This week?s assignment is the fourth short paper component of our Return on Investment (ROI) project.The focus of this week?s writing will be to consider the value and steps necessary in preparing a ?look back analysis? on the particular project that a ROI for both ?hard and soft? information that has been prepared. The purpose of the review is to determine if the information initially submitted was correct and the predicted outcomes occurred and what specific lessons can be learned to improve the analysis. Please see the attached two reference sources for examples of this process.

Eight steps for a successful post-implementation audit. (2003, October 01).CIO, http://www.cio.com/article/29818/Eight_Steps_for_a_Successful_Post_Implementation_Audit

Levinson, M. (2003, October 01). How to conduct post-implementation audits.CIO,http://www.cio.com/article/29817/How_to_Conduct_Post_Implementation_Audits

The professor wants the results of the review ofthe phase 3 project [attached ]as presented to the board. Since eight months has passed and the project is up and running how accurate were our projections? Is there an adjustment needed? Or should the project be abandon? Review the eight steps for a successful post implementation audit referenced in the assignment .

ASUZU NKIRUKA QUINTA ASUZU NKIRUKA QUINTA Financial Management of Health Care Organizations Saint Joseph's University ROI PAPER 3 NOVEMBER 9 2015 ASUZU NKIRUKA QUINTA Question: Three key aspects should be considered: (1) Amount and type of expenditure (2) Attainment of key decision criteria and (3) Detailed financial analysis. Using pro-forma data attached prepare a net present value analysis using the data in the example and substitute the 5% hurdle rate in the problem to a 6% hurdle rate, and prepare a profitability index. Finally, consider in your writing how you would factor risk (technology change, Physician acceptance, competition from other HCO's, accuracy of market data and volume projections) associated with the capital project in your discount rate...should it be increased? Answer: The factors involved in the justification of expenditure can be analyzed through a primary care physician in ambulatory-care settings across the U.S. but also from Partners HealthCare System, an integrated delivery network formed in 1994 by the Brigham and Women's Hospital and the Massachusetts General Hospital. The study constructed a theoretical primary care provider patient panel utilizing average statistics solely based off the institutions listed above. This panel included 2500 patients, 75% of whom were under 65 years of age; 17% of patients less than 65 years old belonged to capitated plans. In sensitivity analyses, panel size was varied from 2000 to 3000 patients. A justifiable argument needs to be shown on how logical necessity for the purchase of the EMR for the ambulatory offices. What makes this investment a meaningful expenditure? According to Cleverly (1997), Return on Investment (ROI) is defined as \"a calculation of the most justification of capital expenditure: a cost-benefit analysis to understand returns on investments substantial financial gains or benefits that can be expected from a project versus the costs for implementing the suggested program or solution.\" The first obstacle of this expenditure is the nature of the Return on Investment that a purchase such as an EMR would generate. If the purchase in question were a new MRI machine that insurance companies would reimburse the office at a higher rate for providing to the patients because of more sophisticated and cost- ASUZU NKIRUKA QUINTA effective results, the ROI would be considered a \"hard\" investment. This would include benefits accrue primarily from savings in drug expenditures, improved utilization of radiology tests, better capture of charges, and decreased billing errors. This substantial, quantitative, financial return would provide immediate profit and quickly reimburse the initial investment costs. However, when arguing for a purchase of a software system, after initial investment of a particular amount of cash (cash outflow), there is no immediate profit (cash inflow). To justify an expense, the exact amount and scope of expenditure being considered must be reviewed. After analyzing the expenses operating without an EMR system, the 5-year net cost- implementing a full electronic medical record system was $86,400 per provider. Of this amount, savings in drug expenditures made up the largest proportion of the benefits (33% of the total). Of the remaining categories, almost half of the total savings came from decreased radiology utilization (17%), billing errors (15%), and improvements in charge detainment (15%). The expense of buying, installing, and implementing an electronic-records system in a medical office comes to about $40,000 (Wang, 2002).