secondly, being able to calculate the break-even point, where total revenue equals total costs, helps healthcare organizations determine the minimum volume of services or patients needed to cover expenses. Lastly, sensitivity analysis enables healthcare professionals to evaluate how variations in factors like patient volume, reimbursement rates, or service prices affect the break-even point, allowing for more informed decision-making amidst dynamic healthcare environments. Mastering these objectives empowers healthcare managers to make strategic financial decisions that ensure sustainability and effective resource allocation within their organizations. Copyright © 2022 Foundation of the American College of Healthcare Executives. Not for sale.