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Discussion: Growth in the Remote Workforce

Globally, we are increasingly moving to a remote-centered workplace. In the United States alone, as a global culture, approximately 25 percent of Americans worked remotely in 2021. This figure will nearly double by 2025 (Ioannou, 2021). This places an extraordinary burden on both supervisors and their employees, mainly because neither has had considerable education and training in working in a distributed workplace. As the Organizational Behavior Specialist in your organization, your role is to maintain your employees’ productivity and ensure that your organization remains profitable. With the growth in the number of employees working from home, this poses a communication challenge. What do you do?

Initial Post

Discuss your plan on how you will ensure that both supervisors and their employees working in a distributed workforce are not only more productive but profitable as well. How will this be communicated? Provide a minimum of two researched strategies in your plan to support your plan.

Post your initial response by Wednesday, 11:59 pm ET.

Response Post

Once you’ve posted your plan, read through those of your peers. Then, select two to respond to by offering feedback and suggestions on their plan. Your response is due by Sunday, 11:59 pm ET.

Evaluation

It is important that you review the Discussion Rubric and read the Discussion Posting Guide. These documents lay out the basis for how you should engage in discussions and how you will be evaluated.

All discussions combined are worth 20% of your final course grade.

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Discussion Scenario

In this discussion, you will assume the role of Business Operations Manager at Ashley Regional Medical

Center, which is evaluating the potential adoption of Isansys Wireless Monitoring systems in their

newborn intensive care unit (Birmingham Children’s Hospital, n.d.). North Dakota’s Ashley Regional

believes that this technology will be both attractive to customers, and in line with their “Higher

Standards of Care Every Day” marketing and branding campaign (Ashley Regional Medical Center, n.d.).

Importantly, a variety of estimates are dependent on forecasting values. As Business Operations

Manager at Ashley Regional Medical Center, you thus believe that a thorough assessment of risk must

be made prior to the adoption of this costly system, which is a continuous monitoring and digitization

platform based on a “smart-patch” cardiac sensor and other wireless sensors, and a multifunction

patient portal located near each patient. As patient outcomes are improved, Ashley Regional believes

that cost may fall dramatically over time (Hoagland, 2011), for this small business. This assumption

depends on both cost and revenue assumptions, however, which you understand may be somewhat

optimistic given the presence of a newly-built competitor not to many miles away.

In investigating adoption of this technology as Business Operations Manager at Ashley Regional Medical

Center, you have estimated the project’s NPV to be positive at a discount rate of 18%, based on

projected cash flows. However, you recognize the possibility of error in these cash flow projections, and

you wish to alert decision-makers as to the impact of different assumptions about the future, on these

estimates. You intend to present these findings to the Medical Center’s Technology Adoption Board, a

group of medical professionals that is most likely unfamiliar with this variety of analysis. As such, while

you intend to include a discussion of sensitivity and scenario analyses alongside your estimates, you

understand that you will have to put some attention into introducing sensitivity and scenario analysis

prior to delivering this judgment. Working capital needs will begin at $20,000, and will be 10% of

revenues thereafter, while an initial investment of $800,000 (the price of the Isansys unit) will be

required. You have developed the following base estimate of essential data, and will assume that the

Isansys system will be depreciated on a MACRS 7-year basis:

Base Case

Unit Sales $7,200

Price per Unit 1,800

Variable costs per unit 1,200

Fixed costs per year $400,000

Table 1. Base Case

In the base case given, using a discount rate of 28%, a discounted cash flow would appear as follows:

Year 0 Year 1 Year 2 Year 3

Sales – $12,960,000 $16,848,000 $9,072,000

Variable – 8,640,000 11,232,000 6,048,000

Fixed – 400,000 400,000 400,000

Depreciation – $114,320 $195,920 $489,760

EBIT – 3,805,680.000 5,020,080.000 2,134,240.000

Taxes (34%) – 1,293,931.200 1,706,827.200 725,641.600

Net Income – 2,511,748.800 3,313,252.800 1,408,598.400

1.28 – 1.28 1.64 2.10

NPV – 1,962,304 2,022,249 671,672

Table 2. Calculation of NPV of EBIT, for use in computing Operating Cash Flow, Base Case

