{"id":24395,"date":"2023-12-18T03:39:55","date_gmt":"2023-12-18T03:39:55","guid":{"rendered":"https:\/\/academicwritersbay.com\/writings\/develop-a-return-on-investment-roi-strategy-for-the-acquisition\/"},"modified":"2023-12-18T03:39:55","modified_gmt":"2023-12-18T03:39:55","slug":"develop-a-return-on-investment-roi-strategy-for-the-acquisition","status":"publish","type":"post","link":"https:\/\/academicwritersbay.com\/writings\/develop-a-return-on-investment-roi-strategy-for-the-acquisition\/","title":{"rendered":"Develop a return on investment (ROI) strategy for the acquisition"},"content":{"rendered":"
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Develop a return on investment (ROI) strategy for the acquisition of a strategic HIT solution in which you consider 2\u20133 cost saving and\/or revenue generating opportunities that you feel apply to Dynamic\u2019s scenario.<\/p>\n

APA format, in-text citation, reference include, 1 page<\/p>\n

Read those two attachments to complete the task<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n

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    proFormaExplanationMaterial.pdf<\/div>\n<\/p><\/div>\n<\/li>\n
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    Task.docx<\/div>\n<\/p><\/div>\n<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n
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    \u00a9 2016 Laureate Education, Inc. Page 1 of 4 <\/p>\n

    Pro Forma Explanation Material There are two types of costs to consider planning the HIT program pro forma. These two types of costs are capital costs and operating costs. While the accounting definition of these costs varies depending upon the organization, the general definition of these costs are capital costs (being one-time expenses) and operational costs (being ongoing or reoccurring cost of the program). The HIT Program Pro Forma Template provides the opportunity to estimate both capital and operating costs for an HIT program. The following information is a description of each line item on the HIT Program Pro Forma Template. Keep in mind that as you are working through these costs on a year-by-year basis that you are working diligently with teams of stakeholders to best estimates these costs. Therefore, your cost estimates will be generally more accurate for the first fiscal year and second fiscal year of the program and be more vague as the fiscal years of the project go out into subsequent years. For this reason, the HIT program pro forma is updated often, based on new information and changes in the program environment. Capital costs generally consist of the following categories: consultative services, implementation salaries, database software, hardware costs, network costs, and other licensed software costs. The following is a description of the meaning of each of these line item categories on the HIT Program Pro Forma Template. Keep in mind that if your organization organizes capital costs in a different way or asks you to capitalize costs under your program that fall outside of these categories you can add additional rows to your program pro forma file. Consulting services vendor or third-party: Often the help of external consultants from either the HIT vendor or another third-party are used in order to implement systems. Often, these costs are significant at the early stages of a project and are capitalized by an organization. It is possible, as the program progresses, that the chief financial officer of the organization may ask that these costs be moved into operating expenses. A solid understanding of the scope of the project and the project plan enables organizations to have an idea of how to estimate consulting costs. Most accounting rules do not allow organizations to capitalize travel associated with consultants. Thus, these costs will typically only involve the hourly rate paid to the consulting company for the consultants. Implementation salaries: Often, chief financial officers of an organization will allow or prefer that internal staff salaries that are associated with implementing the program to be capitalized with the program. This is an internal decision; it is permitted by General Accounting Principles. If the organization prefers that this be the case, planners work with leaders in the organization to estimate a blended rate for different kinds of staff who are working on the implementation and estimate their hours to come up with the implementation salaries cost estimate. <\/p>\n<\/p><\/div>\n

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    \u00a9 2016 Laureate Education, Inc. Page 2 of 4 <\/p>\n

