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Capital Project Case Study,

Question # 00081885
Subject: Economics
Due on: 08/11/2015
Posted On: 07/12/2015 08:18 AM

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Capital Project Case Study, Part 1

This case study considers the expected costs and benefits to a managed care organization resulting from a
decision to design a centralized nurse triage line. This triage line would assist routine primary care patients to
provide self-care and/or seek urgent care in lieu of seeking more expensive care after-hours in the emergency

Jiranna Healthcare owns and operates a 268-bed hospital in the San Jose area. The hospital
is Jiranna Healthcares main facility and is home to more than 80 on-site specialty and surgery
clinics, employing over 5,000 staff. In addition to the main hospital, Jiranna Healthcare has 18
satellite clinics, containing primary care services such as pediatrics, family medicine, and geriatric
health. These facilities (hospital plus outlying clinics) serve a total enrollee population of 97,000.
Currently, Jiranna Healthcares centralized call center schedules primary care appointments
and handles an average of 1,500 to 2,000 calls daily with a staff of 20. Patients routinely have
difficulty obtaining access to urgent or acute care (primary care) in a timely fashion. Additionally,
the majority of Jiranna Healthcares primary care centers are unable to meet access standards in
three out of four cases. These access issues have a secondary effect on the call center, which
experiences a much higher call rate because members have to call back multiple times to find
available appointments. The existing process leads to overutilization of emergency departments
for urgent care and primary care concerns. In addition, patient satisfaction has steadily declined
as a result of the continued lack of appointment availability.
To address this problem, there is a proposal to implement a centralized nurse triage line, an
off-site phone center that would be staffed by registered nurses with a multitude of specialties
(including ER nurses, critical care, surgical, and even some nurse practitioners). These nurses
are able to offer callers medical advice encompassing the treatment of fevers, wound care, and
emergent conditions such as chest pain. The nurses are trained to triage conditions to the
appropriate level of care be that at home, at an urgent care center, or at an emergency
Laureate Education, Inc.


The major cost impact is the increased salary requirement for the phone center staff, which
will entail approximately 33 multi-discipline employees, based on workload and enrollment data.
Additional elements of the proposal include hiring an IT specialist to manage the triage lines
computer system, and facility renovations. The main benefit of this proposal is projected cost
reductions in patient care as a result of moving primary care out of the expensive emergencyroom setting.

The Capital Project Case Study, Part 2 spreadsheet provides cash flow data (costs and benefits) for the
proposal. Download and save this Excel spreadsheet, and use the information provided to complete the


Determine the cash inflows and outflows for each year.


Evaluate the capital project by calculating the following metrics:


a. net present value (NPV)
b. internal rate of return (IRR)
c. modified internal rate of return (MIRR)
d. payback period
e. discounted payback period
Indicate whether the project is acceptable, assuming Jiranna has a corporate policy of not accepting
projects that take more than 3.5 years to pay for themselves, and assuming an 11% cost of capital.

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Capital Project Case Study,

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Tutorial Preview …whichexperiences x much xxxxxx call rate xxxxxxx members have xx call xxxx xxxxxxxx times xx findavailable appointments xxx existing process xxxxx to xxxxxxxxxxxxxxx xx emergency xxxxxxxxxxxxxx urgent care xxx primary care xxxxxxxx In xxxxxxxxx xxxxxxx satisfaction xxx steadily declinedas x result of xxx continued xxxx xx appointment xxxxxxxxxxxx To address xxxx problem, there xx a xxxxxxxx xx implement x centralized nurse xxxxxx line, anoff-site xxxxx center xxxx xxxxx be xxxxxxx by registered xxxxxx with a xxxxxxxxx of xxxxxxxxxxxxxxxxxxxxx xx nurses, xxxxxxxx care, surgical, xxx even some xxxxx practitioners) xxxxx xxxxxxxxx able xx offer callers xxxxxxx advice encompassing xxx treatment xx…
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