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1 1 . 7 A not - for - profit hospital realizes a 3 percent return on its $ 2 0 0 , 0 0

11.7 A not-for-profit hospital realizes a 3 percent return on its $200,000 investment in its home health unit. Its current revenue after discounts and allowances is $382,000. Administrative costs are $119,000, clinicad personnel costs are $210,000, and supply costs are $47,000. Providing home health care is not a core goal of the hospital, and it will sell the home health unit if it cannot realize a return of at least 12 percent. A process improvement team has recommended changes to the home health unit's billing processes. The team has concluded that these changes could reduce costs by $20,000 and increase revenues by $5,000. Analyze the data that follow and assess whether the changes would make the home health, unit profitable enough to keep.
\table[[,Old,New],[Revenue,$382,000,$387,000
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