Service Line Development Case Study: Service Line Development

AMT2 Service Line Development
Task 4
Echo Breen

A. Determine the feasibility of one of the proposed service lines in the attached “Service Line Development Case Study” by doing the following:
A1. Evaluate the demand for the new service line in the market area defined in the case study.

Trinity Community Hospital (TCH) has the opportunity to develop a new orthopedic service line. It is anticipated that there will be a huge increase in need for orthopedic services within the next 5 years; orthopedic cases will increase by 46%, joint and spine procedures will increase by 30% and outpatient joint and spine procedures will increase by 350%. The five year projection for the orthopedic shows gross charges per orthopedic surgical case to be
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The cost will run between $600,000 - $700,000 depending upon final purchasing or building decisions. There is an added expense related to another MRI machine which will come at the cost of 3 million dollars. The $25 million in capital reserve that TCH has will allow the orthopedic service line expansion project to take place. The number of new patients would be 2100 for surgical cases which also adds 6,500 to the physical therapy patient numbers. There will be an estimated profit of $2,171,500 to TCH with the implementation of the orthopedic service line. Gross charges for surgical cases will run $25,000 and physical therapy will run at $275 per treatment. And there is a final expectation of a 31% cost to charges ratio. (Western Governors University, n.d.). Revenue will be supported by the anticipated increase in each area of payment; self-pay, insured, Medicaid and Medicare patients. The loss of patient numbers in the OB program at TCH could be offset by implementation and continued growth of an orthopedic service line. Operating profits will increase as the number of patients utilizing the new service line also increases and there is an increased exposure to not only orthopedics but the other services offered by

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