1) Big Sky Mining Company must install $1.5 million of new machinery in its Nevada mine. It can obtain a bank loan for 100% of the purchase price, or it can lease the machinery. Assume that the following facts apply:
1. The machinery falls into the MACRS 3-year class.
2. Under either the lease or the purchase, Big Sky must pay for insurance, property taxes, and maintenance.
3. The firm’s tax rate is 40%.
4. The loan would have an interest rate of 15%.
5. The lease terms call for $400,000 payments at the end of each of the next 4 years.
6. Big Sky Mining has no use for the machine beyond the expiration of the lease, and the machine has an estimated residual value of $250,000 at the end of the 4th year.
What is the NAL (Net Advantage of Leasing) of the lease?

You would have cash flows for owning and leasing in years 1-4. You should also have tax on residual value in year 4 in cost of owning.

NPV LEASE ANALYSIS

Year = 0 1 2 3 4
Cost of Owning
After-tax loan payments ($135,000)($135,000) ($135,000) ($1,635,000)
Maintenance Cost
Tax savings from main.
Tax savings from depr. $198,000 $270,000 $90,000 $42,000
Residual value $250,000
Tax on residual value
Net cash flow $0 $63,000 $135,000 ($45,000) ($1,443,000)
PV ownership cost @ 9% $ (885,580.87)
Cost of Leasing
Lease payment(AT) ($240,000) ($240,000) ($240,000) ($240,000)
Net cash flow $0 ($240,000) ($240,000) ($240,000) ($240,000)
PV of leasing @ 6.5% $ (777,532.77)

Cost Comparison
PV ownership cost @ 9% $ (885,580.87)
PV of leasing @9% $ (777,532.77)
Net Advantage to Leasing $ 108,048.10
2) Net advantage to leasing problem (NAL).
ABC Industries is negotiating a lease on a new piece of equipment which would cost $100,000 if purchased. The equipment falls into the MACRS 3-year class, and it would be used for three years and then sold, because ABC plans to move to a new facility at that time. It is estimated that the equipment could be sold for $30,000 after three years of use. A maintenance contract on the equipment would cost $3,000 per year, payable at the beginning of each of the three years of usage. Conversely, ABC could lease the equipment for three years for a lease payment of $29,000 per year, payable at the beginning of each year. The lease would also include maintenance. ABC is in the 20 percent tax bracket, and it could obtain a three-year simple interest loan to purchase the equipment at a before tax cost of 10 percent. Should ABC lease or buy?

NPV LEASE ANALYSIS

Year = 0 1 2 3
Cost of Owning
After-tax loan payments ($8,000) ($8,000) ($108,000)
Maintenance Cost (after tax) ($2,400) ($2,400) ($2,400) $0
Depreciation $33,000 $45,000 $15,000
Tax savings from depr. $6,600 $9,000 $3,000
Residual value $30,000
Tax on residual value ($4,600)
Net cash flow ($2,400) ($3,800) ($1,400) ($79,600)
PV ownership cost @ 8% $ (70,307.84)

Cost of Leasing
Lease payment $29,000 $29,000 $29,000 $0
Tax savings from leas($5,800) ($5,800) ($5,800) $0
Net cash flow $23,200 $23,200 $23,200 $0
PV of leasing @ 8% $ 64,571.74

Cost Comparison
PV ownership cost @ 8% $ (70,307.84)
PV of leasing @ 8% $ 64,571.74
Net Advantage to Leasing $ (5,736.10)

Unit 4 Discussion 1 (Due Immediately) $10

Third-Party Reimbursement – 250 Words

Resources

·  Discussion Participation Scoring Guide.

·  APA Style and Format.

Discuss the history of third-party reimbursement. Describe the most common reimbursement methodologies used in the past, and then discuss the methodologies that are most common today. Explain the long-term implications for the health care provider, the payer, and the patient, as the method for reimbursement continues to evolve.

Remember to use citations and references as appropriate. Your post must follow APA sixth edition style and formatting guidelines. An iGuide page APA Style and Format is included in the resources, which may be helpful to you.

 

Unit 4 Discussion 2 (Due Immediately) $10

Medicare and Medicaid Programs

Resources

·  Discussion Participation Scoring Guide.

