The Patient Protection and Affordable Care Act (ACA), passed in 2010, is a collection of laws that were created to reform health insurance and healthcare.
Health Care Reform: Overview
When it comes to healthcare in America, we seem to believe that more is better but does more healthcare result in better health? As a nation, we spend more on healthcare per person than any European country, yet our health outcomes are worse. The PBS documentary, Money and Medicine was aired in 2012, and addresses one of the key issues of healthcare reform the cost of health care. Watch the trailer below, or the entire episode
Affordable Care Act: Five Years Later
Answer the questions and complete the calculations required for the assignment.
Submit your answers on a Word document, with the heading of Week 5 Assignment. For the questions requiring a written response, please adhere to proper grammar and syntax, and provide references. For the questions requiring calculations, show all your work and follow the format that has been provided for the calculations in the lesson for Week 5.
1. When performing calculations, standard rounding rules apply. If the number to the right of the decimal is less than 5, round down to the nearest whole number,
e.g., 33.4 = 33
If the number to the right of the decimal is 5 or greater, round up to the nearest whole number,
e.g. 33.5 =34.
2. Read the question carefully. Pay close attention to the units be asked and keep them consistent. For example, hours vs FTEs; days vs months vs years.
3. Provide ALL formulas with references. Designate which formula associates with which source. It is not sufficient to simply list the source at the beginning of the section.
Write out the formula used BEFORE filling in the numbers. Formulas used should be taken from one of the required resources for this course.
Example: Total Contribution Margin (CM) = (CM) category 1 + CM cat 2 + CM 3
Leger, J.M. & Dunham-Taylor, J. (2018). Financial management for nurse managers: Merging the heart with the dollar, 4th Ed. Burlington, MA: Jones-Bartlett.
Preparing the paper
Break-Even Analysis Case Study
You and several of your colleague business partners have decided to establish an outpatient fertility clinic in your service area. All of you are very familiar with this patient population base, have completed an extensive market analysis that demonstrated a great need for the service, and are comfortable with setting up a business and the costs associated with this special group of patients.
As part of the business plan, you and your partners will need to convince stakeholders that this new service endeavor will be viable. They will want to know how many patients visits annually will need to occur and how long it will take for the service to be at least cost neutral or profitable. To provide them with this information you will perform a break-even analysis. Use the following data, conduct the analysis accounting for the contribution margin of each patient acuity category.
Fixed Costs: $9,788,000 (start-costs, specialty physicians, anesthesiologists, APNs, staff
nurses and other staff salaries, specialty equipment, other miscellaneous)
Variable costs: $500/patient visit (specialty equipment, oxygen supplies, other
Clinic days: Monday-Saturday- 305 days/year
Projected patient visits per year: 7480
Patient charges by patient acuity category:
Break-even Analysis Data Table
Charge per Visit
Visits per Year
Charges per Year
Visits per Day
Charges per Day
Simple 20% $2000
Moderate 70% $6500
Complex 10% $10,000
Expected Total Daily Charges
Expected Total Daily Revenue
Break Even point in days
Break Even point in visits
1. Describe your approach to this case study. In addition to the numbers given, what do you need to know before you can calculate the break-even analysis?
2. Perform the calculations needed for the break-even analysis. Show your work, formulas used, and reference the formula. When calculating the patient visits per day, round to the nearest whole. After youve completed the calculations, record your results in the appropriate place in the table.
3. How many patient visits are expected per day?
4. What is the contribution margin of each category of patient?
5. Based on the data and your calculations, what is the expected daily revenue?
6. How long (in days, months, or years) will it be before the return on investment begins?
7. How many patient visits will be required to reach the break-even point?
8. Discuss your analysis. Is the project viable and profitable service? Does the analysis support moving forward with the business? Cite specific data from you analysis to support your interpretation.
Description Approach to Break-Even Analysis 5 5%
Approach to Break-even analysis is clearly articulated and contains elements needed to address the scenario
Calculate the number of patients/category served per year and day.15 15%
Number of patients served by the fertility clinic is correctly calculated per year and day for each type/category. Formulas are correctly shown, used, and referenced. Calculations are shown
Calculate the contribution margin for each patient
category 30 30%
For each of the three patient/categories the contribution margin is correctly calculated. Formulas are correctly shown, used, and referenced. Calculations are shown.
Calculate the number of days to break-even.10 10%
Time to break-even in days is correctly calculated. Formulas are correctly shown, used, and referenced. Calculations are shown
Calculate the break-even quantity 15 15%
The break-even quantity (number of visits) is correctly calculated. Formulas are correctly shown, used, and referenced. Calculations are shown.
