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, clinical 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 significant changes to the home health units 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 follows and assess whether the changes would make the home health unit profitable enough to keep.

	Old	New
Revenue	$382,000	$387,000
Cost	$376,000	$356,000
Profit	$6,000	$31,000
Return on investment	3%	16%