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The document contains a detailed case analysis of new ambulatory surgery center being
considered by Coral Bay Hospital to treat the increasing number outpatient and restrict decline
in hospital profitability due to fall in inpatient flow. Project has been considered by incorporating
detailed assumptions and also after taking into account the impact of loss of inpatient due to
diversion towards outpatient center. Evaluation is based on four critical parameters NPV, IRR,
MIRR and Payback. Base assumptions have been also tested by conducting sensitivity analysis
around cost of capital and cost and revenue inflation. Also evaluation has been made based on
three different scenarios viz. base case, optimistic case and pessimistic case. Variables
considered for change in scenario analysis are number of procedures per day, net patient
revenue per procedure, building and equipment salvage value and cost of capital. Project
riskiness has also been evaluated based on risk-adjusted NPV and margin of safety assumed
based on break-even analysis under base case assumptions. The output reveals that the
project is very risky based on very high coefficient of variation and thin line of gap between
break-even output and base case assumptions. Lastly, the project is also evaluated on certain
qualitative factors such as competition. Based on base case assumptions and output final
decision has been made that the project is viable and should be considered for execution.
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