\" This cost is tremendously vital in the financial analysis for this expenditure. Alternative resources and products should be considered, along with cost and benefit data. The overall risk of the product should be considered. Is this risk of this purchase high enough to create a detrimental return? Next, the cost of the product should be determined to be competitive and legitimate, and its solvency is considerable. With only a few feasible servers available for an EMR that is of proper scale for the small medical practice, the capital decision making process proves the suitability of this specific EMR (Wang, 2002). For example, if table 3 below shows the option to purchase the EMR for $42,900.00 for an initial investment with a 6% Discount Rate, the NPV can be calculated to be -$40,326.00. This was calculated as follows: Rate x initial investment (6% x $42,900) = $2,574.00, minus the initial investment ($2,574.00-$42,900.00) equaling our ASUZU NKIRUKA QUINTA total, -$40,326.00. This can be compared to the second payment option presented by the EMR Company, which allows for $2,784.00 payments over 5 years with the same Discount Rate of 6%. This generates an NPV of -$43,616.00 using the same calculation. This NPV calculation showed the two options of financing alternatives presented by the EMR Company and proved it was financially healthier to purchase the EMR with a larger initial investment of $42,900.00 which generated a greater NPV (Wang, 2002). The second financial method to be utilized during the financial analysis portion of capital expenditure justification is the Profitability Index, which \"attempts to compare rates of return (Cleverly, 1997).\" To determine the Profitability Index (PI), the NPV is divided by the investment costs. The PI as a result is calculated to be 0.92 (-$40,326.00 / $43,616.00). I have found that that known no funding restrictions, and projects with profitability indices greater than zero should be funded. Despite possible restrictions in a practical setting, the PI value of 0.92 would sustain the purchase of this specific EMR system due to it being a positive value. The cost-benefit model utilized in this case study was based on primary data from the institutions that were used and solely estimated based on literature. The efficiency of some of these interventions has been demonstrated in the inpatient setting, but outpatient success is less certain. There could be additional costs linked with implementation of an electronic medical record. For example, system incorporation costs may be greater at other healthcare facilities, depending on the number and complexity of system that is required. In this research project, the cost-benefit model was geared toward primary care physicians. Diagnostic test utilization may be higher for specialists, so there may be more chances for cost-saving interventions. On the other hand, specialists may be less likely to obey with computer recommending alternative medications or tests. This study was framed from the perspective of the health care organization to assist in making decisions about implementation of an electronic medical record. It may also ASUZU NKIRUKA QUINTA be valuable to take the community perspective, which would incorporate benefits to payers and patients. Not all benefits of an electronic medical record are measurable in financial terms; other benefits include improved quality of care, reduced medical errors, and better access to PHI (Wang, 2002). Now that the EMR system is able to be considered an efficiently practicable purchase, it can be projected that the Return on Investment for this purchase would be noticed by several definite factors, including an increase in patients, due to greater patient satisfaction (decrease in wait time, prompt prescription refill time, better provider-patient communication), and as a whole net increase in profitability per provider. Since this medical office staffs differently, the purchase of the EMR would pay for itself essentially if each clinician showed a net benefit of more than $13,000 or more per fiscal year. Although this particular immediate Return on Investment is a qualitative one, the benefit, as demonstrated above, will allow for more cash inflow in a large number of components and prove not only to be a justifiable expenditure, but an extremely profitable one at that. References Cleverley, W. (1997). Essentials of health care finance (4th ed.). Gaithersburg, Md.: Aspen. Custodio, R., Gard, A., & Graham, G. (2009). Health Information Technology: Addressing Health Disparity by Improving Quality, Increasing Access, and Developing Workforce. Journal of Health Care for the Poor and Underserved, 20(2), 301-307. ASUZU NKIRUKA QUINTA Jha, Ashish K. MD, MPH, Catherine M DesRoches, Dr. Ph., Eric G. Campbell, PhD., et. al. \"Use of Electronic Health Records in U.S. Hospitals.\" The New England Journal of Medicine, 2009; 360:1628-1638. Appendix Table 1 ASUZU NKIRUKA QUINTA