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Finance Assignment - The Capital Project Case Study Part 1 & 2




Question;Capital Project Case Study;Part 1;This;case study considers the expected costs and benefits to a managed care;organization resulting from a decision to design a centralized nurse triage;line. This triage line would assist routine primary care patients to provide;self-care and/or seek urgent care in lieu of seeking more expensive care;after-hours in the emergency room.;Summary;Jiranna Healthcare owns and operates a;268-bed hospital in the San Jose area. The hospital is Jiranna Healthcare?s;main facility and is home to more than 80 on-site specialty and surgery;clinics, employing over 5,000 staff. In addition to the main hospital, Jiranna;Healthcare has 18 satellite clinics, containing primary care services such as;pediatrics, family medicine, and geriatric health. These facilities (hospital;plus outlying clinics) serve a total enrollee population of 97,000.;Currently, Jiranna Healthcare?s;centralized call center schedules primary care appointments and handles an;average of 1,500 to 2,000 calls daily with a staff of 20. Patients routinely;have difficulty obtaining access to urgent or acute care (primary care) in a;timely fashion. Additionally, the majority of Jiranna Healthcare?s primary care;centers are unable to meet access standards in three out of four cases. These;access issues have a secondary effect on the call center, which experiences a;much higher call rate because members have to call back multiple times to find;available appointments. The existing process leads to overutilization of;emergency departments for urgent care and primary care concerns. In addition;patient satisfaction has steadily declined as a result of the continued lack of;appointment availability.;To;address this problem, there is a proposal to implement a centralized nurse triage;line, an off-site phone center that would be staffed by registered nurses with;a multitude of specialties (including ER nurses, critical care, surgical, and;even some nurse practitioners). These nurses are able to offer callers medical;advice encompassing the treatment of fevers, wound care, and emergent;conditions such as chest pain. The nurses are trained to triage conditions to;the appropriate level of care be that at home, at an urgent care center, or at;an emergency department.;The;major cost impact is the increased salary requirement for the phone center;staff, which will entail approximately 33 multi-discipline employees, based on;workload and enrollment data. Additional elements of the proposal include;hiring an IT specialist to manage the triage line?s computer system, and;facility renovations. The main benefit of this proposal is projected cost;reductions in patient care as a result of moving primary care out of the;expensive emergency-room setting.;Assignment;The;Capital Project Case Study, Part 2;spreadsheet provides cash flow data (costs and benefits) for the proposal.;Download;and save this Excel spreadsheet, and use the information provided to complete;the following;1. Determine;the cash inflows and outflows for each year.;2. Evaluate;the capital project by calculating the following metrics;a. net present;value (NPV);b. internal;rate of return (IRR);c. modified;internal rate of return (MIRR);d. payback;period;e.;discounted payback period;3. Indicate;whether the project is acceptable, assuming Jiranna has a corporate policy of;not accepting projects that take more than 3.5 years to pay for themselves, and;assuming an 11% cost of capital.


Paper#49170 | Written in 18-Jul-2015

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