1) What is the projected additional revenue from the HIFU?

2) What is the projected payor mix of the HIFU?

3) What is the contribution margin, if any, of the HIFU?

4) What are the strategic and expansion benefits of an HIFU?

5) Would you purchase this equipment? Why?

$40,977,016 21974863 $19,002,153 Income Statement Revenue Less Vaiable expenses Technician salary expenses 19098765 Patient Supply expenses 2876098 Total variable expense 21974863 Contributions Margin Fixed expenses Management salary expenses 1000087 RN salary expense 44000 Support staff salary expenses 250432 Fringe expesnes 4078657 Office supply expenses 242423 Administration and general ex 10435687 Depreciation expenses 1450654 Interest expenses 116052 Miscellaneous expenses 17789 Total fixed expenses 17635781 Profit Margin 17635781 $1,366,372 Available Information- HIFU: The cost of the HIFU equipment is $4,800,250. The HIFU has a Useful Life of 5 years - Useful life is the expected length of time the equipment will be in service. The CFO told you the Hospital weighted cost of capital is 6.5% Variable Expense of HIFU- All Payors is $800.00 Expected Revenue per Visit is a 5% increase each year. Expected Variable Expense is a 3.5% increase each year. Expected Outpatient Payment Volume: Health Plan Payment Projected Volume 1,100 750 Excellus BXBS Excellus BXBS Excellus BXBS MVP MVP 50 Type Commercial Medicare Medicaid Commercial Medicare Commercial Commercial 775 $1,300 $450 $0 $1,380 $480 $1,400 $1,390 $400 400 Aetna 700 United 800 Traditional Medicare Medicare 650 Traditional Medicaid Medicaid 0 200 $40,977,016 21974863 $19,002,153 Income Statement Revenue Less Vaiable expenses Technician salary expenses 19098765 Patient Supply expenses 2876098 Total variable expense 21974863 Contributions Margin Fixed expenses Management salary expenses 1000087 RN salary expense 44000 Support staff salary expenses 250432 Fringe expesnes 4078657 Office supply expenses 242423 Administration and general ex 10435687 Depreciation expenses 1450654 Interest expenses 116052 Miscellaneous expenses 17789 Total fixed expenses 17635781 Profit Margin 17635781 $1,366,372 Available Information- HIFU: The cost of the HIFU equipment is $4,800,250. The HIFU has a Useful Life of 5 years - Useful life is the expected length of time the equipment will be in service. The CFO told you the Hospital weighted cost of capital is 6.5% Variable Expense of HIFU- All Payors is $800.00 Expected Revenue per Visit is a 5% increase each year. Expected Variable Expense is a 3.5% increase each year. Expected Outpatient Payment Volume: Health Plan Payment Projected Volume 1,100 750 Excellus BXBS Excellus BXBS Excellus BXBS MVP MVP 50 Type Commercial Medicare Medicaid Commercial Medicare Commercial Commercial 775 $1,300 $450 $0 $1,380 $480 $1,400 $1,390 $400 400 Aetna 700 United 800 Traditional Medicare Medicare 650 Traditional Medicaid Medicaid 0 200