Running Head: FROM THE FRONT LINES1 From the Front Lines Lisa M. Buentello HCA 311: Health Care Financing & Information Systems Professor Kathleen Martocci May 29, 2015 - 1 - [no notes on this page] Future Direction of Health Care 2 From the Front Lines The break even analysis figures can be used to establish the impacts of various reimbursements such as Medicare, Medicaid, and Private and self-pay contributions. Notably, from the break even analysis of the “From the Front lines” facility, increase in Medicare and Medicaid benefits have an effect of increasing sales volume. Eventually, the value of the gross margin increases leading to an upsurge of the value of the contribution per unit. This leads to a reduction in the number of the break-even procedures. Private or self-pays have an effect of increasing the volume of sales in addition to the increment made by Medicaid and Medicare benefits. As a result, the break even procedures will become even smaller causing a corresponding increase in profit margins. Break even analysis is essentially important in developing my upcoming capital investment proposal. It will be applicable in clarifying the extent of the viability of my planned objectives. Specifically, this tool will be of great significance in evaluating expansion opportunities, new providers, new services or new capital purchases (Cafferky, 2012). Break even analysis is basically used in establishing whether the planned activity is viable enough to cover the expected costs that are principally divided into variable and fixed expenses. Also, I will utilize break analysis values to ascertain whether the capital proposal will be financially viable. Specifically, it will be applicable in determining the activity level that will - 2 - [no notes on this page] Future Direction of Health Care 3 cover the projected fixed and variable costs of the venture satisfactorily. It is at this point that a break even analysis will be used to evaluate the critical components of my budget plan. Typically, break even analysis and the budget plan are used interchangeably while making financial analysis that concerns various capital investment plan proposals (Cafferky, 2012). Break Even Analysis Break Even Analysis Sales payment per procedure $885 numbe of procedures in year 1 500 numbe of procedures in year 2-5 850 Total Sales amount 1, 194, 750 Variable costs Cost of each Procedure $175 Total number of procedures 1350 Total Variable costs $236, 250 Contribution Per Unit 710 Gross Margin=sales-variable costs $958, 500 Fixed Costs Purchasing costs $ 11, 000 Rennovation Costs $9,000 $20,000 Employees Salaries $ 336, 000 Total fixed costs .