Array machine will enable hospital to perform autoimmunity

Assignment Help Financial Management

Reference no: EM13928097

An equipment acquisition proposal was being considered by a large health care organization. The array machine will enable the hospital to perform autoimmunity tests (for immunoglobulin’s G, M, and A and complements C3 and C4) in-house rather than sending them to a reference laboratory. Test turnaround time is expected to decrease by 2 days. The array machine costs $50,000, with a useful life of 5 years. The depreciation schedule will be $10,000/year. The expected volume for tests is one of each of the five autoimmunity tests per day. Having the tests done by the reference laboratory costs the hospital an average of $10/test. The hospital's average charge to patients is $20/test. If the array machine is acquired and the tests done in-house, the costs of reagents would average $2/test. The array machine can run a maximum of 40 patient samples and perform 20 different tests on each sample every 2 hours. Except in extraordinary circumstances, tests would be run Monday thorough Saturday. The machine requires approximately 1 hour of technician time (valued at $15/hour# each day to calibrate it, to conduct a test run for control purposes and to perform general maintenance. This is a fixed cost because it does not vary by volume. Technician setup time to run tests is negligible. Beyond the five autoimmunity tests the laboratory wants to perform in-house, the machine can also perform apolipoprotein cardiac profiles that are currently done on equipment in the clinical chemistry department. The array machine can provide a quantitative measure and not just the positive or negative indicator that the clinical chemistry department's current equipment gives. 1. How many autoimmunity tests per year will have to be performed on the array machine to break even? 2. Given the present volume of tests, would there be an annual net contribution and, if so, how much? 3. If half of the patients have Medicare coverage #DRG reimbursement includes all tests), would the laboratory break even on the equipment? If not, should the equipment be acquired anyway?

Reference no: EM13928097

Questions Cloud

Discuss how the different types of non-financial : Discuss how the different types of non-financial, ethical and environmental issues might influence the objective of maximizing shareholders’ wealth by companies.

Evaluate your ability to absorb and synthesize content : Having you write about the information you have encountered through the magnitude of required reading in the doctoral program is a method that allows professors to effectively evaluate your ability to absorb and synthesize content

Prior law had restricted the ability of acquirers to credits : In September, 2008, the IRS changed tax laws to allow banks to utilize the tax loss carry forwards of banks they acquire to shield their future income from taxes (prior law had restricted the ability of acquirers to use these credits).

What rate of return per quarter are you being offered : Suppose an investment offers to triple your money in 48 month What rate of return per quarter are you being offered?

Array machine will enable hospital to perform autoimmunity : An equipment acquisition proposal was being considered by a large health care organization. The array machine will enable the hospital to perform autoimmunity tests (for immunoglobulin’s G, M, and A and complements C3 and C4) in-house rather than sen..

Why clinical interview the foundation of all clinical work : Paper details: Why is the clinical interview the foundation of all clinical work in counseling? How does the clinical interview interface with the therapeutic process

What is dickinsons view of death : Describe how the concept of reason was applied during the Enlightenment. How does Tartuffe reflect these ideas and how does Swift apply his satiric message about human nature and reason?

Who has a comparative advantage in outlining : Who has an absolute advantage in outlining, you or your friend? What about typing? Who has a comparative advantage in outlining? In typing?

What is your expected rate of return on this stock : You recently purchased a stock that is expected to earn 16 percent in a booming economy, 11 percent in a normal economy, and lose 2 percent in a recessionary economy. There is a 18 percent probability of a boom, a 64 percent chance of a normal econom..

User Account

All Pages