I. Operating Cash Flow

Operating Cash Flow Year 0 Year 1 Year 2 Year 3

EBIT – $3,805,680.00 $5,020,080.00 $2,134,240.00

Deprec – 57,160 57,161 57,162

Taxes – 1,293,931 1,706,827 725,642

Operating Cash Flow – 2,568,909 3,370,414 1,465,760

1.28 – 1.28 1.64 2.10

Base Case NPV – $2,006,960.00 $2,057,137.33 $698,929.02

II. Working Capital

Initial NWC (20,000) – – –

Change in NWC – 1,296,000 1,684,800 907,200

NWC Recovery – – – 757,600

Total Change in NWC (20,000) (1,276,000) (388,800) 777,600

III. Capital Spending

Initial Outlay (800,000) – – –

Aftertax Salvage – – – 349,840

Total Capital
Spending

(800,000) – – 349,840

Table 3. Components of Operating Cash Flow, Base Case

Year 0 Year 1 Year 2 Year 3

Operating Cash Flow – 2,006,960 2,057,137 698,929

Changes in NWC (20,000) (1,276,000) (388,800) 777,600

Capital Spending (800,000) 0 0 349,840

Total Project Cash
Flow

(820,000) 730,960 1,668,337 1,826,369

Cumulative Cash
Flow

(820,000) (89,040) 1,579,297 3,405,666

1.28% 1.00 1.28 1.64 2.10

Discounted Cash Flow (820,000) (69,562) 963,926 1,623,948

Table 4. Discounted Cash Flow, Base Case

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Student 1

Slide [1]   Introduction

Thank you everyone for attending the meeting. As part of Ashley Regional medical center’s mission to making Communities Healthier, and always to strive to give our customers the best healthcare possible, we seek to do that with the implementation of advanced technologies (Ashley Regional Medical Center, n.d). The intent today is to have a short review of the new technology solution and walk through a financial analysis to see if it makes sense for our clinic.  

Slide [2]   Agenda

Our meeting will be brief, and stick to a high level discussion. We will review the market opportunity first, followed by the proposed solution. In order to best assess that solution we will walk through a sensitively and scenario analysis prior to the final recommendation to move forward or to reject the solution.

Please feel free to ask questions throughout the review, discussion is encouraged.

Slide [3] Market Opportunity

We are the first choice care center for expecting parents in the region. Not only is this because of our excellent care, but for our use of innovative technologies in the newborn intensive care unit. Parents feel comforted to know that their new life will get the attention they need when they deliver with us. Isansys has a new wearable sensors that can help in the monitoring of a patient vitals and provide real time input to staff. This type of information technology supports our data driven patient care expectations.

Slide [4] Scenario Analysis

This technology comes at a very large expense to Ashely Medical. Based on projected cash flows, the NPV estimates are positive at a discount rate of 18%. Further analysis is required to be able to support the decision making process before we can confidently accept or reject the solution, given its large upfront investment of $800,000.

When evaluating these types of financials, several assumptions are made that directly impact the viability of the projected financial analysis. This adds a degree of forecasting risk that needs to be included in the upfront review (Brealey et al., 2020).

A scenario analysis can help off-set some of the forecasting risk. This is a basic form of what-if analysis that identifies areas that could change the NPV, such as sales is higher or lower than originally projected? Several of these “what-ifs” may have a positive or a negative impact on the actual NPV. If we start with the worst case scenario it will allow us to know the worst possible NPV. This would be the lower bound and if the lower bound is positive than the project should be accepted. We can do the same with the best what if scenario as well, which gives us the best possible outcome, known as the upper bound (Brealey et al., 2020).

Historically as an organization we have typically see a 15% variance in the projections from the base case. As a result we will use that same percentage in the scenario, given its historical likelihood in the company. The scenarios presented assume the what-if of a possible 15% change from the base case with an 18% required return to analyze the upper and lower bound limitations.

Slide [5] Sensitivity Analysis

Another way to look at the decision is with a sensitivity analysis. This is useful in identifying exact areas where forecasting risk would greatly impact the viability of the investment. As you will see the theory is that if you freeze all variable, except one you will be able to see how sensitive the estimated NPV is to the changes based on that variable (Brealey et al., 2020). Continuing with the 15% variance in projections from the base case, we see how two variables such as units and fixed cost affect the base case. These were chosen given the local competition could directly impact our units if they implement something sooner (lower bound), or if we beat them to it (upper bound). The fixed cost are more within our control and good to assess as another variable.  

Slide [6] Risk to Assessment

There are always additional areas to be aware of outside of what was presented today. Some of those risk are, but not limited to, new and better technologies, product doesn’t perform as expected and acceptance of the technology all present high risk to the financial outcomes. Additionally if there is a delay in implementation or changes in fixed cost this could also have an impact (lower) on the finical justification of the project.  