·  APA Style and Format.

Research and discuss the following:

· Accountable care organizations.

· Value-based purchasing.

· Never events.

Explain how Centers for Medicare and Medicaid Services (CMS) is trying to improve health care quality with each of these programs.

Remember to use citations and references as appropriate. Your post must follow APA sixth edition style and formatting guidelines. An iGuide page APA Style and Format is included in the resources, which may be helpful to you.

 

 

Unit 5 Assignment 1 (Due Sunday 8/16/15) $40

System Implementation

Resources

·  System Implementation Scoring Guide.

·  APA Style and Format.

·  Cost Benefit Analysis Template.

You are the CFO of a large academic medical center and your organization is in the process of implementing a new electronic health record (EHR) and practice management (PM) system. Several of your providers are complaining about conversion to the new EHR and PM system and are being resistant to change.

Review “Perspective 13.5: Financial Benefits From IT,” on page 616 of your Financial Management of Health Care Organizations text by Zelman, McCue, Glick, and Thomas. This section discusses the benefits realized by Banner Health System when they invested in IT.

Conduct additional research on the benefits of IT and develop a presentation that you will give to all internal stakeholders to convince them to embrace the conversion. Complete the following:

· Apply a cost-benefit analysis to consider potential profit and risks to your organization based on the experience of Banner Health System. Use Plowman’s spreadsheet “Cost Benefit Analysis Template” to display your data.

· Utilize professional research to analyze opportunities for your organization based on potential profits and risks. Include a discussion on improved quality of care that may be realized.

· Devise a strategy to influence multiple levels of your organization, especially providers. Describe at least two steps you would take to influence others and enlist endorsements for the conversion.

· Identify the key stakeholders to gain support for this initiative and explain how you will gain their support.

· Evaluate two state-of-the-art systems currently being used in other organizations that your organization may consider for this conversion.

· Evaluate the strategic position of your organization after this IT implementation in relation to the use of technology such as hand-held devices, patient portals, et cetera.

· Evaluate the probable expectations of your providers and patients surrounding this conversion.

· Develop a strategic plan for this implementation based on the expectations of providers and patients.

Create a 15–20-slide PowerPoint presentation that includes the above points.

Submission Requirements

Your paper should meet the following requirements:

· Written communication: Create a PowerPoint presentation of 15–20 slides, not including the title or reference slides. Be sure to include detailed speaking notes. Your writing needs to communicate professionally, with correct English usage. Your points need to be logical, substantive, and relevant based on the evidence presented. Your document should clearly identify where each grading criteria or parts of the assignment are addressed by using APA-formatted headings and subheadings. In addition, your communication needs to be free of errors that detract from the overall message.

· Parts of document: Your presentation should include the following:

13. Title slide.

13. Slides that contain the main body of the presentation with APA-formatted headings and subheadings.

13. Reference slides.

. APA formatting: Resources and citations are formatted according to APA sixth edition style and formatting.

. Font and font size: Arial, 10 point.

Submit your PowerPoint presentation in the assignment area by midnight CST Sunday.

Be sure to review the scoring guide to understand how the assignment will be graded.

 

 

 

 

 

 

Unit 5 Discussion 1 (Due 8/15/15) $10

Health Care Cost Accounting – 250 words

Resources

·  Discussion Participation Scoring Guide.

·  APA Style and Format.

Discuss three different methods of estimating costs in a health care organization and provide the pros and cons of each.

Remember to use citations and references as appropriate. Your post must follow APA sixth edition style and formatting guidelines. An iGuide page APA Style and Format is included in the resources, which may be helpful to you.

 

Unit 5 Discussion 2 (Due 8/15/15) $10

Cost Allocation

Resources

·  Discussion Participation Scoring Guide.

·  APA Style and Format.

Complete problem 11a concerning cost allocation on page 573 of your Financial Management of Health Care Organizations text by Zelman, McCue, Glick, and Thomas. Show all of your calculations in an Excel spreadsheet. Post your spreadsheet and ask related questions or offer comments about it.

Remember to use citations and references as appropriate. Your post must follow APA sixth edition style and formatting guidelines. An iGuide page APA Style and Format is included in the resources, which may be helpful to you.

