Part I: Market size calculation: Determine the size of the market for the ECRHS product or service you are recommending. Assume East Chestnut Regional Health is located in the market in which you live or work. Visit the University Library Consumer Demographics page.

Market Estimation and Pro-forma Income Statement

Healthcare economics has the market demand at its center. There is a need to calculate the projected income to establish the influence of the organization’s finances and marketing plans held by the organizations. Notably, this is established in this paper. In addition, a break-even analysis is performed to determine the number of clients that should be served to break even. Finally, various market considerations important for healthcare organizations are discussed.

Part I: Market Size Calculation

The market size for East Chesnut Regional Health (ECRHS) Women’s Health Services is estimated using the U.S. Census Demographics and Case Study analysis. Notably, the initial step in determining the market size entails determining the market share of ECRHS using the case study and then explaining it based on local concepts. That is the case when the service provider offers services in a different market. The next undertaking in determining the market size was establishing the number of beds in the possessed Northern Mountain Hospital Consortium (NMHC). Essentially, 400 physicians are employed by ECRHS in its system, with most of them being posted in the Chestnut County operations. Notably, this means that the other locations served by the service provider are under the remaining 165 physicians. The Archway Hospital (A.H.) and ERMC, which the 165 physicians serve, have 750 registered beds. It is established that there would be 402 beds for every three physicians, assuming the same physicians-to-bed ratio for the rest of the system.

In gross, it means ECRHS’s system has 1102 beds. A 73% market share is established for ECRHS, considering that the rest of the market has 400 beds. Based on census findings, the approximate number of women aged above 65 is 554,434 in Wisconsin. Notably, this figure obtained from the U.S. Census Bureau Demographics formed a basis to answer the Women’s Health Services question. A total of 404,737 market size is established by taking 73% of the established market share of 554,434.

Part II: Breakeven Analysis

The calculation of the fixed and variable costs of service provision is based on different aspects. Regarding the fixed costs, the amount established relates to the new office capital expenditure meant to expand the capacity in the existing facility for offering services to women. Notably, this is a one-time cost that is totaling to $500,000. Regarding the variable costs, three expenses inform the variable expenses. They include supplies used for every office visit, estimated to be $5, the office staff per patient visit of $20 per office visit of 15 minutes, and the physician cost for every 15-minute office visit of $60. Notably, when the three expenses are added, a total variable of $85 per client visit is established. The established price per client visit is $150. Notably, the breakeven units will indicate the price and number of units sold at this price. As calculated above, the breakeven units are 7,693 office client visits. Additionally, these break-even units represent the number of visits required to cover fixed and variable costs.

Part III: Pro Forma Income Statement