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Tulsa Memorial Hospital. Break-Even Analysis

In: Business and Management

Submitted By otaibi
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Tulsa Memorial Hospital (TMH) Break-Even Analysis (Case 6).
Brandon Harley, TMH's CEO is concerned about the Urgent Care Center's overall financial soundness. He has 3 options to consider one of them (1) continue to operate as it; (2) close it down; or (3) continue to operate, accompanied by the expanded marketing effort.
Positive considerations: 1- TMH has reputation for quality care 2- Urgent care Centers are increasingly visited by patients who need immediate treatment for illness “Wall Street Journal”. 3- One competing center had recently closed. 4- Capacity to see 85 patients/day 5- The center does not have seasonal utilization pattern 6- Expanded marketing program requires no capital investment.
Negative Considerations: 1- The center has been staffed at the bare minimum, so any increase in the number of patient visits would require immediate administrative and medical staffing increases. 2- The center on long term lease, with cancellation penalty of 3 months’ rent or $37,500. 3- TMH's major competitor had just bought the city's largest primary care practice, and planning for more acquisitions. 4- Marketing expansion requires marketing assistant and advertising coasts.
To consider these positive and negative points especially the closure of competing center and the new acquisition plan by the major competitor, total average that includes 2013 and Jan/Feb 2014 will be used in this analysis to answer the following questions:
What is the projected profitability of the center for the entire year if volume continues as its current level?
If it is so then the center will have a net loss of $8,773 with a gross margin of -18.7%. But currently the average price per patient is 47,037/1,230 = $38.24, while as it was mentioned in Wall street Journal that the charge per procedure in Urgent care center is between $60 and $200.…...

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