Congratulations, you have just been appointed as director of the radiology department at High Quality Hospital $($HQH$).$ Your hospital is known for outstanding service and has earned many quality awards. On your first day as director you read the Hospitals$$ strategic plan. You find that osteoarthritis $($weakening of the bones$)$ is increasing in your primary service area for both men and women. As you assess the radiology equipment in your department, you realize that the hospital does not have the equipment to measure bone density.

Over the next $2$ weeks, you research and develop a business plan to make the case for the Hospital to buy a dexa scan $($equipment to measure bone density and the degree of osteoarthritis, if any$).$ A part of the business plan is a $5$ year projection of the financial impact of buying a dexa scan and running this new modality of care.

First, In order to determine the potential volume of patients, you contract with New Solutions $($NS$)$ a New Brunswick company specializing in hospital demographic data. NS determines that the hospital could see as many as $700$ patents a year after $5$ years of operating the dexa scan service. Given the time it takes to grow a new service, it is most likely that only $80\%$ could be achieved after the initial $5$ years. However, in the start up year it is expected that the most patient volume could be is $250$ patients. You will need to estimate your volume growth for each year subsequent year. The population trends for the next $5$ years show no change in the overall population. However, the population is aging and osteoarthritis is usually diagnosed in a person$$s late $40$s to early $50$s$.$ This is the only demographic age cohort that is growing and is project to increase by $15\%$ over the next $5$ years.

Since there is no payer data to determine the volume by payer, the department$$s actual payer mix will be assumed for the dexa scan service. The current payer mix is as follows: Medicare $25\%,$ Medicaid $10\%,$ Horizon $20\%,$ United $25\%,$ Aetna $10\%,$ CIGNA $5\%,$ Self$-$pay$/$Charity are $5\%.$

There are $2$ dexa scan tests with CPT billing codes that are used by hospitals and radiology centers as follows: