代写ECON2101 Cost Benefit Analysis Final Case Study – Indigenous Health Clinic代写留学生Matlab程序

ECON2101 Cost Benefit Analysis Final Case Study – Indigenous Health Clinic

ALL SECTIONS DUE, 3pm 9th June. Submitted online.

Instructions:

This assignment will consist of a group task worth 30% and an individual reflection worth 10%, for a total of 40% of your final grade. The case study can be done individually or as a group of TWO students. Please note that this task is a significant amount of work for an individual, so groups are encouraged.

The assignment must be submitted electronically through the Online Submission links in the Assessment section of the Course Blackboard site.

•    Part  1  MUST  be submitted as an  Excel file (.xls or .xlsx) – only one submission per group is required.

•    Part 2  MUST  be submitted as a Word file (.doc or docx) – only one submission per group is required.

•    Part 3 MUST be submitted as a Word file (.doc or .docx) – each student must submit their own reflective task for marking.

Further details to be announced on Blackboard.

Groups must be finalised by 5pm, 6th June. No changes are allowed after this date.

Remember that each value should be entered into the spreadsheet only once.

Marked out of 80 points (weighted to 40% of your final grade).

Background

A regional health authority is considering the development of a community-led Indigenous health clinic in a remote area of Queensland. The clinic would provide culturally safe primary healthcare services, preventative programs, and social and emotional wellbeing support tailored to the needs of Aboriginal and Torres Strait Islander (ATSI) peoples. To assist in evaluating the investment, the authority has asked you to provide a cost-benefit analysis (CBA) to determine the feasibility of the project. As part of this analysis, the authority would  like you to examine the  potential costs  involved  in establishing and operating the clinic, as well as the expected benefits to individuals, families, and the wider community. Additionally, the CBA should consider how the proposed clinic aligns with national Closing the Gap targets and regional strategies to improve long-term health outcomes for Indigenous Australians.

The facility is expected to be operational by the start of 2026 and will operate for 20 years. The initial capital investment is scheduled for 2025, with additional purchases required in 2026. In your report to the regional health authority stakeholder, you will need to discuss the results from the Investor, Social, and Disaggregated analyses. You will also need to consider any relevant literature or reports on the evaluation of the external  benefits of improved health as part of a program to support the local government and community.

Part 1- Spreadsheet Group Task – 30 marks (15%)

[Use the template Excel File on the BB website]

a)    Market and Investor Analysis

Development of the new indigenous health clinic requires the preparation of a site and a prefabricated building for the clinic. The custom-designed prefabricated building is built off-site and transported for assembly The cost of the prefabricated building is $1.25 million, but there will also be an expected transportation and set up cost of $150,000.

The regional health authority plans to rent a location for the clinic, however site preparation including basic landscaping, fencing, and 8-10 car parks for staff and patients will be required.  This site preparation is expected to cost $150/m² for preparation of 750 m² of the site including the cost of the new car parks.

The clinic will feature three patient consultation rooms, an administrative area, and a dedicated pathology room, designed to support  efficient and high-quality healthcare delivery. The medical treatment rooms will be fitted out in 2025 at a cost of $40,000 per room. Furniture for the consultation rooms and administrative area will also be purchased in 2025, with an allocated budget of $55,000. Equipment for the  pathology room is scheduled for purchase in 2026, with an expected cost of $45,000.  An additional $11,000 has been budgeted for 2026 to cover any unforeseen furniture requirements that may arise as operations expand. Further, the health clinic requires an IT system and software at a cost of $100,000 for recordkeeping, scheduling, and service efficiency.

Given the facility is in a regional area, two 4WD or SUVs with regional suitability will be purchased at a cost of $75,000 each. To ensure uninterrupted operations in a remote setting, a reliable backup power source is essential. A diesel generator will be installed at an estimated cost of $40,000, based on current market prices for a high-quality model with a 100-litre fuel tank. This generator is capable of running for  13 hours on a single tank, providing critical support during power outages. To ensure readiness, 1,000 litres of diesel fuel will be procured in 2025 at a cost of $2.20/L to support ongoing use of the vehicles and generator.

The clinic will need to purchase the following items in 2026 as part of the initial investment:

(1)  Medical supplies and pharmaceuticals will be required based on projected patient volumes. With two General Practitioners (GPs), each seeing 25 patients per day for approximately 20 - 24-minute consultations, and working 5 days per week for 48 weeks per year, the total number of annual patient visits has been estimated accordingly to allow for personal leave.

(2)  Costs for medical supplies and pharmaceuticals are calculated on a per patient per year (PPPY) basis, with expected average costs of $110 for medical supplies and $159 for pharmaceutical supplies.

