Tulsa Memorial Hospital
Break-Even analysis

Introduction:
Tulsa Memorial Hospital (TMH), an acute care hospital with 300 beds and 160 staff physicians, is one of 75 hospitals owned and operated by Health Services of America, a for-profit, publicly owned company.
Although there are nine other acute care hospitals serving the same general population, TMH historically has been highly profitable because of its well-appointed facilities, fine medical staff, and reputation for quality care.
In addition to inpatient services, TMH operates an emergency department within the hospital complex, no appointment necessary, and charge between $ 60 and $ 200 per procedure.
Originally, (10 years ago) there were 15 acute care in the city, but none of them were making money. Now, only 11 are left, one of them located about two miles from the hospital.

Current TMH operational situation:
The center is handling a patient load of 45 visits a day, though it has the physical capacity to handle up to 85 visits a day and facing continues profit loss since 2013.

CEO Financial concern:
Brandon Harley, TMH chief executive officer, expressed his concern about the financial situation and proposed 3 outcomes for the center:
1) It could be closed; this will result in loss $ 37,500 lease cancellation penalty as per contract
2) It could continue to operate as its; with 45 patients per day and loss of $ 3,173
3) It could continue to operate, accompanied by the expanded marketing effort; with incremental costs (variable, semifixed salaries, and fixed costs).

* In reference to the TMH care center historical financial data, I would like to build on the data from Jan/Feb 2014, as it is the most recent and could give better estimate the future situation for many reasons, such recently closure of several clinics/centers and opening of new one.

* The Break-even point without new marketing: (figer.1) a) Per day; will be 20 additional visits, and total of 65 visits b) Per month; 600 additional visits, and total of 1,950 visits c) The estimated monthly profit will be $ 222

* The Break-even point with the new marketing (figure 2) a) Per day; will be 28 additional visits, and total of 73 visits b) Per month; 840 additional visits, and total of 2190 visits c) The estimated monthly profit will be $ 788

* The Break-even point with new program expanded marketing (figure 3); a) Per day; will be 25 additional visits, and total of 70 visits b) Per month; 750 additional visits, and total of 2,100 visits c) The estimated monthly profit will be $ 788

Conclusion: The TMH Center has a good chance of reaching the break-even point with just increasing the number of visits from 45 to 65 visits per day, however the marketing program and the expansion would results in higher profitability.

The Break-even point without new marketing: (figer.1)

The Break-even point with the new marketing (Figure 2)

The Break-even point with new program expanded marketing (figure 3):