You are interning at a physicians office, which is part of a physicians group. The group is thinking about implementing an electronic medical record (EMR) system in all of their offices and because of your Excel skills learned during your college coursework, you have been asked to create a break-even analysis that will help the physicians decide if implementing this particular system will be financially beneficial to the group.

Costs The physicians group consists of 15 offices and the plan is to install the system in three offices in 2018, five offices in 2019, and the remaining offices in 2020.

There is a one-time installation cost of $102,000 per office in the year of installation.

The annual operating costs will be $21,000 for each office with a system installed.

Benefits The physicians group will also benefit from federal meaningful use payments designed to incentivize the adoption of EMR systems.

Each physician in the group will be eligible for $6,000 in annual meaningful use payments for working in an office with an EMR.

Each office has 2 physicians.

Each physician sees patients 220 days per year. T

he system will improve efficiencies in assessing and treating patients so that each physician will be able to see one more patient each day. Each additional patient will increase revenue by an average of $110. The NPV Rate is 10% Calculations The break-even analysis will cover a 4-year period from 2018-2021. For each year:

Calculate the system costs and benefits. Calculate the net benefits of the system and the break-even totals for the system. Break-even totals are simply the accumulated net benefits. The project breaks even when the accumulated net benefits value is positive. For the total 4-year period: Calculate the net present value (NPV) of the investment using a rate of 10%. Calculate the internal rate of return (IRR). Break-Even Structure Your Break-Even Analysis will contain the following sections:

Variables: this section is where all fixed values given to you in the instructions are stored. The only calculated values in this section is a running total of offices with systems in row 4.

Costs: this section uses the variables related to system costs to calculate the total costs that will be required to implement and operate the EMR system.

Benefits: this section uses the variables related to system benefits to calculate the total benefits anticipated from the implementation of the EMR system.

Break-Even, NPV, and IRR Calculations: this section calculates simple break-even totals, net present value, and the internal rate of return for the project that will indicate the relative financial value of going forward with the project.