    Database software: Often organizations purchase software from vendors and have to pay separate software licenses for the database product that runs the vendor applications. For example, if a site purchases an electronic health record from Cerner Corporation they may need to buy associated Oracle licenses for its use. These details need to be clarified with the vendor and HIT staff. If this is the case, this line item is included to record the usually significant licensing costs associated with licensing a database. If this database cost is estimated at the \u201cper user\u201d rate then the program planner must provide an estimate of the number of users who will be on the system every year and multiply by that per user cost to get this line item estimate. Hardware costs, servers, and devices: There are many types of devices required to implement different kinds of solutions in the healthcare environment. If any of these devices are purchased by the organization as a depreciable asset then these costs should be noted as capital costs. This may include, but would not be limited to, desktops, laptops, printers, scanners, thumbprint login devices, and other peripherals. Network costs: Senior network engineering staff work with project and program planners to determine what kind of network requirements are necessary to run planned solutions in the healthcare environment. Network assessment should be conducted to ensure that the expected service that is assumed as part of the program is aligned with current network capabilities. Additional network hardware and or bandwidth may need to be purchased in order to execute the program. These costs should be estimated as closely as possible for the entire program and updated as information progresses. Licensed software-vendor and third-party software: Often HIT program solutions in healthcare involve significant capital purchases from vendor suppliers. Depending upon the terms of the contract with these vendors these costs may be loaded into early years of the project or they may be paid out in increments over the life of the program and associated with milestones. The planner who is executing the pro forma must include the cost of all licensed software including any kinds of software products that are needed to run other software products or desktops and servers. Operational costs generally consist of the following categories: Software maintenance and support, hardware maintenance and support, physician salary support, postproduction support salaries, travel training, and other. The following is a description of each of these operational cost items. Keep in mind that these operational costs may reside in different organizational budget throughout the organization. Having said that, often senior leaders want to see all of the capital and operational costs associated with an HIT program in one place in order to manage these significant investments. <\/p>\n<\/p><\/div>\n

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    \u00a9 2016 Laureate Education, Inc. Page 3 of 4 <\/p>\n

    Software maintenance support: The software that is being licensed in the capital area will need to be supported on an ongoing basis. Often those support costs \u201ckick in\u201d after a license is paid and the software has been installed for a year. Solutions vary in how they are priced and sold to organizations. It is important for the organizational planner to understand when those software maintenance and support fees \u201ckick in\u201d in the lifecycle of a program. Hardware maintenance and support: Similar to software, when hardware is purchased whether it be servers running in a data center or desktop computers or printers, there are often support fees associated with keeping those hardware products up and running and supported on an ongoing basis. Sometimes organizations don\u2019t even purchase hardware. They may \u201clease\u201d hardware products such as desktops. If this were the case, then the estimated leasing fees for those desktops per year would be inserted in this part of the program pro forma. Physician salary support: Sometimes, but not always, organizations make a financial commitment to cover internal salary costs of physicians when they are working on significant program efforts. Organizations do this because they want to have the ability to pull those physicians out of clinical service for a period of time and have them focus on an HIT program. If this is the case, this is the place where those salary estimates would be inserted. Keep in mind that any time you are estimating salaries in a pro forma, whether it be capital or operating, you most likely will work with leadership to determine a \u201cblended\u201d salary rate for an average personnel cost and use that rate in your pro forma. Also, keep in mind that a typical salary year is budgeted at 2,080 hours per year per full-time individual. Support and postproduction salaries: Similarly, this line item is used to record any and all other salaries needed to support the program on an ongoing basis. This line item requires significant work in that one has to understand all of the different individuals, skill sets, and compensation levels of those individuals that go into supporting the technology that is being implemented. Sometimes individual efforts are budgeted at a full-time effort for an entire year; other times portions of people\u2019s time is budgeted on these programs from a support perspective. Travel training: Accounting rules prevent two items\u2014travel and training costs\u2014 from being recorded as capital expenses. Salaries associated with training people on new HIT systems and any travel associated with training or implementation staffs must be recorded as operating costs. Training may include training of IT staff as well as training of end-users. Other: Many other types of costs may come into play when planning a program. For example, there may be outside legal costs incurred, or there may be marketing costs involved if a program includes patient facing applications that <\/p>\n<\/p><\/div>\n

