Questions to Think About from the Case Authors 4 of 4 Case 20: Coral Bay Hospital (Traditional Project Analysis) Questions to think about only from the authors George Pink and Paula Song 1. What are the NPV, IRR, MIRR, and payback of the proposed ambulatory surgery center? Do the measures indicate acceptance or rejection of the proposed ambulatory surgery Center? 2. Inflation is one of the most difficult factors to deal with in project analysis. a. Complete the inflation impact table shown in exhibit 20.2. b. What management information is provided by the inflation impact table? 3. One board member wants to make sure that complete risk analyses, including sensitivity and scenario analyses, are performed before the proposal is sent to board a. Perform a sensitivity analysis b. What management information is provided by the sensitivity analysis? 58 1/22/22 v1.0 Page 3 4. Do the following: a. Perform a scenario analysis b. What management information is provided by the scenario analysis? c. Why is the expected NPV obtained in the scenario analysis different from the base case NPV? 5. A board member is interested in the utilization breakeven of the Center a What are the breakeven values of the three input variables that are highly uncertain? b. What management information is provided by the breakeven analysis? 6. To help with the risk-incorporation phase of the analysis, Jules Bergman consulted with the hospitals CFO about both the risk inherent in the hospitals average project and how the hospital typically adjusts for risk. a. What is the project's differential risk-adjusted NPV? b. Assess the corporate risk of the project (No calculations are required Think about the correlation between the surgery center and hospital cash flows.) 7. Jules is aware that some qualitative factors are relevant to the surgery centar decision a. What qualitative factors might support project acceptance ? b. What qualitative factors might preclude project acceptance? C. Can you think of any costs that might be associated with the project that have not been included in the analysis? d. Are there any potential benefits that have not been included? e. What additional data would you seek from other hospital staff members to conduct a more thorough analysis? 8. Considering all points, would you build the ambulatory surgery center? 9. In your opinion, what are three key learning points from this case? CASE 2 CORAL BAY HOSPITAL: Trond Project Anal ta Copyright 2018 Foundation of the American College of Healthcare Executives. Not for sale Wodel without Gestion de Version This case stresa come caps Bodeng anys, induding confowww probleme. No modelos court The model costs of a complete bene changes to the meeting MOOEL GENGUATED DATA schon Hewletih UTOATA section of the det predstave been replaced by Students must select appropriate pt values and enter The cell with value colored red. Ateron done anywhere will be conected and the che solution The KEYOUTPUT to ne more from the MOOEL GENERATED DATA secten KEY OUTPUT NOV RR MRR SO w PUT DATA and cost Land opportyorlande Building on coul Burgers Procedures per day Average rat presente per procedure Unico Incrementales Seycom cu While online naten on Tas Hovernors from news Meduction in gey coute Cost of capital be.com DON 10 50 VOCEL-GENERATED DATA Depreciation Schedule MACRS Derec End of Year 1 2 3 4 5 020 03 0.10 . 011 Net Cash From Wh giu H 30 . . . . . 0 0 Land opponunt com Nu putere cutego Building womento Lahoru Cet savings on co Incrementales Deprecation come free T Project me income Plus Depreciation Plus Netfand sale Pul Natbuling page Net Cow Cumulative result o 30 al ol 30 18 . so 501 30 10 SO $ ls 2 30 30 10 10 10 Pot and see Net present value (NPV Internal rate ofron MMOR Puybach 90
