Patient care has become a primary focus in the development of new healthcare technology. Technological development in clinical applications is a significant trend in healthcare currently, and hospitals worldwide are adopting exciting new innovations in the area of patient care. A 2016 survey circulated among healthcare providers indicated (HIMSS, n.d.) indicated that 74% of healthcare professionals consider Information Technology to be a critical tool in clinical settings, for instance. In a hospital setting in particular, patient monitoring is a critical aspect of patient care in a hospital setting. Isansys is an innovative, continuous vital sign data acquisition, analysis, and prediction platform that combines wearable wireless sensors and networks with analytical algorithms and data analysis to provide low cost, continuous monitoring for patients. The technology can be used either in a hospital setting or at home. This technology was pioneered with the assistance of clinicians and hospitals as an innovative and unobtrusive new patient monitoring technology with predictive care methodologies to improve patient outcomes and reduce cost. The Oxfordshire-based company received a Small Business Research Initiative (SBRI) grant to increase the functionality and extend the intended use of its innovative Patient Status Engine (PSE). Hospitals in England and India then participated in early trials, and it is currently in use in many countries throughout the world, but has not gained widespread adoption in the United States. PSE provides a continuous vital sign data acquisition, analysis and prediction platform that is helping hospitals and healthcare organizations move into the next generation of digital, data driven patient care (Hortin, 2015).

Outcome:

Interpret a sensitivity analysis for a proposed investment.

Apply historical knowledge, market returns, and risk premiums in financial markets to managerial decisions.

QUESTION:

1. Present additional insights to risk associated with project returns that capital market history can offer regarding risk and return associated with this project.

   

In this discussion, you will assume the role of Business Operations Manager at Ashley Regional Medical Center, which is evaluating the potential adoption of Isansys Wireless Monitoring systems in their newborn intensive care unit (Birmingham Children's Hospital, n.d.). North Dakota's Ashley Regional believes that this technology will be both attractive to customers, and in line with their "Higher Standards of Care Every Day" marketing and branding campaign (Ashley Regional Medical Center, n.d.). Importantly, a variety of estimates are dependent on forecasting values. As Business Operations Manager at Ashley Regional Medical Center, you th us believe that a thorough assessment of risk must be made prior to the adoption of this costly system, which is a continuous monitoring and digitization platform based on a "smart-patch" cardiac sensor and other wireless sensors, and a multifunction patient portal located near each patient. As patient outcomes are improved, Ashley Regional believes that cost may fall dramatically over time (Hoagland, 2011), for this small business. This assumption depends on both cost and revenue assumptions, however, which you understand may be somewhat optimistic given the presence of a newly-built competitor not to many miles away. Discussion Scenario In investigating adoption of this technology as Business Operations Manager at Ashley Regional Medical Center, you have estimated the project's NPV to be positive at a discount rate of 18%, based on projected cash flows. However, you recognize the possibility of error in these cash flow projections, and you wish to alert decision-makers as to the impact of different assumptions about the future, on these estimates. You intend to present these findings to the Medical Center's Technology Adoption Board, a group of medical professionals that is most likely unfamiliar with this variety of analysis. As such, while you intend to include a discussion of sensitivity and scenario analyses alongside your estimates, you understand that you will have to put some attention into introducing sensitivity and scenario analysis prior to delivering this judgment. Working capital needs will begin at $20,000, and will be 10% of revenues thereafter, while an initial investment of $800,000 (the price of the Isansys unit) will be required. You have developed the following base estimate of essential data, and will assume that the Isansys system will be depreciated on a MACRS 7-year basis: Unit Sales Price per Unit Variable costs per unit Fixed costs per year Base Case Table 1. Bose Case $7,200 1,800 1,200 $400,000