HA499 Unit 6 Capstone Financial Justification Example

Counting Only What the Hospital Would Actually Keep: A Capstone Financial Justification for a Two-Person Imaging Authorization Team and a Scheduling Safeguard at a Composite Community Hospital, With a Rejected Option and a Position Given Up

[Student Name]

Purdue University Global

HA499: Bachelor's Capstone in Health Care Administration

Unit 6 Financial Justification

[Instructor Name]

[Date]

The hospital, its volumes, margins and salaries are composite and bracketed; the model is a course example and every assumption is stated so it can be replaced with real data.

The Proposal

Option C from Unit 5: two authorization specialists in imaging who confirm approval for every listed MRI and CT scan five business days ahead, using insurer portal access, plus a scheduling rule that no listed scan is confirmed without an approval number.

Start-Up Costs

Portal agreements and setup: [$4,000]. Electronic authorization-check tool, first year: [$6,000]. Training, 40 hours: included in salary. Total start-up: about [$10,000].

Operating Costs

Two specialists at [$52,000] each with benefits: [$104,000] a year. Total first-year cost: about [$114,000].

Benefits, Counted Carefully

Baseline: about [856] postponements a year for missing authorization and [244] scans a year performed without authorization and later denied. Assumption: the team prevents [60] percent of postponements and [70] percent of unauthorized scans, below the best results reported by other hospitals, because the evidence base is weak (Unit 4).

1. Unfilled slots: when a scan is postponed, the slot is refilled only about [40] percent of the time. Preventing [514] postponements avoids about [308] unfilled slots, at a contribution margin of about [$450]: [$139,000].

2. Patients lost to other providers: about [25] percent of postponed patients take their scan elsewhere. Preventing [514] postponements keeps about [128] scans: [$58,000].

3. Denials: of [171] unauthorized scans prevented, about [80] percent would have been approved if requested and are now paid, at about [$700]; the rest would not have been approved, and the hospital avoids only the variable cost of performing them, about [$150]: [$101,000].

Total annual benefit: about [$298,000]. A denied scan that the insurer would never have approved is not lost revenue; it is a cost avoided, and counting it at full price would double the case.

Net and Payback

Net annual benefit: about [$184,000] in the first year after start-up. Payback within about [five] months.

Sensitivity

If the team prevents only [30] percent of postponements and [35] percent of denials, the benefit falls to about [$148,000], still above cost. If the refill rate for postponed slots rises to [70] percent, the slot benefit falls by half. The case is positive in all scenarios tested but depends most on denial recovery.

Cash Flow by Quarter

Quarter 1: start-up and hiring, about [$36,000] in costs and little benefit while the team learns the portals. Quarter 2: about [$26,000] in costs and [$60,000] in benefit as the scheduling rule takes effect. Quarters 3 and 4: about [$26,000] in costs and [$75,000] in benefit each. The first quarter is the only one in which the team costs more than it returns.

What the Model Leaves Out

The model does not count patient goodwill, fewer complaints at the front desk or the time imaging staff now spend calming patients whose scans are postponed. It does not count possible gains in referrals from practices that find the hospital easier to work with. These omissions make the estimate cautious; adding them could only raise the benefit.

How the Committee Can Check It

Every input comes from a report the hospital already runs: postponements from the check-in reason code, denials from the weekly denial report, refill rates from the scheduling system and contribution margins from the cost accounting system. The finance analyst can rerun the model each month.

Costs Others Bear

Ordering offices will receive more requests to confirm approvals early. Practices already spend considerable staff time on insurer interactions (Casalino et al., 2009). The plan offsets this by having the hospital team check portals directly where agreements allow, reducing calls to practices.

The Option the Budget Rejected

An outside vendor offered authorization services at [$18] per scan, about [$70,000] a year for listed scans. It was rejected because the vendor would not use the hospital's denial report or referral relationships, and because vendor staff could not resolve problems with ordering offices in person. Its lower cost did not offset weaker control.

The Position Given Up

To fund the team without raising total headcount, the hospital will leave one vacant central scheduling position unfilled. Scheduling volume will be managed by moving routine imaging rescheduling to the new team.

External Factors

A 2024 federal rule requires some payers, including Medicare Advantage plans, to make standard authorization decisions within set timeframes starting in 2026 (89 Fed. Reg. 8758, 2024). Faster decisions should help the team. But decisions still take time; even for medications, only about a third of prescriptions initially rejected for authorization were processed within a day (Wang et al., 2026). The five-business-day lead time remains necessary.

Recommendation

Fund the two-person team and the scheduling safeguard for twelve months; at the midpoint, the finance committee should compare actual postponements, denials and refill rates with the assumptions above.

References

Casalino, L. P., Nicholson, S., Gans, D. N., Hammons, T., Morra, D., Karrison, T., & Levinson, W. (2009). What does it cost physician practices to interact with health insurance plans? Health Affairs, 28(4), w533-w543. https://doi.org/10.1377/hlthaff.28.4.w533

89 Fed. Reg. 8758 (2024). Medicare and Medicaid programs; patient protection and Affordable Care Act; advancing interoperability and improving prior authorization processes (final rule).

Wang, Y., Levy, J. F., Mattingly, T. J., & Anderson, G. (2026). Prior authorization and associated delays and denials of branded medication dispensation. JAMA Health Forum, 7(4), Article e260760. https://doi.org/10.1001/jamahealthforum.2026.0760