Capital Operating Budget Using Proforma Analysis
Capital Operating Budget Using Proforma Analysis
Information technology-based initiatives are significant and strategic investments for organizations. Costs must be considered, such as upfront items, incurred early in the system development life cycle, and ongoing costs, which are incurred on a perpetual basis. These costs must be actively estimated during the project/program planning process and updated on a regular basis. These estimates inform the organizational budget process and must also be incorporated into return-on-investment (ROI) analysis. The concept of outlining an inclusive set of costs for an IT investment is called the total cost of ownership (TCO) for the technology asset.
One of the most efficient methods to execute this concept is through the development of a multi-year proforma, which is updated on an annual basis. A proforma is not a budget; it is a long-term estimate of the capital and operational costs for the initiative. A proforma should be carefully updated as needed and used to inform both the budget process and the ROI in the organization. These updates should take place on an annual basis, at a minimum. Technology-based initiatives are complex investments for any organization, and communication between project/program planning staff, financial staff, and operational leadership is imperative.
This week, you explore how to develop a capital operating budget using proforma analyses. Using a multi-year proforma template and explanation material provided, you use a tool, a 5-year informatics cost proforma, for the pilot launch of a patient portal in a PCP office in which PCPs are working to effectively manage the health of chronically ill populations, such as persons with diabetes, heart failure, asthma, and anxiety/depression.
Remember that the proforma represents estimates of costs, which is one side of the effectiveness equation. The other side of the equation is represented by the tangible benefits enabled by investments in informatics. When you total your proforma and understand the operational and capital costs needed to obtain and sustain the informatics solution, consider how these costs compare with the expense reductions or new revenue projections anticipated as part of using these solutions.
Please note: The specific numbers and data you will need are not provided. You will need to derive them from the resources such as peer-reviewed articles related to similar projects where costs can be extrapolated as well as your own research.
To Prepare:
Review the Resources, including the Proforma Instructions and Proforma Template.
Research 3–5 peer-reviewed articles no more than 3 years old on the use of patient portals to manage the health of populations.
Familiarize yourself with Healthcare Information Management and Systems Society (HIMSS) and vendor web sources.
Consider the balance of costs versus benefits.
Read the following scenario:
You are a leader in a practice of 10 physicians and 2 nurse practitioners. You are interested in using a vendor’s portal and handheld devices provided by the practice to manage your target population. Assuming that your top commercial insurance entity provided you a list of 500 persons in this practice who comprise the target population, compile a proforma in order to understand the capital and operational costs of using a patient portal as part of the practice’s electronic health record.
The Assignment: (2 pages)
Using data from these articles and information from sites such as HIMSS and vendor web sources, compile a proforma capital operating budget using the Proforma Template (or one of your own) and instructions provided.
Part I: Paper: (½ to 1 page]
Describe the costs of an informatics program used to address the health of a population.
Part II: Proforma Analysis
Using the Proforma Template and explanation material provided, complete a 5-year informatics cost proforma for the pilot launch of a patient portal in a PCP office in which PCPs are working to effectively manage the health of chronically ill populations, such as persons with diabetes, heart failure, asthma, and anxiety/depression.
Complete the Proforma Template in Excel. Remember, for this Assignment, you will be selecting only the rows that are pertinent to this assignment. You do not need to fill out every row. You will be provided with a template that has all of the possible rows you might need. Start this assignment by evaluating the rows you might need and ignore those you want (but you may need them in the future).
Part III: Executive Summary (1 page)
Provide an Executive Summary in which you describe the relevant capital and operating costs for the program. Include the most relevant expenses that you think would be most significant to executives.
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