Cost-Benefit Analysis

Create a 5–6-page cost benefit analysis that supports a risk financing recommendation for a selected organization.

Note: The assessments in this course build upon each other, so you are strongly encouraged to complete them in a sequence.

In your current and future role as a health care leader, you can expect to conduct a cost-benefit analysis (CBA) to determine whether the positive benefits of a proposed recommendation outweigh the negative costs.

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

• Competency 1: Conduct an environmental assessment to identify quality- and risk-management priorities for a health care organization.
  • Specify the focus and stakeholders for a cost-benefit analysis.
  • Develop a value proposition for change management that incorporates quality- and risk-management concepts.
  • Describe strategies to influence and impact the needed changes for quality improvement.
• Competency 2: Apply a risk-management model or framework to a specific risk-management priority.
  • Conduct a cost-benefit analysis for a risk-management intervention.
• Competency 3: Analyze the process and outcomes of a care quality- or risk-management issue.
  • Identify relevant internal and external benchmarks, using a systems-based perspective.
• Competency 5: Communicate in a manner that is scholarly, professional, and consistent with expectations for professionals in health care administration.
  • Use correct grammar, punctuation, and mechanics as expected of a graduate learner.

Context

In your current and future role as a health care leader, you can expect to conduct a CBA. You may be asked to offer three alternatives and to make a recommendation.

Plowman relates that “a cost benefit analysis is used to evaluate the total anticipated cost of a project compared to the total expected benefits in order to determine whether the proposed implementation is worthwhile for a company or project team.” Plowman also identified the three parts of a CBA to be the following:

• Identification of potential costs.
• Recording of all anticipated benefits.
• Examination of the differences to determine if positive benefits outweigh negative costs.

A pre-formatted Excel spreadsheet that can be used as a template for CBAs is a good tool to have in your personal toolbox. Inputting data is simply the first step. As you fill out templates, always consider the numbers within the context of an organizational mission, strategic direction, patient safety, risk-management issues, regulatory requirements, patient and stakeholder satisfaction, and also the dynamics within the health care industry.

Reference

Plowman, N. (2014). Writing a cost-benefit analysis. Retrieved from http://www.brighthub.com/office/project-management/articles/58181.aspx

Questions to Consider

As you prepare to complete this assessment, you may want to think about other related issues to deepen your understanding or broaden your viewpoint. You are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of your professional community. Note that these questions are for your own development and exploration and do not need to be completed or submitted as a part of your assessment.

• What steps do you need to take in order to align a CBA with an organization’s mission and strategy?
• If you were to offer three alternative recommendations after a CBA, what types of elements would you consider to differentiate them from one another?
• How would you substantiate a recommendation for reducing financial risks in a health care setting when the quality of care is involved?
• What are the three parts of a CBA?