Create a 5-6 page cost-benefit analysis that supports a risk financing recommendation for a selected organization. Introduction Note: The assessments in thi

Assessment 3
Cost-Benefit Analysis

Instructions: Create a 5-6 page cost-benefit analysis that supports a risk financing recommendation for a selected organization.

Introduction

Note: The assessments in this course build upon each other, so you are required to complete them in sequence.

In your current and future role as a healthcare leader, you can expect to conduct a cost-benefit analysis (CBA) to determine whether the positive benefits of a proposed recommendation outweigh the negative costs.

Plowman relates that "a cost-benefit analysis is used to evaluate the total anticipated cost of a project compared to the total expected benefits in order to determine whether the proposed implementation is worthwhile for a company or project team" (2014, para. 1). Plowman also identified the three parts of a CBA to be the following:

• Identification of potential costs.
• Recording of all anticipated benefits.
• Examination of the differences to determine if positive benefits outweigh negative costs.

A pre-formatted Excel spreadsheet that can be used as a template for CBAs is a good tool to have in your personal toolbox. Inputting data is simply the first step. As you fill out templates, always consider the numbers within the context of an organizational mission, strategic direction, patient safety, risk management issues, regulatory requirements, patient and stakeholder satisfaction, and also the dynamics within the healthcare industry.

As you prepare to complete this assessment, you may want to think about other related issues to deepen your understanding or broaden your viewpoint. You are encouraged to consider the questions below and discuss them with a work associate, an interested friend, or a member of your professional community. Note that these questions are for your own development and exploration and do not need to be completed or submitted as a part of your assessment.

• What steps do you need to take in order to align a CBA with an organization's mission and strategy?
• If you were to offer three alternative recommendations after a CBA, what types of elements would you consider to differentiate them from one another?
• How would you substantiate a recommendation for reducing financial risks in a healthcare setting when the quality of care is involved?
• What are the three parts of a CBA?

Reference

Plowman, N. (2014). Cost-benefit analysis: A template. https://www.brighthubpm.com/project-planning/58181-writing-a-cost-benefit-analysis/

Overview

Note: The assessments in this course build upon each other, so you are required to complete them in sequence.

The following resources are required to complete this assessment.

• Cost-Benefit Analysis Template [XLSX].Download Cost-Benefit Analysis Template [XLSX].
• Cost-Benefit Analysis and Example listed on the Assessment 3: Cost-Benefit Analysis reading list.

Preparation

For this assessment, continue to use the organization you selected in Assessment 1 on which to base your work.

Instructions:

Suppose an issue has emerged in your organization that presents significant risks to the stakeholders involved. Your supervisor has asked you to conduct a cost-benefit analysis (CBA), make a recommendation, and present it to the board of directors. You are expected to consider the numbers within the context of the organizational mission, strategic direction, patient safety, risk management issues, regulatory requirements, patient and stakeholder satisfaction, and the dynamics within the healthcare industry.

Select a relevant issue within your workplace, or one from the resources provided for this assessment, for which a CBA may be conducted. The CBA should include one of the following course-related topics:

• Quality.
• Patient safety.
• Risk management.
• Regulatory standards.
• Compliance.
• Patient and stakeholder satisfaction.

Step One: Identify Costs

Read the Cost-Benefit Analysis and Example and apply the process to identify costs:

1. Make a list of all monetary costs that will be incurred upon implementation and throughout the life of the project. These include start-up fees, licenses, production materials, payroll expenses, user acceptance processes, training, and travel expenses, among others. Include the assumptions for your totals. An example would be $2,000 for licenses includes $100 for 20 providers.
2. Make a list of all non-monetary costs that are likely to be absorbed. These include time, low production of other tasks, imperfect processes, potential risks, market saturation or penetration uncertainties, and influences on one's reputation. An example would be the organization has a 60-day waiting list for new appointments. A new provider salary is $XXX,XXX and our reimbursement rate for this type of appointment is $XXX. The new provider will see XX patients per day.
3. Assign monetary values to the costs identified in steps one and two. To ensure equality across time, monetary values are stated in present value terms. If realistic cost values cannot be readily evaluated, consult with market trends and industry surveys for comparable implementation costs in similar businesses.
4. Add all anticipated costs together to get a total costs value.

