You are the Administrator of the Radiology Department responsible for the day to

Question

You are the Administrator of the Radiology Department responsible for the day to day operation as well as developing the capital budget. Your capital budget for fiscal year 2015(July 1, 2014 to June 30, 2015)is $1 million. You have received two capital requests. One from the Medical Director of Mammography requesting a new state of the art digital mammogram machine at the cost of $800,000. This department has won awards for its outreach to poor and low income women who otherwise would not have access to mammograms. The second request is from the Medical Director of the MRI Department requesting a state of the art open MRI eliminating fears patients have going into the MRI tube. The cost of the new MRI is $800,000. Both machines run faster, produce clearer films , meet all safety / radiation emission standards and can get the patient in and out faster resulting in enhanced patient satisfaction.

1. Identify the problem/issues you face? Be specific and direct in outlining the issues/problems.

2. Referring to the Chapter on Managing Costs and Revenues what method will you use to base your decision?

3. What additional data/information will you need before making the decision ?

4. What challenge do you face once a decision is made? Will you have to explain or justify your decision to the Medical Directors of the departments?

5. In your discussion refer to the text, quote directly from the text to substantiate , expand your discussion and to demonstrate your understanding of the concepts/strategies described especially in Chapter 11 and 13. Include concepts learned in Leadership and Motivation -- what leadership or motivation strategy will you use to most effectively manage this real life situation? Be specific.

6. What is your final decision?

Explanation / Answer

1,Capital budget for fiscal year(north american finanacial year) 2015 is 1 million dollar.Both machines total cost,16,00,000 dollar..Adjusting a financial state and this department has won awards for its outreach the radiology department must make the decision for adjusting the budget..
?2, Before financial justification begins,planning for the capital budget starts with consideration of the organization's needs for the coming three or more years(especially equipment replacement,service expansion and strategic positioning for the future).Capital budget must be weighed against every other to determine which investments will make the most sense,both clinically and financially..
? A good decision can only be based on solid predictions of expences and revenues..Revenue assumptions include not only how the capital item will bring in money,but also how that revenue will be counted(proper.using CPT codes)
?3, Be realistic in how many referrals you can expect to obtain,procedures per day, pay ormix, reimbursement changes.Use the CPT code including supply and contrast codes,procedural volume,to determine projected revenue..Since major expense can cause a serious loss of credit..The expenses fall in capital equipment,space,infrastructure,staff salories and benefits,maintnance other direct,fixed costs..
?4,Once the decision made for this financial situation this should be explained to the medical director of the department..
?5, An insurance company will write a policy to cover the department or center and to combine two costs the ppolicy's premium and a fixed equipment-repair fund..It is also critical to determine a cost of service percentage by dividing the value of the equipment by the actual service cost for the past fiscal year..
?6, Good planning can effectively avoid any potential problem with this budgeting policy..To perform an economic analysis for the replacement decision,there needs to be consideration for the existing piece of equipment and any possible replacement..Revenue predictions will be based primarily on professional-fee CPT-codes.but additional payments could be expected from radiologists..The power of a strategic theme,consider a large preposition is to offer a full range of affordable products and services to the mass market...

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