(3)  While point (1) estimates the total number of visits, calculating costs on a per patient per year (PPPY) basis requires adjusting for the average number of GP visits per patient in regional areas, which is currently 3.4 visits per year.

(4)  To ensure readiness, an initial stock of medical and pharmaceutical supplies will be pre- purchased to cover 30% of the expected patient volume calculated in (1).

As part of the project, the clinic will need to invest in working capital in 2026 to assist in maintenance of the facilities. The working capital items have been provided in Table 1.

Table 1: Working Capital

In addition to the working capital, the council expects the following operating costs:

Table 2: Operating Costs

Ongoing fuel costs are complex due to the combined needs of both the clinic s vehicles and the backup diesel generator. The generator  is  expected to  operate for approximately  260  hours  per  year.  In addition, the two vehicles are estimated to consume 3,000 litres of fuel annually for patient transport, outreach services, and staff travel in the regional setting.

The project will also require leasing a 1,000 m² parcel of land to accommodate the clinic and associated infrastructure, at an annual cost of $28 per square metre.

In addition to the initial investment in medical supplies and pharmaceuticals, there will be ongoing operating costs associated with replenishing these items. It is estimated that these ongoing costs will amount to  10% of the initial 2026 investment in medical and pharmaceutical supplies, supporting continuous service delivery throughout the year.

To run the clinic, the expected wage expenses include:

-     Two General Practitioners (GPs) at salary of $300,000 per year.

-     Two Registered Nurses (RNs) at a salary of $87,000 per year.

-      One practice manager at a salary of $84,000 per year.

-      Cleaning and maintenance will be provided by casual staff for a total of 750 hours per year, at a rate of $35 per hour.

-      Support staff will be employed on a casual basis for 400 hours per year, at a rate of $42 per hour. These staff will assist with administrative and operational tasks within the clinic when the salaried staff are unavailable.

There are two components to insurance. Firstly, the clinic itself requires insurance. This is expected to be 4.5% of the total initial investment. Then both practicing GPs in the clinic require medical indemnity insurance at a cost of $6,000 per year.

To calculate clinic revenues, various sources tied to the Medicare Benefits Schedule (MBS), patient services, and government incentive programs need to be considered. Below is a breakdown of the  key revenue streams and how you decide it is best to calculate them:

(1) General consultations: 50% of consultations are bulk billed at $42.00 each. The remaining 50% are not bulk billed and attract a full fee of $120.00 per consultation.

(2) Chronic Disease Management (CDM)  Plans: These plans are billed at $164.50 per eligible patient. The number of CDM  plans will depend on the clinic s patient mix and GP service patterns. It is expected that 40% of patients require a CDM each year.

(3) Immunisations: Each immunisation is billed at $145.00 with 150 immunisations expected to be done each year.

(4) Minor medical procedures: There is an estimated 15 procedures expected each week such as wound suturing, skin lesion removal, and joint injections. This is billed at $120.00 each.

(5) Allied  Health  Services: Services such dietician visits are  billed at $75.00  per session.  Each person on a CDM uses at least one allied health service per year.

(6) Travel checkups: Pre-travel medical consultations are billed at $350.00 per visit. Only 125 of these can be done in a single year.

(7) Practice Incentive Program (PIP): The clinic is eligible for a fixed annual payment of $30,000.00 per GP working full time at the clinic as part of the rural program incentive to supports quality improvement and continuity of care.

To finance the initial investment costs, the clinic requires a loan of $500,000 at an interest rate of 4.5% per annum. The loan will have a 12-year term with repayments starting from 2026. Additionally, in 2028 the council will take out a balloon loan of $100,000 as a contingency for any unexpected costs. This loan will have a term of 4 years with repayments starting in 2029 and an interest rate of 9% per annum. The balloon payment is 25% of the initial loan paid in the final year. Both loans are from foreign banks.

Table 3: Depreciation

*Note that the furniture purchase in 2026 can be depreciated in the same year of purchase.

The tax rate on profits is 30%. Assume the salvage value for all investment costs is 5% of the initial fixed investment cost plus 5% of the additional investment cost (for capital purchased in year 2026).

Assume the clinic operates at two different capacity levels:

-     Operating capacity starts at 70% in Year 1, increases to 80% in Year 2, and reaches  100% in Year 3.

-      Revenue capacity is expected to be 45% in Year 1, 70% in Year 2, and 95% in Year 3.

