Question
I really need help with this case study. Case Study- St. Francis Healthcare - Outpatient Diagnostic Center 1 a Gross and Net Patient Service revenue
I really need help with this case study. Case Study- St. Francis Healthcare - Outpatient Diagnostic Center 1 a Gross and Net Patient Service revenue by Financial class/Payor budget for the period of 5 years. b Detail Expense budget for 5 years c Income statement for 5 years d What is the project's payback period? What are the deficiencies of payback method when used as project selection criteria? e What is the project's NPV at WACC of 12%? 2 What is the payor mix % for Year 1 using gross revenue? 3 Would you recommend opening this new Diagnostic Center? 4 What other factors including internal and external would you consider when doing this business plan? 5 There is a rumor that a big national company is also looking to open a free standing diagnostic center in that area within the next two years. It is estimated that if the new diagnostic center is opened, it will result in decrease in volume for St. Francis by 5% per year (in year 3-5). Also, Commercial/Managed Care insurance companies are looking ways to cut their cost by reducing hospital reimbursement. One way is to tie their reimbursement with Medicare. Managed Care/Commercial insurance are considering paying 150% of Medicare rates starting year 3. Assuming everything else remaining same, show the impact this will have on income statement, payback period and Net Present Value (NPV) using 12% cost of capital. What would be your recommendation based on this new information?
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