In-Office Nuclear Cardiac Stress Lab - Term Paper Example

This report will take into consideration the financial, health and economic implications of adding an in-office nuclear cardiac stress lab as an investment to an existing eight-physician cardiology practice while taking into consideration the expected returns, compliance to Stark physician self-referral law and recommendation on whether the project remains viable or not. More importantly, it is essential to undertake assumptions upon which the evaluation of the project is based on. One of the assumptions is that as a profit making organization, the project implemented should give high levels of returns that are of additional value to the existence of the healthcare facility as a whole.

In addition, the forecasted revenues and expenses are expected to remain constant over the period in which the project is functional. Nonetheless, the initial costs comprising of marketing expenses, clinician education cost are paid only once at the initial start of the project. More so, the rest of the expenses and revenues remain constant for the rest of the project life cycle (Moyer et al., 2012). Finally, the investment in the in-office nuclear cardiac stress lab will be a long-term project that is expected to last for a longer period.

Estimated net revenue and volume projections More significantly, an analysis of the data issued based on income and expenses issued in the spreadsheet are more likely to be based on the initial costs and revenues to be recovered on implementation of the project. Nonetheless, the main question is based on considerations made in case the project become a success or failure and the revenue collected would face increase or decrease in the estimated net revenue and volume projections (Young, 2003).

As a result, the changes in volume projections should influence the estimated net revenue over the years as the project is expected to be a long time. Payor mix and contract rates, including bad debt assumptions Considerably, the payor mix influence the amount of collections that go to the contractor who is involved with the implementation of the project (Moyer et al., 2012). Nonetheless, the current contract rates through allowance of $941,223 seem to be favorable in case they are paid at the initial project outlay because it still ensures that financial benefits derived from the project remains viably high.

Considering that bad debt include those revenues that are likely to be defaulted by the customers, the estimated value is high as it stands at $149,363. Capital expenditures and start-up costs In most cases, capital expenditure relates to the cash from a business that is spent on purchasing of new fixed assets that are entitled to give the business-increased benefits. More so, the capital expenditures relate to the start-up costs of investment projects for example, the implementation of the initial outlay in-office nuclear cardiac stress lab allows expenses to initiate the costs.

However, it is advisable to recover the capital expenditure and the start up costs over a lifecycle period within which the project yields free cash flow (Moyer et al., 2012). Therefore, the costs that attribute to the start up costs and capital expenditu