Case 10

1237 words 5 pages
Case Study # 10 Denver Health Network: ABC Analysis
1. Estimate the base (initial) cost of each alternative. Here, you just need to put in the appropriate RED input from the information in the case study. The answers will be spit out. Which alternative has the lower total cost? Why?
Alternative 2 has the lowest total per a procedure cost. Operating costs of Alternative 1 is $86.15, which is lower than Alternative 2 of $92.15Alternative 2 is higher in operation al cost because there is six dollars in extra costs assessed with travel and set up costs. When the other costs, which include capital and maintance, are incorporated, Alternative 2 becomes the lower cost with an annual cost of$ 251,160 and Alternative 1 is $ 268,260.
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Also although not included in the allocation calculations it was noted that Alternative 1 could provide a higher volume of patients. Alternative 1 seems to be less costly with increases in longer life span.

5.) What are some practical operational considerations in this case?
Alternative 1
• Less wear and tear on machinery
• Can increase utilization through patient volume usage of ultrasound machines at each clinic and provides room for growth at each of the 3 clinic sites
• Ultrasound tech does not have to travel as much less gas usage
• The longer the life span is the better cost Alternative
• Has one ultrasound at each clinic site
Alternative 2
• More wear and tear on ultrasound machine and vehicle
• Less ability to grow or expand services
• More costly for gas, repairs, and travel
• Inability to handle an increase in volume
• The sorter life expectancy the lower cost alternative
• Has one ultrasound machine mounted in vehicle
• Less costly per a procedure in short term

6.) Given the costs and benefits of each alternative, what would be your final recommendation? Under what conditions, if any, could you be persuaded to change your mind?
If making a decision solely based on which Alternative is less costly when expecting a five year or 3 year life span. Alternative 2 would be the final recommendation. Alternative 2 has the total lower cost per a procedure

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