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Cost-Benefit Analysis in Healthcare

Cost-Benefit Analysis in Healthcare

Preparation

Scenario

Suppose an issue has emerged in your organization that presents significant risks to the stakeholders involved. Your supervisor has asked you to conduct a CBA, make a recommendation, and present it to the board of directors. You are expected to consider the numbers within the context of the organizational mission, strategic direction, patient safety, risk-management issues, regulatory requirements, patient and stakeholder satisfaction, and the dynamics within the health care industry.

Select a relevant issue within your workplace (or one from the Suggested Resources) for which a CBA may be conducted. The CBA should include one of the following course-related topics:

  • Patient safety.
  • Risk management.
  • Regulatory standards.
  • Patient and stakeholder satisfaction.

Instructions

Step One: Identify Costs

Apply the process from Writing a Cost-Benefit Analysis article (from the Required Resources) to identify costs:

  1. Make a list of all monetary costs that will be incurred upon implementation and throughout the life of the project. These include start-up fees, licenses, production materials, payroll expenses, user acceptance processes, training, and travel expenses, among others.
  2. Make a list of all non-monetary costs that are likely to be absorbed. These include time, low production of other tasks, imperfect processes, potential risks, market saturation or penetration uncertainties, and influences on one’s reputation.
  3. Assign monetary values to the costs identified in steps one and two. To ensure equality across time, monetary values are stated in present value terms. If realistic cost values cannot be readily evaluated, consult with market trends and industry surveys for comparable implementation costs in similar businesses.
  4. Add all anticipated costs together to get a total costs value (Plowman, 2014).

Step Two: Identify Benefits

Continuing with the CBA, proceed with the identification and quantification of benefits, per Writing a Cost-Benefit Analysis article.

  1. Make a list of all monetary benefits that will be experienced upon implementation and thereafter. These benefits include direct profits from products or services, increased contributions from investors, decreased production costs due to improved and standardized processes, and increased production capabilities, among others.
  2. Make a list of all non-monetary benefits that one is likely to experience. These include decreased production times, increased reliability and durability, greater customer base, greater market saturation, greater customer satisfaction, and improved company or project reputation, among others.
  3. Assign monetary values to the benefits identified in steps one and two. Be sure to state these monetary values in present value terms as well.
  4. Add all anticipated benefits together to get a total benefits value (Plowman, 2014).

Cost-Benefit Analysis

Enter the cost and benefit data you developed for the CBA in your preparation steps into the Cost-Benefit Analysis Template, linked in the Required Resources.

Then, write an analysis in which you do the following:

  • Describe the organizational, program, or departmental issue for which you have created the CBA.
  • Evaluate the cost versus benefit according to the general guidelines outlined by Plowman’s 2014 article, which you read in the preparation for this assessment.
  • Make a recommendation as to whether the benefits are sufficient to outweigh the costs of the proceeding.
  • Describe the systems-based context for your recommendations, integrating the CBA within the organization as a whole.
  • Describe how the issue relates to the organization’s vision, mission, and strategic direction.
  • Provide a rationale that explains how your recommendations are appropriate for your organization’s capacity and strategy.

Your analysis should use proper APA style and formatting and include the following sections. Each section, except the title page, should include the appropriate section heading.

  1. Title page: Use APA formatting and include the following:
    • Assessment number (Assessment 3).
    • Your name.
    • The date.
    • The course number
    • Your instructor’s name.
  2. Abstract: Include a one-paragraph summary of analysis content. This is not an introduction to the topic, but a summary of the entire analysis. Make sure to double-space.
  3. Issue description.
  4. CBA evaluation.

Project Iron Boomerang

Project Iron Boomerang

It is now around a decade since Australian entrepreneur and UQ alumnus Shane Condon devised
Project Iron Boomerang, in which a 3000km railway line would link Queensland’s Bowen Basin’s
coal resources to the iron ore resources of Western Australia’s Pilbara mines. Iron ore would be
sent eastwards, and coal would be sent westwards along the railway line and, at each end of the
railway, steel production would take place for export markets. But nothing much seems to have
happened despite bold initial claims. Early on, some commentators dismissed the project on the
basis that Australian wages were simply too high for the steel to be made for a competitive
international price. Although the project is envisaged as a private sector venture, its sheer scale

