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You are a newly hired operations manager within Simi Regional Hospital. Prior to your arrival, based on customer feedback, the executive leadership team has developed interest in the purchase, installation, and employment of a new radiology service line. Using a planning process to define a new radiology service line, a decision is being requested, but leadership feels they do not have a complete answer to proceed. Bear in mind that a decision matrix gave the new radiology service line a high priority.

Administrators want to evaluate its financial feasibility, but, as the newest member of the team, they first want to hear your input. Estimated fixed costs are $1 million, and the estimated net reimbursement level is $1,500 per procedure. Physicians and other provider salaries on a direct basis are $340 per procedure, and total operating expenses will add another $160 per procedure. Calculate the breakeven point for this potential new service line.

If Simi Regional discovered a way to reduce the total initial investment to $600,000, causing the average pricing level to fall to $1,200 and the other assumptions to stay the same, how many procedures would be required to break even?
Assuming that the hospital conservatively estimates that it can deliver 1,000 procedures in the first year, which option should be chosen? Is it financially feasible to purchase, install, and employ the new radiology line? Or should the new radiology service be cancelled?
Using the breakeven analysis, and your own research on the proposal, provide a written recommendation to the executive leadership team and the Board of Directors the benefit (or lack thereof) of proceeding with the purchase and further developing the service line for Simi Regional Hospital.

Sample Solution

Additionally, I wanted to control the interview too much with continuously asking questions, thus not giving time to the interviewee to elaborate more on some topics. This could be considered to be an improper way to conduct an interview since an interview is regarded to be a collaboration of the interviewer and interviewee (Weiss, 1994). The transcription also shed light on which questions worked and which were not that successful. These insights benefit that the researcher gains from the first few interviews (Luker, 2008). For example, it turned out that questions regarding family contacting habits proved to be too general. To address the weaknesses of the first interviews, I worked on the improvement of both questions and interviewing style. To tackle the dilemma of too general questions and the resulting obscure answers on the central topic, I followed Weiss’s (1994) guidance on how to obtain more detailed responses. In the topic of family contacting habits, I focused more on asking for the explanation of specific incidents, like “Could you walk me through the last time you contacted your family, just what happened?” rather than asking for generalised descriptions, which work better for the topics which are not in the centre of the study, such as introduction or ‘cooling down’ questions (Weiss, 1994). I was also interested in revealing the emotional dimension of communication. Weiss’s (1994) points on helping the interviewees develop information on internal events contributed to my success in this mission. Asking about the feelings in certain situations, like “And how do you feel when you video chat them?” allowed me to gain entry to this dimension. Thus, applying these ideas not only strengthened the quality of the responses but also developed my interviewing style. Furthermore, during my third and fourth interviews, I paid particular attention to wait for full responses and to avoid self-reporting as much as possible. While preparing for these interviews, I memorized the most relevant questions. This strategy enabled me to concentrate more on the interviewee during the interview and be more flexible on the questions.

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