Using a conversion factor of 10,000 and the information above, you have been asked to calculate the following:

i)    The IRR and NPV for the Market Analysis at a 5%, 7% and 10% real discount rate.

ii)   The  IRR on equity and NPV for the business at a 5%, 7% and 10% real discount rate for the Investor Analysis.

b) Social Analysis

You  now need to consider the social CBA. Due to taxes, duties, and subsidies we are  required to calculate the relevant shadow prices for the following:

Table 4: Taxes and Subsidies *remember that duties are only paid once.

As we observe taxes and subsidies only on inputs in this project, we assume that inputs represent additional quantities supplied (not diverted from other uses). It is also noted that land has an opportunity cost of $0 and the opportunity cost of casual labour is 60% of the market wage for casual workers. All other workers are employed from elsewhere and should be costed at the market wage.

To estimate the external benefits of the new Indigenous health clinic, several key factors have been considered to reflect improvements in access, health outcomes, and community wellbeing

(1) Reduced travel burden

The clinic will significantly reduce the need for long-distance travel to access healthcare. For 50% of total patient visits, travel time to receive healthcare is expected to decrease by 70 minutes. This is particularly valuable in remote and regional Indigenous communities where access to local, culturally safe care is limited.

-     The value of time saved from reduced travel is estimated using a market wage rate of $39.70 per hour, which serves as a proxy for opportunity cost.

(2)         Fewer potentially preventable hospitalisations

Improved access to timely primary care will reduce avoidable hospital admissions. It is estimated that 15 individuals per year will avoid hospitalisation due to receiving early intervention locally. With an average hospital stay of 4 days at a cost of $3,595 per day, this represents a significant health system saving.

(3) Improved quality of life

The clinic is expected to enhance overall wellbeing, particularly for Indigenous patients  through culturally appropriate care. It is estimated that 75 patients per year will experience a 0.025 gain in QALYs (Quality-Adjusted Life Years). Based on a willingness-to-pay value of $28,000 per QALY.

These benefits highlight the broader social value of the clinic beyond direct medical services, particularly in addressing health inequities faced by Indigenous Australians.

i)            Building on the spreadsheet completed in a), calculate the NPV and IRR of the Social Cost Benefit Analysis using a 5%, 7% and 10% real discount rate.

c)    Disaggregated Social Analysis

Now you want to disaggregate the results of the analysis. In this case you would like to evaluate who gains and who loses from the project. As part of the approach to disaggregation you are asked to exclude the private investor and the foreign bank from the Total Disaggregated CBA and then identify the  remaining  stakeholders with standing.  The remaining stakeholders include landowners, local labour, the community, and the government. Using the template identify:

i)            The  NPV for the total disaggregated group of interest (without the investor and foreign bank) using a 5%, 7% and 10% real discount rate.

ii)           The NPV for each remaining stakeholder group using a 5%, 7% and 10% real discount rate.

d) Sensitivity Analysis

Now as part of the cost-benefit analysis, the health authority is interested in evaluating the assumptions and how sensitive or insensitive the results are to the best guess inputs. Specifically, the health authority would like to answer the following questions:

i)            There are two key inputs that are uncertain for the generation of revenue for the clinic    the percentage of patients who are bulk billed and the price charged for those who pay full fees to see a GP. As these are two components that the clinic has some control over, they would like to see how the NPV changes for the investor analysis at the 5% discount rate. Allow the full fee-paying patients fee to to vary by $10 from the best guess and the bulk billing percentage vary by 20% from the best guess. Comment on the result.

ii)           The health authority would like to identify the full fee-paying price for the breakeven NPV at a 5% discount rate. Use the “Goal Seek” command to identify the minimum full fee (for non-bulk billed patients) the facility could charge to just break even. How much would this fee change if the bulk billing percentage was increased to 60%?

Part 2 – Written Report Group Task – 30 marks (15%)

Using your results from Part 1 of the case study, write a comprehensive report analysing the results of your CBA. In your report ensure you:

1)    Provide professional recommendations to the health authority on whether it should implement the re-development project. You are expected to research relevant literature on indigenous health.

2)   Outline the approach and results of sections a) to d) in Part 1. In your response you should investigate which variables should be subject to a partial sensitivity analysis in addition to the results of d).

3)    Identify considerations for your analysis or any alternative approaches that would improve on the current format of the CBA.

Word limit 1,500 words (+/- 10 %).

The rubric for this component of the case study can be found on the course website.

Part 3 – Reflective Assessment Individual Task – 20 marks (10%)

Critically reflect on the CBA task from the Case Study. In your answer,

1)   determine and establish the relevance and authenticity of the case study task as part of your development in a professional context.

2)    reflect on your individual challenges or challenges faced as part of a group.

Word limit 750 words.

The rubric for this component of the case study can be found on the course website.