 

 

 

 

 

 

Unit 6 Assignment 1 (Due 8/23/15) $65

Accounts Receivable Management

Resources

·  Accounts Receivable Management Scoring Guide.

·  APA Style and Format.

It is critical that financial leaders have a firm grasp of the organization’s receivables, because roughly 75 percent of a provider’s current assets is tied up in AR (Zelman, McCue, Glick, & Thomas, 2014). In addition to your text, select three journal articles to support your conclusions. Complete the following:

· Prepare a strategic assessment based on your research surrounding AR management and discuss three ways a health care provider can reduce days in AR.

· Prepare a strategic assessment based on your research surrounding AR management and discuss three ways a health care provider can monitor days in AR.

· Develop a perspective on the long-term financial trends surrounding AR management. Discuss the risks surrounding inadequate AR management.

· Discuss three significant changes or trends that are taking place and their impact on the revenue cycle. Discuss how these trends will impact organizational strategy, patient care, and community health.

Prepare an 8–10-page paper based on the above.

Submission Requirements

Your paper should meet the following requirements:

· Written communication: Your 8–10-page document should clearly identify where each grading criteria or part of the assignment is addressed by using APA-formatted headings and subheadings. Your writing needs to communicate professionally, with correct English usage. Your points need to be logical, substantive, and relevant based on the evidence presented. In addition, your written communication needs to be free of errors that detract from the overall message.

· APA formatting: Resources and citations are formatted according to APA sixth edition style and formatting.

· Parts of document: Your paper should include the following:

9. Title page.

9. Table of contents.

9. Body of paper with APA-formatted headings and subheadings.

9. References.

. Font and font size: Arial, 10 point.

Submit your Word document in the assignment area by midnight CST Sunday. Attach spreadsheets, if any.

Be sure to review the scoring guide to understand how the assignment will be graded.

Reference

Zelman, W. N., McCue, M. J., Glick, N. D., & Thomas, M. S. (2014). Financial management of health care organizations: An introduction to fundamental tools, concepts, and applications (4th ed.). San Francisco, CA: Jossey-Bass.

 

Unit 6 Discussion 1 (Due 8/20/15) $10

Materials Management – 250 words

Resources

·  Discussion Participation Scoring Guide.

·  APA Style and Format.

Materials management is an essential function in any health care organization to control the flow of supplies. Discuss the benefits and limitations of using a bar code scanner in the operating room for materials management.

Consider routine items and supplies that only have to be ordered on rare occasions. Who should be responsible when an item that was supposed to be ordered is not available, or when a surgery has to be cancelled?

Offer recommendations based on your research.

Remember to use citations and references as appropriate. Your post must follow APA sixth edition style and formatting guidelines. An iGuide page APA Style and Format is included in the resources, which may be helpful to you.

Unit 7 Discussion 1 (due 8/22/15) $10

Present Value

Resources

·  Discussion Participation Scoring Guide.

·  APA Style and Format.

Complete problems 19 a, 19b, 19c, and 19d on page 287 of your Financial Management of Health Care Organizations text by Zelman, McCue, Glick, and Thomas.

Calculate the present value of the 120,000 dollars based on all of the discount rates listed. Post your spreadsheet to this discussion. In a paragraph or two, state what you learned or any tips for others working through this problem.

Remember to use citations and references as appropriate. Your post must follow APA sixth edition style and formatting guidelines. An iGuide page APA Style and Format is included in the resources, which may be helpful to you.

Response Guidelines

Briefly respond to the posts of two of your peers concerning anything they shared that may be helpful in the future.

 

Unit 7 Discussion 2 (due 8/22/15) $10

Payback, Present Value, and Internal Rate of Return

Resources

·  Discussion Participation Scoring Guide.

·  APA Style and Format.

Explain the payback method, net present value method, and the internal rate of return. How are they similar and how are they different?

Remember to use citations and references as appropriate. Your post must follow APA sixth edition style and formatting guidelines. An iGuide page APA Style and Format is included in the resources, which may be helpful to you.

 

Unit 8 Assignment 1 (due 8/25/15) $35

Break-Even Analysis

Resources

·  Break-Even Analysis Scoring Guide.

·  APA Style and Format.

