A surgery center specializes in high-risk cardiovascular surgery. The center needs to forecast its profitability over the next three years to plan for capital growth projects. Find the distribution of the net present value of profit over the three-year horizon and analyze the summary statistics using 50 trials. Summarize your conclusions. Use a discount rate of 3%. Click here to view the descriptions of the model. Click here to view a sample of 50 simulation trial results. Set up a spreadsheet model and calculate the net present value for the profits in thousands of dollars using the minimum for uncertain values with uniform distributions, the mean for uncertain values with normal distributions, and the most likely values for uncertain values with triangular distributions. The net present value is $ thousand. (Round to the nearest thousand dollars as needed.) Based on the provided simulations, the mean net present value of the profits over the next three years is $[ (Round to the nearest thousand dollars as needed.) thousand, the standard deviation is $ thousand, the minimum is $ thousand, and the maximum is $ thousand. Model description For the first year, the anticipated number of patients served is uniform between 1,200 and 1,700. The growth rate for subsequent years is triangular with parameters (5%, 8%, 9%). and the growth rate for year 2 is independent of the growth rate for year 3. Average billing is normal with mean of $150,000 and standard deviation $12,000. However, because of managed care, the center collects only 30% of billings. Variable costs for supplies and drugs are calculated to be 10% of billings. Fixed costs for salaries, utilities, and so on will amount to $20,000,000 in the first year and the annual increase in fixed costs is uniform between 4% and 6% and independent of other years. Print Done Simulation Results Trial NPV 1 80,844 2 71,397 3 60,385 4 77,655 5 83,515 6 50,167 7 77,758 8 49,723 9 66,184 10 70,500 11 84,583 12 50,616 13 81,072 14 92,008 15 99,227 16 91,837 17 62,394 18 41,475 19 68,237 20 94,945 21 88,951 22 73,227 - X
A surgery center specializes in high-risk cardiovascular surgery. The center needs to forecast its profitability over the next three years to plan for capital growth projects. Find the distribution of the net present value of profit over the three-year horizon and analyze the summary statistics using 50 trials. Summarize your conclusions. Use a discount rate of 3%. Click here to view the descriptions of the model. Click here to view a sample of 50 simulation trial results. Set up a spreadsheet model and calculate the net present value for the profits in thousands of dollars using the minimum for uncertain values with uniform distributions, the mean for uncertain values with normal distributions, and the most likely values for uncertain values with triangular distributions. The net present value is $ thousand. (Round to the nearest thousand dollars as needed.) Based on the provided simulations, the mean net present value of the profits over the next three years is $[ (Round to the nearest thousand dollars as needed.) thousand, the standard deviation is $ thousand, the minimum is $ thousand, and the maximum is $ thousand. Model description For the first year, the anticipated number of patients served is uniform between 1,200 and 1,700. The growth rate for subsequent years is triangular with parameters (5%, 8%, 9%). and the growth rate for year 2 is independent of the growth rate for year 3. Average billing is normal with mean of $150,000 and standard deviation $12,000. However, because of managed care, the center collects only 30% of billings. Variable costs for supplies and drugs are calculated to be 10% of billings. Fixed costs for salaries, utilities, and so on will amount to $20,000,000 in the first year and the annual increase in fixed costs is uniform between 4% and 6% and independent of other years. Print Done Simulation Results Trial NPV 1 80,844 2 71,397 3 60,385 4 77,655 5 83,515 6 50,167 7 77,758 8 49,723 9 66,184 10 70,500 11 84,583 12 50,616 13 81,072 14 92,008 15 99,227 16 91,837 17 62,394 18 41,475 19 68,237 20 94,945 21 88,951 22 73,227 - X
Chapter4: Economic Evaluation In Health Care
Section: Chapter Questions
Problem 10QAP
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