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Capital Investment Analysis
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Capital Investment Analysis
How Should The Analysis Incorporate The Cannibalization Of Inpatient Surgeries? Would The Handling Of Cannibalization Change If You Believed That The Local Physicians Were Going To Open An Outpatient Surgery Center Of Their Own?
To incorporate the cannibalization of inpatient surgeries, the analysis should take into account information on previous cash flow statements of the inpatient surgery unit. The current cash flow statements of the inpatient surgery unit should then be compared to the outpatient cash flows statements. This will provide information regarding the decline in cash inflows in the internal surgery unit and the increase in inflows in the outpatient unit. This analysis will also provide information to enable comparison of other important details, which include the differences in pricing of the services provided by the inpatient as well as the outpatient surgery units.

The information will help the management in finding solutions and recommendations in the inpatient surgery unit. Some of the changes may include changing the price of services and the period, which their services are offered. The handling of cannibalization would change if the local physicians opened an outpatient surgery center of their own. This would require the management to carry out a scenario analysis of the third surgical center, which would change the inpatient as well as the outpatient cash flow statements.

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