MHA FPX 5006 Assessment 3 Cost-Benefit Analysis MHA-FPX 5006 Health Care Finance and Reimbursement Cost-Benefit Analysis

Endeavoring the various cost-effective methods to streamline patient care is a purpose that healthcare facilities should explore when presented with the opportunity. One method to render better-streamlined care is to acquire an MRI device. Acquiring an MRI device can attract more patients to the facility, reduce the utilization of other facilities, provide timely results, and increase the clinic’s revenue. However, this acquisition should be approached carefully due to the high cost. A healthcare facility intending to offer MRI services should consider maintenance costs, system upgrades, and personnel training in its cost-benefit analysis (Phillips Healthcare, 2016). This analysis will help estimate the potential revenue the facility may generate with this expensive investment.

Opportunity Cost

The concept of opportunity cost involves the forgone benefits of an asset. If the benefits of investing in the machine outweigh the risks, it can be profitable and generate more revenue for the facility (Cleverley & Cleverly, 2018). A thoughtful strategy is required for the cost-benefit analysis, considering all options during the decision-making process of acquiring the MRI (Cleverley & Cleverly, 2018). Identifying effective alternatives and forecasting will aid in decision-making. The clinical success and necessity of the MRI device will yield more favorable patient outcomes and increase net revenue. Administrators’ decisions will be evaluated based on the net revenue received after the purchase.

Cost-Benefit Analysis

A cost-benefit analysis evaluates the total anticipated cost of a project compared to the expected benefits to determine whether the proposed implementation, in this case, the MRI machine, is worthwhile (Plowman, 2009). The cost-benefits are calculated over five years with a present value discount of 2%. According to Medicare pricing data, the average nationwide cost of an MRI machine in the U.S. can range from $150,000 to $1.2 million (Glover, 2014).

The present value of the total costs over five years is calculated at $10,924,856.21, using a present value discount rate of 2% (Appendix for more information on the cost-benefit analysis over five years). The analysis includes revenue and fixed cost details for the five years of operation from 2021-2025. Fixed costs include equipment installation, personnel training, utilities, maintenance, and system upgrades. The five-year total benefit projection is $11,065,714.23. Revenue was measured based on the fee for each MRI being $2,900 per patient, with 600 patients. The net benefit, estimated by deducting the present value of total costs, is assessed at $140,858.02 (Appendix for more information on cost-benefit analysis over five years). Based on the net benefit, the directive is that the acquisition is a viable decision.

Action Plan

Directives must implement an action plan for the acquisition of the MRI machine. The cost-benefit analysis results must be clear and detailed on how to proceed with the purchase and the long-term benefits (Chakravarty & Naware, 2008). The action plan includes the following steps towards the purchase of the MRI device. The executive director and clinical personnel must have full knowledge of the benefits from both financial and patient satisfaction standpoints. The action plan must also include methods to regulate costs while enhancing patient influx. The healthcare organization’s overall goal is to regulate costs while providing a satisfactory patient experience.

Once the administration determines if the MRI acquisition is viable, a budget must be set. Setting a budget will allow the facility to manage the expenses that might occur with implementation. Based on the cost-benefit analysis and the budget, the facility must decide which type of MRI machine will be beneficial. Additional costs, such as equipment fees, installation fees, and maintenance costs, will influence whether a new or used MRI machine should be acquired (Chakravarty & Naware, 2008).

The executive director will monitor MRI maintenance costs by initiating regular maintenance. By doing so, the directives will control expenses. The executive director must implement procedures and standards that guarantee ethical and culturally equitable guidelines. Guidelines will instruct personnel on how to properly utilize the machine, ensuring required care during MRI procedures. This will enhance the machine’s longevity, increase patient satisfaction, and boost clinic revenue.

Conclusion

The acquisition of an MRI machine must be approached carefully due to the high cost. A healthcare facility intending to offer MRI services should consider maintenance costs, system upgrades, and personnel training in its cost-benefit analysis. This analysis will help estimate the potential revenue that the facility may