and potential implications for regional development mean that it attracts the attention of State and
Territory governments, especially with the Australian dollar now far lower than it was at the time
the project was first proposed.
Imagine that you are an economist working for the Department of Premier and Cabinet in the
Queensland Government and have been asked to prepare a critical analysis of the project as a
briefing for the Queensland Premier, who expects the Western Australian Premier and Northern
Territory Chief Minister to raise the future of the project when they all meet in mid 2020. Your
expertise in the evolutionary/complex systems approach to economics is the reason that you in
particular have been asked to write this briefing, since previous advice has been informed by
traditional economic thinking and the Premier is keen to know whether your approach leads to
different perspectives on the feasibility and potential impact of the project.
****Marks will be awarded for:
(i) Evidence of the extent of relevant reading that has been undertaken, both in terms of breadth
and depth, especially from the scholarly literate rather than merely referring to media reports and
sources that have not been peer reviewed (9 marks);
(ii) Grasp of theoretical issues/absence of mistakes in explaining key concepts (8 marks)
(iii) Insight, critical thinking and creativity evident in applying theoretical perspectives to the topic
(10 marks) ;

(iv) Quality of writing and presentation, given the target audience (6 marks);
(v) Accuracy and consistency of referencing (2 marks).
In relation to (iii), note that if you are merely reporting what others have said and showing you
have understood it, then you will be unlikely to score more than 5/10 on this criterion; we want to
see evidence that you can make original connections and/or display critical insight by using the
theory yourself.

Balanced Score Card in Healthcare Organization

Balanced Score Card in Healthcare Organization

Preparation Select

Select a health care organization that has readily available data for the four categories from Kaplan and Norton’s 1996 model. Those categories are:

  • Financial performance measures.
  • Internal business processes.
  • Learning and growth.
  • Customer satisfaction.

You may wish to select your employer; however, please do not disclose proprietary data without prior written consent from your employer. You may wish to review the websites of large global organizations to research case study articles on best practices for organizations.

Instructions

PowerPoint Slides

To complete this assessment, you will develop a PowerPoint presentation with 10–12 slides that describes how you would apply a balanced scorecard to your selected organization. Include the following in your PowerPoint presentation:

  • A brief description of the organization you selected.
  • Your balanced scorecard analysis of the organization, including how vision and strategy connect to the four balanced scorecard elements.
  • Four recommendations for the organization.
  • At least one APA-formatted in-text citation and accompanying, congruent APA-formatted reference.

Audio Recording

  • A two-minute introduction.
  • The four elements of a balanced scorecard for the organization.
  • Four area recommendations for the organization.
  • A two-minute conclusion.

Include the notes or script of your audio recording. You may choose to include this in the form of the completed Notes section of the PowerPoint presentation slides, as a script you may have used when you created your recording, or in the form of a detailed outline. This will serve to clarify any insufficient or unclear audio.

Note: If your notes are not included in the PowerPoint presentation itself, attach them in a separate document along with the other presentation elements.

Additional Requirements

  • Written communication: Written communication should be free from errors that detract from the overall message.
  • APA formatting: Resources and citations should be formatted according to APA style and formatting guidelines.
  • Number of resources: At least one APA-formatted in-text citation and accompanying, congruent APA-formatted reference.
  • Length: The PowerPoint presentation should contain 10–12 slides.
  • Duration of audio recording: Maximum of 10 minutes.
  • Font and font size:
    • Headline type should be 24–28 points.
    • Bullet or body type should be 14–18 points for readability.
    • Avoid decorative type; use Arial or Times.

Definition of the Balanced Scorecard

The Balanced Scorecard Institute: The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. The balanced scorecard performance measurement framework considers non-financial performance measures in addition to financial metrics to provide a more balanced view of organizational performance.

Using the Scorecard in the Health Care Industry Within the health care industry, the scorecard must reflect a framework that incorporates patient safety, regulatory compliance, and a variety of other operational factors (Gunduz & Simsek, 2007). The contemporary version of the balanced scorecard transforms the organizational strategic plan into a dynamic document that provides a snapshot of performance measurement across the organization. Recall from earlier units that performance measurement is a condition of participation for some government and privately sponsored reimbursement sources.

 The Four Perspectives

The balanced scorecard indicates that organizations should be examined from four perspectives: learning and growth, business processes, customer satisfaction, and financial performance (Kaplan & Norton, 1992). Additionally, each perspective requires metrics for which data can be collected and analyzed (Balanced Scorecard Institute, n.d.). The analysis takes place within the context of the organizational strategic direction. When used to its full potential: The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. (Balanced Scorecard Institute, n.d.) Once the balanced scorecard is applied to an organization, it is important that managers effectively communicate results and take appropriate action. Applying the balanced scorecard results to key risk management areas is equally important when using the scorecard to minimize risk and develop a quality improvement strategy.