Model

CASE $20$ JONES MEMORIAL HOSPITAL

Capital Budgeting Decision Criteria

Student Version

This case deals with basic decision criteria in capital budgeting. The student version of the model is a format guide only because the objective is for students to attempt basic calculations themselves. The key to student success in this case lies in correct calculations and interpretation of the data.

Students should enter numbers, cell references, or formulae in cells that are shaded:

INPUT DATA:

Payer

Medicare

Medicaid

Blue Cross $/$ Private insurance

Managed care

Self$-$pay

Other

Total

Equipment cost

Equipment installation

Year $1$ number of tests per year

Years $2-5$ test volume growth rate

Net patient revenue inflation rate

Tests per $1\mathrm{.}0$ nurse FTE

Annual nurse salary & benefits

Nurse salary & ben inflation rate

Smith MOB Year $1-5$ rent per year

Contractual allowances discounts,

bad debts

$\backslash$table$[[$mix$,$per test,bad debts$],[41\%,$$$900,40\%$