How would this business memorandum look like and please be detailed as possible.

Practicing Defensive Medicine

CASE STUDY

The CFO of a small rural women's health center within Acme General Hospital has received requests from several physicians to purchase a 3D mammography machine. The anticipated retail price for the equipment and installation is $450,000. We have to pay separately for the maintenance/service agreement. We currently use 2D technology. The 3D equipment is considered state-of-the-art and useful in the early detection of breast cancer. The reality is that the women's health center has limited funds and currently does not have a large incidence rate of breast cancer diagnoses.

In addition to thinking about the impact of 3D technology on early diagnosis and revenue enhancement, the leadership team is keenly aware of the importance of keeping the young physicians satisfied so they'll choose to remain apart of the hospital. Acquiring the latest in technology is known to satisfy providers, especially those who recently completed their residency. On the other hand, the Board of Directors has indicated they want to keep a tight control over frivolous spending, as they are uncertain how new regulations like those coming from the Patient Protection and Accountable Care Act of 2010 will impact the financial solvency of the company.

You are a member of the organization's acquisition team. Your team to make a formal recommendation for Mr. Jason Harris, the Chairman of the Board. Mr. Harris is expecting you to put your recommendation in Business Memorandum.

1. Explore alternatives including thestatus quo.

2. Influence of defensive medicine on this request.

3. Cost of this new technology.

4. Reimbursement implications.

5. Effectiveness of current technology compared to 3D.

6. Volume projections with and without the acquisition of the new technology.

Intro info

It is no secret in the healthcare industry that many professionals are dealing with increasing premiums for their professional liability insurance. As a result, many have adopted a philosophy of "do more to cover myself". As a result, they are ordering unnecessary tests or treatments so to be able to say they covered all the bases even when there is no indication it is needed. This is commonly referred to as defensive medicine.

There is another form of defensive medicine, which results in providers choosing treatments and procedures that may have a poor prognosis, but intel less risk as opposed to another alternative that has a better prognosis, but possesses more inherent risk. Some might feel that the practice of defensive medicine is okay and that it's better to be safe than sorry; however, it could subject patients to harm or unnecessary delays in their diagnosis and treatment. We need to strike a balances between playing it too safe and being too aggressive, cost v. benefit, maintaining the existing business model or changing the paradigm, especially given the litigious nature of our society. Change in practice will be the focus of this discussion question.