Preparing the Assignment

Break-even Analysis Assignment.   Answer the questions and complete the calculations required for the assignment. Submit your answers on a Word document, with the heading of Week 5 Assignment. For the questions requiring a written response, answer directly on the assignment and adhere to proper grammar and syntax, and provide references. For the questions requiring calculations, show all of your work and follow the format that has been provided for the calculations in the lesson for Week 5. In addition, further explanations and formulas on the break-even analysis are contained in the required reading resources.

Key points for calculations

• When performing calculations, standard rounding rules apply. If the number to the right of the decimal is less than 0.5, round down to the nearest whole number, e.g., 33.4 = 33 If the number to the right of the decimal is 0.5 or greater, round up to the nearest whole number, e.g. 33.5 =34.
• Read the question carefully. Pay close attention to the units be asked and keep them consistent. For example, days vs months vs years; charges vs contribution margin; dollars vs percentage
• Provide ALL formulas with references. Designate which formula associates with which source. It is not sufficient to simply list the source at the beginning of the section. Write out the formula used BEFORE filling in the numbers. Formulas used should be taken from one of the required resources for this course.

Example: Total Contribution Margin (CM) = Contribution margin (CM) category 1 + CM cat 2 + CM 3

Leger, J.M. & Dunham-Taylor, J. (2018). Financial management for nurse managers: Merging the heart with the dollar, 4^th Ed. Burlington, MA: Jones-Bartlett. Resources 

Answer Guide: Break-even Analysis Assignment

Use the following data, the analysis accounting for the contribution margin of each patient acuity category was conducted.

• Fixed Costs: $9,788,000 (start-costs, specialty physicians, anesthesiologists, APNs, staff

nurses and other staff salaries, specialty equipment, other miscellaneous)

• Variable costs: $500/patient visit (specialty equipment, oxygen supplies, other

miscellaneous)

• Clinic days: Monday-Saturday- 312 days/year
• Projected patient visits per year: 7488
• Patient charges by patient acuity category:
  • Simple (15%) ————$2000/visit
  • Moderate (60%) ——–$6500/visit
  • Complex (25%) ———$10,000/visit

 

Break-even Analysis Data Table
Acuity Category	Percentage %	Charge per Visit	Visits per Year	Charges per Year	Visits per Day	Charges per Day (Money In)		Contribution Margin
Simple	15%	$2000	1123	$2,246,000	4		$8,000	$6000
Moderate	60%	$6500	4493	$29,204,500	14		$91,000	$84000
Complex	25%	$10,000	1872	$18,720,000	6		$60,000	$57,000
Expected Total Daily Charges							$159000
ExpectedTotal Daily Revenue							$147000
Break Even point in days							67 days
Break Even point in visits							1608 visits

1. Describe your approach to this case study. In addition to the numbers given, what do you need to know before you can calculate the break-even analysis?

To calculate the break-even point for the outpatient fertility clinic, the following will be needed:

Patient Revenue:

• Average charge per patient visit: This includes all professional fees, facility charges, medication costs, and any other expenses typically incurred by a patient during a single visit. The data should be segmented by visit type (initial consultation, IUI, IVF monitoring, etc.) if charges vary significantly (Lohmann, 2020).
• Average number of visits per patient: This can be difficult to estimate, since it changes on the specific fertility treatments offered and individual patient needs. Analyzing data from similar clinics or conducting surveys with potential patients can provide a clear methodology (Lohmann, 2020).

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