Write a 4–6-page paper discussing the importance of a break-even analysis when making a decision to lease or buy a piece of equipment. Research and provide an example of a break-even analysis conducted in a health care organization. Complete the following:

· Prepare a strategic assessment of the sample break-even analysis you researched. Within your assessment, discuss when it is appropriate to use a break-even analysis and how a break-even analysis is done.

· Analyze the financial data in the sample break-even analysis and explain the potential implications for the health care institution. Discuss the role of fixed and variable costs in the break-even analysis and how indirect costs and profit are factored into the analysis.

· Evaluate the probable priorities and expectations of stakeholders surrounding this break-even analysis.

· Discuss if you would develop a strategic plan to move forward based on the sample break-even analysis.

· Explain how the sample break-even analysis might be used to make a long-term financial decision.

· Assess the potential financial impact of the sample break-even analysis as it relates to organizational strategy, patient care, or community health.

Submission Requirements

Your paper should meet the following requirements:

· Written communication: Your 4–6-page paper should clearly identify where each grading criteria or part of the assignment is addressed by using APA-formatted headings and subheadings. Your writing needs to communicate professionally, with correct English usage. Your points need to be logical, substantive, and relevant based on the evidence presented. In addition, your communication needs to be free of errors that detract from the overall message.

· APA formatting: Resources and citations are formatted according to APA sixth edition style and formatting.

· Parts of document: Your paper should include the following:

11. Title page.

11. Table of contents.

11. Body of paper with APA-formatted headings and subheadings.

11. References.

. Font and font size: Arial, 10 point.

Submit your Word document in the assignment area by midnight CST Sunday. Attach spreadsheets, if any.

Be sure to review the scoring guide to understand how the assignment will be graded.

 

 

Unit 8 Discussion 1 (due 8/27/15)$10

Decision Making – Expand or Reduce

Resources

·  Discussion Participation Scoring Guide.

·  APA Style and Format.

Complete question 10 concerning an expand-or-reduce decision on page 449 of your Financial Management of Health Care Organizations text by Zelman, McCue, Glick, and Thomas. Show all calculations and provide recommendations for Ms. Gilbert.

Remember to use citations and references as appropriate. Your post must follow APA sixth edition style and formatting guidelines. An iGuide page APA Style and Format is included in the resources, which may be helpful to you.

 

 

Unit 9 Discussion 1 (due 8/27/15)$10

Different Types of Budgets – 250 words

Resources

·  Discussion Participation Scoring Guide.

·  APA Style and Format.

Discuss four different types of budgets and explain when it would be appropriate to use each for a medical organization.

Remember to use citations and references as appropriate. Your post must follow APA sixth edition style and formatting guidelines. An iGuide page APA Style and Format is included in the resources, which may be helpful to you.

Response Guidelines

Respond to the posts of two of your peers offering your ideas or first-hand experience concerning the use of the particular budgets mentioned.

 

Unit 9 Discussion 2 (due 8/28/15 )$10

Decentralization – 250 words

Resources

·  Discussion Participation Scoring Guide.

·  APA Style and Format.

Discuss decentralization and the advantages and disadvantages of decentralization for a health care organization.

Remember to use citations and references as appropriate. Your post must follow APA sixth edition style and formatting guidelines. An iGuide page APA Style and Format is included in the resources, which may be helpful to you.

Unit 10 Discussion 1 (due 8/30/15) $10

Affordable Care Act – 250 words

Resources

·  Discussion Participation Scoring Guide.

·  APA Style and Format.

Discuss the Affordable Care Act of 2010 and explain how it attempts to improve quality, reduce cost, and increase access. In your post, include strategies and how to gain support from various stakeholders and improve community acceptance. Also, research and share the act’s impact on community health in your geographic area to date.

Remember to use citations and references as appropriate. Your post must follow APA sixth edition style and formatting guidelines. An iGuide page APA Style and Format is included in the resources, which may be helpful to you.

 

Unit 10 Discussion 2 (due 8/31/15) $10

Professional Application – 250 words

Resources

·  Discussion Participation Scoring Guide.

Discuss how you will use what you have learned in this course in your personal and professional life. Include a discussion on potential financial impacts as it relates to your topic. You may discuss any course content that you examined this quarter.