Slide [7] Recommendation

Predicting the future to justify today’s decisions always comes at a risk. There is no magic to ensure the decision is perfect, however, the sensitivity and scenario analysis combined with NPV can help identify the what-if’s as well as the worst and best outcome based on the what-if’s identified. This helps minimize forecasting risks

Ashley medical wants to continue to evolve to provide the best possible care for their patients. Based on the financial analysis utilizing simulation and scenario analysis that consider best case and worst case situations, indications are strong that this solution will help with that mission. It is recommended that the Isansys wearable sensors should be approved, and Ashley Regional medical center should move forward with the $800,000 investment.

Slide [8] References

 

References

Brealey, R. A., Myers, S. C., & Marcus, A. J. (2020). Fundamentals of Corporate Finance. McGraw Hill Education.

Excelsior College Module 7. (2022). Module Notes: Intorduction & Managing Forecasting Risk. Retrieved from  https://excelsior.instructure.com/courses/28284/pages/module-7-module-notes-introduction-and-managing-forecasting-risk?module_item_id=2462457

Mission & Vision. Ashley Regional Medical Center. (n.d.). Retrieved April 23, 2022, from https://www.ashleyregional.com/mission-vision-and-high-five-guiding-principles

Wearable sensors. Isansys Products – Wearable Sensors. (n.d.). Retrieved April 23, 2022, from https://www.isansys.com/en/Wearable-Sensors

 (Links to an external site.)

 

Student 2

PowerPoint Narration

Slide 1 (title slide): Financial analysis of implementing Isansys systems at Ashley Regional Medical Center

Slide 2 (purpose & agenda): This presentation will address the financial impacts the addition of this system will have here at Ashley Regional. Ensuring that it benefits patients, the organization, and our shareholders. I will give an explanation of the two analyses used; scenario and sensitivity for assessing this project. This will be followed by the metrics calculated during those two analyses, then an explanation of some risks associated with this project, and completed with my conclusions that were made following the analysis.

Slide 3 (scenario & sensitivity analyses overview): Scenario and sensitivity analyses are two forms of what-if analysis that aid in assessing risk. Scenario analysis is the most basic form of this type of analysis and helps to determine if different plausible scenarios were to occur, would the project still result in a positive NPV (Ross et al., 2019). This helps to determine if a project will truly be financially beneficial for the organization or if initial estimates were too optimistic and the project is overly risky. Sensitivity analysis is also an assessment of specific scenarios but it isolates specific variables such as units sold, price, fixed costs, or others to determine how sensitive NPV is to that variable. A higher sensitivity indicates that there is higher risk associated. There are advantages to utilizing both methods to gain a better understanding of the risks associated to a specific endeavor. Scenario analysis improves systems thinking and leads to the optimal allocation of resources while sensitivity analysis provides and in-depth assessment helps to fact-check against certain variables (CFI, n.d.).

Slide 4 (scenario analysis): These tables were generated utilizing a +/- 15% factor and a 18% rate of return to ensure a positive NPV for the base scenario. The 15% change was used as it can be reasonably assumed that this is a likely scenario based on the current market and the recent introduction of a new competitor.

Slide 5 (sensitivity analysis): Still following the 15% +/- change, the sensitivity analysis assessed sensitivity for number of units sold, price, and fixed costs. These elements were chosen as there is a new competitor in the market which will impact how much the organization sells and at what price so it was important to determine if those had high risks associated. It was also important to determine if fixed costs increase or decrease if that would create more risk for implementing this project.

Slide 6 (risk drawn from assessment): The new local competitor is going to impact the organization and could have much more severe affects than what was analyzed and is a risk. The risks for implementing this project remain low, as even at the calculated worst-case scenario it still has a positive NPV. There is also high reward for the best-case scenario should our highest estimates come to fruition. As seen in the previous slides, sensitivity regarding the number of units sold and fixed costs is low indicating a low risk. However, price sensitivity is high and depending on the competitor’s price, this could become an issue.

Slide 7 (conclusions drawn from analysis): Overall, it is recommended that the Isansys systems are implemented. It can reasonably be expected that the benefits to patients and shareholders will both be positive. It will be necessary to monitor the new local competitor and make an effort to proactively have the best price to remain competitive as opposed to reactive as those customers will be lost. It would be wise to temper expectations from the initial assessment of possible revenue increase. The addition of the new competitor will have impacts and our initial estimates of units sold under a specific price needed to be adjusted. These analyses aided in eliminating some of the possible errors in initial estimates, but they are still estimates and only give several possibilities of scenarios.

