Southwest Hospital Financial Outlook
As we look at your hospital and its overall financial status we concluded that your organization needs to perform 750 operations (annually) to stay in business. Currently your facility handles 840 operations (yearly), at this current rate Southwest stands to make a profit of $54,000.
TC: 400X+450,000
R: 1000X
P: 600X-450,000
Proposal A (upgrade of equipment)
As we broke down the financial mechanics of the upgrade we came to the conclusion that in Southwest’s current position it would be a NEGATIVE impact on your organization. With an annual cost of $50,000 and a savings of $50.00 per operation you stand to lose $8,000 a year. At this time we discourage this move.
TC: 350X+500,000
R: 1000X
P: 600X-500,000
Proposal B (advertising)
Advertising for Southwest hospital would greatly increase its number of surgeries and subsequently profits yearly. Costing $120,000 annually it seems to make a big impact on the total costs, but with the potential to increase patients by more than 36.4% the $120,000 is easily fabricated throughout the year. Once the advertising campaign begins Southwest will handle an additional 480 operations totaling 1320 operations yearly. These additional patients will be solely responsible for a $168,000 increase in profit (annually).
TC: 400X+ 570,000
R: 1000X
P: 600X 570,000
If the advertising campaign is not as successful as noted prior, Southwest must perform
a minimum of 17 operations monthly (950 annually) to recoup the costs of the Ad campaign.
Proposal A+B (Upgrades, and Advertising)
Advertising and upgrades of equipment would increase Southwest profits by $16,000 annually. Both of These moves by the hospital would raise the annual cost of the facility by $170,000 to $620,000 yearly. Although your revenue would not increase per operation your facility would be able to handle the 1320 total yearly patients at a discounted rate of $350.00 per operation. This...