Quantitative Methods for Business

According to exhibit # 2, in order to break even annually, the clinic will have to cover the total operating expenses of $690,000. That means that the clinic will have to perform 986 scan per year, or approximately 4 scans per day to achieve this goal. Considering that the equipment in the clinic is capable of much more, this operation should have no problem in reaching and exceeding its goal daily if proper measures are put into place.

A comprehensive satellite health clinic will reduce admissions, as well as re-admissions to the current single hospital within the county. This extra resource will reduce the possibility of competitors moving into the area, specifically those from neighboring hospitals that could bring the needed services that PMH is lacking and looking to provide. Additionally, consumers feeling forced to travel out of the area for care, or those facing the potential of being transferred out of the area due to the severity of the case as a result of inadequate primary and preventative care, or lack of space will diminish through these efforts.

This charge is also another revenue stream for the hospital and contributes to the ROI of the equipment. GE, which is the manufacturer of the equipment, indicates that the equipment has a viable life span of up to 15 years, but the warranty only covers the first 6 years of use (Price, 2011). The above figures are a clear indication that the MRI equipment can provide the hospital with an adequate return on investment. These figures, the machine’s lifespan, and the growing demand for MRI scans serve to justify the purchase of the equipment. Other factors that enhance the returns from the equipment include:

The economic cost for the clinic due to waiting times rise. By taking more time to process the patients, the clinic cannot reach its potential of seeing 108 patients. This of course results in less revenue. Currently the clinic operates at 74% capacity, resulting in a loss of 26% revenue.

After twenty years the true allocation facility cost for the Dialysis Center should be zero, since the facility would be paid off and should have only minimal allocating facility costs such as opportunity costs and costs of using the center. If after the twenty years the building is not occupied it can be used from other medical centers or it could be rented out or sold. It is difficult to try to determine the opportunity costs for space occupied by all activities. The current system of facility allocation assigns equal opportunity cost across all activities and services and avoids the problem inherited in the new method.

3. How many operations could the hospital perform per day before running out of bed capacity? How well would the new resources be utilized relative to the current operations? Why?

At 5% level of significance, is there sufficient evidence to conclude that the proportions of errors in transactions assigned to each of the 5 memory locations are all different?

2. Analyze the available MD and NP capacity.  How effective is the clinic in matching supply and demand?

The hospital utilizes its best to full capacity three days in a week, on the other hand, the doctors operate at the hospital five days in a week, and this implies the equation for the utilization of the beds will focus on two different perspectives.

First and foremost, if a hospital is suddenly lost all of its cardiovascular surgeons...heads will roll. However, if there are a major lost of service such as the cardiovascular surgeon...there will be a decrease in the volume due to the lost of services. Thus when the hospital have a reduce in the total volume it will also have a reduce in total cost. If the hospital is operating under statistics budget...in the long run, through the development or discontinuation of certain programs volume may be

Littlefield Laboratories has opened a new blood testing lab. This laboratory uses the same process as the lab encountered in your prior assignment, Capacity Management at Littlefield Labs—neither the process sequence nor the process time distributions have changed. The lab began operations with a raw materials inventory of 160 kits and $1,000,000 cash. Customer demand continues to be random, but the expected daily demand will not change during the lab’s life span. Expert advisors know that demand will end abruptly on Day 268 and the lab will no longer be necessary. Any remaining machinery or inventory will be useless after Day 268, and thus have no residual value.

The hospital is currently utilizing 71.43% of their beds, this is actually an ideal operating point. To increase its rate of utilization might decrease the service quality.

Managing demand and capacity: MGH could forecast the demand and research the bottlenecks in each area of process flow diagram (Exhibit 8) such as surgery room, Ellison 8 rooms, SICU floor bed, and other hospital beds. Based on the research, they can increase or decrease the resources such as staff or beds or even expand the facility. They need the data to forecast and manage the capacity. Without the data, it is impossible to manage the capacity. So MGH need to start collecting data to better manage the demand and available capacity. However, this would not help solve the current immediate problem in hand to improve the process and reduce costs.

3.) Strong presence in high margin health services business. In addition to UnitedHealth Group’s leadership position in the health benefits market segment, UnitedHealth Group has strong information and technology based health services platform through its business segments which is Ingenix, OptumHealth and PrescriptionSolutions. The “CNN MONEY” (2012) website states Ingenix is one of the largest health information, technology and consulting companies in the world. The UnitedHealth Group derived $2.3 billion of revenues from Ingenix which contributed $284 million (excluding $200 million in goodwill impairment and business line deposition charges) of operating profit, and an operating margin of 12.1% during FY2010.

In the calculation it can be said that they only 7 stations are needed. With this number of workstations one could achieve the highest efficiency at this moment. But the company will grow rapidly. Therefore they had to add new stations every year.