Question

what particular public health core functions might support the topic regarding break even analysis

Answer 1

THE THREE CORE PUBLIC HEALTH FUNCTIONS

And the Essential Public Health Services

1.)Assessment

Monitor health status to identify community health problems

Diagnose and investigate health problems and health hazards in the community

Evaluate effectiveness, accessibility, and quality of personal and population-based health services

2.)Policy Development

Develop policies and plans that support individual and community health efforts

Enforce laws and regulations that protect health and ensure safety

Research for new insights and innovative solutions to health problems

3.)Assurance :-

Link people to needed personal health services and assure the provision of

health care when otherwise unavailable

Assure a competent public health and personal health care workforce

Inform, educate, and empower people about health issues

Mobilize community partnerships to identify and solve health problems

The break even analysis come under the policy development core function of public health.

Break even analysis:-A break-even analysis is a financial tool which helps you to determine at what stage your company, or a new service or a product, will be profitable. In other words, it’s a financial calculation for determining the number of products or services a company should sell to cover its costs (particularly fixed costs). Break-even is a situation where you are neither making money nor losing money, but all your costs have been covered.

Components of Break Even Analysis

a.)Fixed costs

Fixed costs are also called as the overhead cost. These overhead costs occur after the decision to start an economic activity is taken and these costs are directly related to the level of production, but not the quantity of production. Fixed costs include (but are not limited to) interest, taxes, salaries, rent, depreciation costs, labour costs, energy costs etc. These costs are fixed no matter how much you sell.

b.)Variable costs

Variable costs are costs that will increase or decrease in direct relation to the production volume. These cost include cost of raw material, packaging cost, fuel and other costs that are directly related to the production.

Calculation of Break-Even Analysis

The basic formula for break-even analysis is driven by dividing the total fixed costs of production by the contribution per unit (price per unit less the variable costs).

* Contribution per unit= (selling price per unit)-(variable cost per unit)

*Break even poin in quality= (fixed cost)/ (contribution per unit)

The following case studies will elucidate the concept of break-even analysis.

CASE REPORTS

Case 1 A hospital is offering laparoscopic cholecystectomy at a package deal with a selling price ` 30,000/- per operation and the variable cost per operation comes out to be ` 20,000/-.

The annual fixed cost is ` 60,00,000/-. How many laparoscopic operation the hospital must do to come at BEP.Solution

Total xed cost = ` 60,00,000Unit

selling price = ` 30,000Unit

variable cost = ` 20,000Unit

contribution = unit selling price-unit variable = 30,000 – 20000 = 10,000

Therefore, BEP (units) = 60,00,000/10,000 = 600 numbers of laparoscopic operation.Thus, a minimum number of 600 operations must be done so that the hospital achieves breaks-even point.

Case2 An X-ray center has priced its X-ray test and report for ` 200/- each. The variable cost is ` 100/- per test.

The annual fixed cost is ` 2,00,000/-. Find out the number of X-ray tests to be performed per year for BEP to be achieved.

Solution:-Total fixed cost = ` 2,00,000Unit,. selling price = ` 200Unit

variable cost = ` 100

Therefore, BEP (units) = 200,000/(200-100) = 2000

Break even analysis used when:-

Starting a new business: If you wish to start a new business, a break-even analysis is a must. Not only it helps you in deciding, whether the idea of starting a new is viable, but it will force you to be realistic about the costs, as well as guide you about the pricing strategy.

Creating a new product: In the case of an existing business, you should still do a break-even analysis before launching a new product—particularly if such a product is going to add a significant expenditure.

Changing the business model: If you are about to the change your business model, like, switching from wholesale business to retail business, you should do a break-even analysis. The costs could change considerably and this will help you to figure out the selling prices need to change too.

Breakeven analysis is useful for the following reasons:

1.)It helps to determine remaining/unused capacity of the concern once the breakeven is reached. This will help to show the maximum profit on a particular product/service that can be generated.

2.)It helps to determine the impact on profit on changing to automation from manual (a fixed cost replaces a variable cost).

3.)It helps to determine the change in profits if the price of a product is altered.

4.)It helps to determine the amount of losses that could be sustained if there is a sales downturn.

Ways to monitor Break even point

a.)Pricing analysis: Minimize or eliminate the use of coupons or other price reductions offers, since such promotional strategies increase the breakeven point.

b.)Technology analysis: Implementing any technology that can enhance the business efficiency, thus increasing capacity with no extra cost.

c.)Cost analysis: Reviewing all fixed costs constantly to verify if any can be eliminated can surely help. Also, review the total variable costs to see if they can be eliminated. This analysis will increase the margin and reduce the breakeven point.

d.)Margin analysis: Push sales of the highest-margin (high contribution earning) items and pay close attention to product margins, thus reducing the breakeven point.

e.)Outsourcing: If an activity consists of a fixed cost, try to outsource such activity (whenever possible), which reduces the breakeven point.