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Break Even Analysis Paper

Katlyn Kiger

Bellevue University

BHMC 413: Fiscal Management

Professor Eric Ewing

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Introduction

Understanding the importance of break-even analysis in the catheterization lab is

imperative to staying afloat and financially stable. There is a ton of equipment needed to perform

catheterization lab procedures but the piece of equipment that will be discussed is the

catheterization packs that are used for each case.

Break Even Analysis Tactics

A break-even analysis is a financial calculation that weighs the costs of a new business,

service or product against the unit sell price to determine the point at which you will break even.

This tactic reveals the point at which companies will have sold enough units to cover all costs. At

that point, companies will have neither lost money nor made a profit. A break-even analysis is a

financial calculation used to determine a company’s break-even point (BEP). It is an internal

management tool, not a computation, that is normally shared with outsiders such as investors or

regulators. The formula considers both fixed and variable costs relative to unit price and profit.

Fixed costs are those that remain the same no matter how much product or service is sold.

Examples of fixed costs include facility rent or mortgage, equipment costs, salaries, interest paid

on capital, property taxes and insurance premiums (Ali, 2022).

Cath Packs

Catheterization packs contain specialty items. Custom packs are very useful because they

provide one package, housing many consumable items. Typically, there is a packing fee

associated with most of the items included in the packaging; therefore, the determination of

whether it is more cost beneficial to take an item off the shelf and drop it on the table, versus

having it in the pack, needs to be made. For instance, an 18-gauge, 7-cm percutaneous needle
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may cost $2 on its own. To have this needle available in a custom pack, a packing fee of about $5

would be applied, which is then added to the cost of the pack. By not having the needle in the

pack, a cost saving of $3 (per pack) could be accomplished. Depending on the number of

procedures a facility performs, these cost savings can be quite significant. For example: 7000

procedures (annually) x $3 = $21,000 in expense reduction. Decisions relating to other items can

be made in the same way, potentially adding to the total cost savings. There are multiple pieces

of equipment just like the percutaneous needle (Holloway, 2006). Some other examples that are

put into a pack in order to save money are prep sticks, towels, bowls, other needles, syringes,

waste buckets, and many different things. In the provided chart it shows the profit made on the

needle in the cath pack compared to the packs made.

Organizational Analysis
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0

Profit Packs Made

Conclusion

In conclusion understanding break even analysis is important and a way that

catheterization labs understand and provide that feedback are putting together their

catheterization packs so that because of the quantity of cases done provides significant profit and

savings in the area of break-even analysis and cath packs used.

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References

Ali, R. (2022, September). Oracle . Retrieved from What Is Break-Even Analysis and How to

Calculate It for Your Business?:

https://www.netsuite.com/portal/resource/articles/financial-management/break-even-

analysis.shtml#:~:text=A%20break%2Deven%20analysis%20is,cover%20all%20of

%20your%20costs.

Holloway, D. (2006, November ). Cath Lab Digest . Retrieved from Cath Lab Expense/Cost

Process Improvements:

https://www.hmpgloballearningnetwork.com/site/cathlab/articles/cath-lab-expensecost-

process-improvements

Ross, T. (n.d.). Health Care Finance .