Analysis of break-even analysis 20 20%
Break-even analysis is clearly articulated. Includes elements potential for viability and profitability of service, recommendation for continuing the business. Specific data from the analysis is used to support your interpretation.
Writing conventions, format, and
reference citations 5 5%
Writing is clear concise without grammatical and spelling errors. All references are correctly cited (if applicable) and written.100 100
A quality assignment will meet or exceed all of the above requirements.
Chamberlain College of Nursing NR533 Financial Management of Healthcare Organizations
NR533 Break-even Analysis AGR STUDENT VERSION 2
The Commonwealth Fund has developed several online, interactive resources to illustrate the impact of the Affordable Care Act in its first five years of implementation. Through personal stories, population and health systems data analysis, and graphics, the Commonwealth fund paints the picture of the impact of the ACA on individuals, businesses, providers and healthcare systems. Take some time to explore these resources in preparation for this weeks discussion board. Link: The Affordable Care Act: A Look Back at the First Five Years.
Review the two interactive digital features: Coverage Reform
and Delivery Reform
Value-Based Purchasing Pay for Performance
Increasingly, hospitals and healthcare providers are reimbursed not just for the amount of services provided (fee-for service), but for the results that are achieved for a particular patient population. As nurses, you may have observed policy changes that emphasize patient experience, prevention of hospital-acquired infections, and effective discharge planning to avoid unplanned re-admissions. In hospitals, we hear a lot about Hospital Consumer Assessment of Healthcare Providers and Systems more likely known for its acronym: HCAHPS. We also hear the term Core Measures, which refers to a national standardized performance measurement system. Health system performance reports are easily accessible to the public on the Centers for Medicare and Medicaid Services (CMS) website, where consumers can compare the performance of local hospitals and providers.
Look up the hospital where you work or live. Explore the performance measures across the various categories, especially Survey of Patient Experiences and Timely and Effective Care. Consider how your work is affected by these measures.
Accountable Care Organizations and Medical Homes
Hospitals and healthcare providers are reimbursed for Medicare services based on their performance on key measures. In order to improve results, providers have organized Accountable Care Organizations and Medical Homes to provide a more comprehensive, coordinated approach to achieve better health and lower costs. Many organizations have established partnerships to collectively be responsible for a group of patients (Accountable Care Organizations) and provide a Medical Home approach to improve patient care outcomes.
The Kaiser Family Foundation has created a brief video to explain Accountable Care Organizations:
The Cleveland Clinic video below describes such an approach:
Originally, the Affordable Care Act mandated expansion of Medicaid to include a larger sector of the population up to 138% of the Federal Poverty Level, with federal dollars funding the vast majority of the related costs of coverage. However, the Supreme Court ruled that the decision to expand Medicaid rests with the states. Florida was one of the states which has not expanded Medicaid (at least at this writing); the issue has become a hot debate in the 2015 legislative session. The following articles from the Kaiser Family Foundation provide a little background to learn more about Medicaid expansion and the experience of states who have expanded coverage:
Video: Expanding Affordable Care through Medicaid
How Well Does Your State Perform?
The Commonwealth Funds Scorecard on State Health System Performance (2014) assessed states on 42 indicators of health care access, quality, costs and outcomes from 2007 to 2012.
This interactive tool (link below) will show the gains that your state could achieve by improving its performance to the level of better-performing states, as well as the losses that would result if your state failed to sustain its performance. Take a look how does your state perform?
Commonwealth Fund Scorecard on State Health System Performance Interactive Tool.
What does the Affordable Care Act mean for Nursing?
You will respond to this question in this weeks discussion forum, based on an article by Brenda Luther and Sara Hart:
What does the Affordable Care Act mean for nursing? ,
and the articles and resources you used to develop your Health Care Reform paper. The American Nurses Association has developed an excellent summary of how the ACA impacts nursing:
Here are several excellent resources to increase your knowledge about the ACA, in preparation for this weeks Discussion Board on Healthcare Reform.
1. U.S. Department of Health and Human Services:
2. Kaiser Family Foundation: Health Reform:
3. The Facts on Medicare Spending and Financing:
4. Read Article: Summary of the ACA:
5. Read Article: What does the Affordable Care Act mean for nursing?
(Luther & Hart, 2014
I hope this study guide was helpful in gaining a better understanding of the Affordable Care Act. You will apply this information as you participate in this weeks paper and discussion on Health Care Reform.