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    \u00a9 2016 Laureate Education, Inc. Page 4 of 4 <\/p>\n

    require a marketing campaign. Any other capital or operating costs should be included in the pro forma and aggregated for each year to understand a total program cost. <\/p>\n<\/p><\/div>\n

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    Scenario:<\/p>\n

    Dynamic Health System is a 3-hospital, 500-bed system in the Midwest United States. This system employs 100 physicians, both primary care and specialists, in 12 physician practices. Dynamic also runs a center of excellence in orthopedic care for the large geriatric population in the area, including an outpatient rehabilitation facility that is currently profitable. Dynamic offers a full spectrum of medical and surgical services to their population with an emphasis on programs of excellence in orthopedic surgery, diabetes, and women\u2019s care.<\/p>\n

    Dynamic\u2019s typical patient mix is over 45% Medicare with another 35% private pay patients covered by three large insurance companies. Their Medicaid population is approximately 12%, with the reminder of patients self-pay.<\/p>\n

    Due to market forces, the three private payers have begun to implement a program of bundled payments for their members in the following areas: hip replacements, knee replacements, and lower back surgeries. In these models, Dynamic hospitals and employed physicians will be paid a fixed amount for an entire episode of care from pre- surgery evaluation, through surgery and post-surgery, physical therapy, and rehabilitation. Medicare is likewise proposing a pilot study for a population of hip replacement beneficiaries to assess the outcomes of care as opposed to procedure costs as a result of Dynamic\u2019s petition to receive increased payments for beneficiaries due to age demographics and for being the only orthopedic geriatric center in 200 miles.<\/p>\n

    As a result of these factors and the aging HIT infrastructure, the Chief Medical Officer (CMO), Chief Executive Officer (CEO), and Chief Information Officer (CIO) of Dynamic are proposing the purchase of a monolithic Electronic Health Record (EMR) solution that will provide complete online documentation, orders, pharmacy, labs, and patient portal for all hospitals and employed physician offices. Because the (1) physician offices are currently using Epic Corporation\u2019s back office billing system with an outstanding record of accurate coding and short \u201cdays in Accounts Receivable\u201d and (2) Epic\u2019s EMR has a high ranking in industry HIT assessments, the executive team is proposing the purchase of Epic\u2019s clinical EMR (documentation, ancillaries, orders, and patient portal).<\/p>\n

    The CFO is supportive but skeptical, as the Epic bid is approximately $1.5 M to implement the clinical software with a continued $300K per year in software maintenance and support. Current clinical technologies information systems are fragmented, disjointed, and don\u2019t meet HITECH Meaningful Use requirements, and it will cost Dynamic about $200K per year to maintain the software and servers needed to run the system.<\/p>\n

    The local competitive landscape may be changing. Dynamic\u2019s CFO is hearing rumors that an established academic system which is centered 300 miles away is possibly considering buying three local stand-alone surgery centers and hiring orthopedic surgeons. This academic center has published best practices in outcomes for surgery care in a recent CMS Medicare study that implies that they are delivering high quality and cost effective orthopedic care.<\/p><\/p>\n","protected":false},"excerpt":{"rendered":"

    Develop a return on investment (ROI) strategy for the acquisition of a strategic HIT solution in which you consider 2\u20133 cost saving and\/or revenue generating opportunities that you feel apply to Dynamic\u2019s scenario. APA format, in-text citation, reference include, 1 page Read those two attachments to complete the task proFormaExplanationMaterial.pdf Task.docx \u00a9 2016 Laureate Education, … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-24395","post","type-post","status-publish","format-standard","hentry","category-essaywr"],"_links":{"self":[{"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/posts\/24395","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/comments?post=24395"}],"version-history":[{"count":0,"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/posts\/24395\/revisions"}],"wp:attachment":[{"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/media?parent=24395"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/categories?post=24395"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/tags?post=24395"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}