# HCM301 CSU Understanding Healthcare Financial Management Analysis

• February 05, 2022/

### Description

Please complete the two problems below, using excel and excel formulas.

 UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT Chapter 12 — Project Risk Analysis PROBLEM 3 Consider the project contained in Problem 7 in Chapter 11 (California Health Center). a. Perform a sensitivity analysis to see how NPV is affected by changes in the number of procedures per day, average collection amount, and salvage value. Remember supplies vary with number of procedures. b. Conduct a scenario analysis. Suppose that the hospital’s staff concluded that the three most uncertain variables were number of procedures per day, average collection amount, and the equipment’s salvage value. Furthermore, the following data were developed: Equipment Number of Average Salvage Scenario Probability Procedures Collection Value Worst 0.25 10 \$60 \$100,000 Most likely 0.50 15 \$80 \$200,000 Best 0.25 20 \$100 \$300,000 c. Finally, assume that California Health Center’s average project has a coefficient of variation of NPV in the range of 1.0 – 2.0. (Hint: Coefficient of variation is defined as the standard deviation of NPV divided by the expected NPV.) The hospital adjusts for risk by adding or subtracting 3 percentage points to its 10 percent corporate cost of capital. After adjusting for differential risk, is the project still profitable? d. What type of risk was measured and accounted for in Parts b. and c.? Should this be of concern to the hospital’s managers? ANSWER
 9/1/14 UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT Chapter 14 — Financial Forecasting PROBLEM 1 Florida Home Health is a small home care agency owned by a group practice of nurses and physical therapists in Tampa, Florida. During the past few years, the company reported the following revenues: Year Revenues (thousands) 1 \$2,058 2 \$2,534 3 \$2,472 4 \$2,850 5 \$3,000 6 ? Predict Florida Home Health’s Year 6 revenue. ANSWER