References

CFI. (n.d.). Scenario Analysis vs Sensitivity Analysis. Corporate Finance Institute. https://corporatefinanceinstitute.com/resources/knowledge/modeling/scenario-analysis-vs-sensitivity-analysis/

Ross, S. A., Westfield, R. W., & Jordan, B. D. (2019). Fundamentals of Corporate Finance (12th ed.). McGraw-Hill Education.

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D1: Isansys – Assessing New Realities in Digital Health

Background:

This discussion addresses the following Module Outcome:

Interpret a sensitivity analysis for a proposed investment. (CO4)

Apply historical knowledge, market returns, and risk premiums in financial markets to managerial decisions. (CO2, CO3, CO4)

Patient care has become a primary focus in the development of new healthcare technology. Technological development in clinical applications is a significant trend in healthcare currently, and hospitals worldwide are adopting exciting new innovations in the area of patient care. A 2016 survey circulated among healthcare providers indicated (HIMSS, n.d.) indicated that 74% of healthcare professionals consider Information Technology to be a critical tool in clinical settings, for instance. In a hospital setting in particular, patient monitoring is a critical aspect of patient care in a hospital setting. Isansys is an innovative, continuous vital sign data acquisition, analysis, and prediction platform that combines wearable wireless sensors and networks with analytical algorithms and data analysis to provide low cost, continuous monitoring for patients. The technology can be used either in a hospital setting or at home. This technology was pioneered with the assistance of clinicians and hospitals as an innovative and unobtrusive new patient monitoring technology with predictive care methodologies to improve patient outcomes and reduce cost. The Oxfordshire-based company received a Small Business Research Initiative (SBRI) grant to increase the functionality and extend the intended use of its innovative Patient Status Engine (PSE). Hospitals in England and India then participated in early trials, and it is currently in use in many countries throughout the world, but has not gained widespread adoption in the United States. PSE provides a continuous vital sign data acquisition, analysis and prediction platform that is helping hospitals and healthcare organizations move into the next generation of digital, data driven patient care (Hortin, 2015).

Discussion:

Please click here  

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[PDF, File Size 242KB] and read the scenario so that you may complete the task.

Tasks:

As Business Operations Manager at Ashley Regional Medical Center, prepare and attach to the relevant discussion board area a narrated PowerPoint presentation of no more than 8 slides using concepts introduced in this Module to update the Medical Center’s Technology Adoption Board regarding the reliability of NPV estimates. Your presentation must:

Evaluate the possibility that forecasted values could differ from the initial NPV estimate, explaining the assumptions and conceptual rationale behind the analyses that you have used to diminish the possibility of error in our estimates, including sensitivity and scenario analyses.

Present additional insights to risk associated with project returns that capital market history can offer regarding risk and return associated with this project.

Responses should comprise 200–600 words.

Post two additional replies to classmates, offering critical analyses and comments relating to their analyses. Please cite sources of additional research, and examine areas where you do and do not believe that your classmates’ statements make optimal use of assigned readings, or could otherwise include additional considerations.

References

Ashley Regional Medical Center. (n.d.) Ashley Regional Medical Center

 (Links to an external site.)

.

Birmingham Children’s Hospital. (n.d.). Isansys wearable technology and wireless patient monitoring platform in at-scale deployment at Birmingham Children’s Hospital.

 (Links to an external site.)

Hoagland, D. (2011). Wireless heart monitoring cuts healthcare costs. [PDF, File Size 246KB]

Hortin, Georgina. (2015). Isansys lifecare wins £1 million SBRI healthcare contract to support NHS objectives

 (Links to an external site.)

.

Consult the Discussion Posting Guide for information about writing your discussion posts. It is recommended that your write your post in a document first. Check your work and correct any spelling or grammatical errors. When you are ready to make your initial post, click on the “Reply”. Then copy/paste the text into the message field, and click “Post Reply.” 

To respond to a peer, click “Reply” beneath her or his post and continue as with an initial post.

Evaluation

This discussion will be graded using the discussion board rubric. Please review this rubric, located on the Rubrics page within the Start Here module of the course, prior to beginning your work to ensure your participation meets the criteria in place for this discussion. All discussions combined are worth 20% of your final course grade.