Step Two: Identify Benefits

Continuing with the CBA, proceed with the identification and quantification of benefits, per the Cost-Benefit Analysis and Example.

1. Make a list of all monetary benefits with assumptions that will be experienced upon implementation and thereafter. These benefits include direct profits from products or services, increased contributions from investors, decreased production costs due to improved and standardized processes, and increased production capabilities, among others.
2. Make a list of all non-monetary benefits with assumptions that one is likely to experience. These include decreased production times, increased reliability and durability, greater customer base, greater market saturation, greater customer satisfaction, and improved company or project reputation, among others.
3. Assign monetary values to the benefits identified in steps one and two. Be sure to state these monetary values in present value terms as well.
4. Add all anticipated benefits together to get a total benefits value.

Cost-Benefit Analysis

Enter the cost and benefit data you developed for the CBA in your preparation steps into the Cost-Benefit Analysis Template [XLSX] Download Cost-Benefit Analysis Template [XLSX].

Then, write an analysis in which you do the following:

• Identify your stakeholders and describe the risk management issue for which you have created the CBA.
• Present a value-based proposal and describe strategies for how you would identify and evaluate the process for reducing or avoiding risk within this organization. Please ensure you evaluate your risk management concern through a DMAIC lens.
• Present your recommended best options for improving your risk management issue, as it relates to the organization in question.
• Using the SMART method, present your key performance indicators (KPIs) for your recommendations. Use your CBA assumptions as a guide. For example, if you are presuming that your revenue is based on an increased daily volume, that volume should be the target for a corresponding KPI.
• Evaluate the cost versus benefit according to the general guidelines outlined in the Cost-Benefit Analysis and Example.
• Make a recommendation as to whether the benefits are sufficient to outweigh the costs of the proceeding.
• Describe the systems-based context for your recommendations, integrating the CBA within the organization as a whole.
• Describe how the issue relates to the organization's vision, mission, and strategic direction.
• Provide a rationale that explains how your recommendations are appropriate for your organization's capacity and strategy.

Your analysis should use proper APA style and formatting and include the following sections. Each section, except the title page, should include the appropriate section heading.

1. Title page: Use APA formatting and include the following:
   • Assessment number (Assessment 3).
   • Your name.
   • The date.
   • The course number (MHA-FPX5014).
   • Your faculty's name.
2. Abstract: Include a one-paragraph summary of analysis content. This is not an introduction to the topic, but a summary of the entire analysis. Make sure to double-space.
3. Issue description.
4. CBA evaluation.
5. CBA recommendations.
6. Context for recommendations.
7. Relationship to vision, mission, and strategy.
8. Rationale.
9. Conclusion.
10. References.
11. Appendix: Attach your completed Cost-Benefit Analysis Template [XLSX] Download Cost-Benefit Analysis Template [XLSX].

Additional Requirements:

• Written communication: Written communication should be free from errors that detract from the overall message.
• APA Format: Use appropriate APA format for a clear, concise presentation of information. Refer to the APA Module to help with APA style guidelines. Communicate information and ideas accurately, utilizing peer-reviewed sources, including proper APA reference citations.
• Length of paper: 5–6 typed, double-spaced pages.
• Font and font size: Times New Roman, 12 point.
• Appendix: Include your Cost-Benefit Analysis Template [XLSX] Download Cost-Benefit Analysis Template [XLSX]as an appendix to your analysis.

Competencies Measured:

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

• Competency 1: Conduct an environmental assessment to identify quality and risk management priorities for a healthcare organization.
  • Specify the focus and stakeholders for a cost-benefit analysis.
  • Develop a value proposition for change management that incorporates quality and risk management concepts.
  • Describe recommendations to influence and impact the needed changes for quality improvement.
• Competency 2: Apply a risk management model or framework to a specific risk management priority.
  • Conduct a cost-benefit analysis for a risk-management intervention.
• Competency 3: Analyze the processes and outcomes for a risk financing issue.
  • Identify your key performance indicators (KPIs).
• Competency 5: Communicate effectively using professional standards embracing diversity, equity, and inclusion.
  • Use correct grammar, punctuation, and mechanics as expected of a graduate learner.