Capital Investment Analysis Name Institution Instructor Course Date Capital Investment Analysis How Should The Analysis Incorporate The Cannibalization Of Inpatient Surgeries? Would The Handling Of Cannibalization Change If You Believed That The Local Physicians Were Going To Open An Outpatient Surgery Center Of Their Own? To incorporate the cannibalization of inpatient surgeries, the analysis should consider information on previous cash flow statements of the inpatient surgery unit. A comparison should then be undertaken between the cash flow statements of the inpatient surgery unit and the outpatient cash flows statements. This will provide information regarding the decline in cash inflows in the internal surgery unit and the increase in inflows in the outpatient unit. Comparisons of other important aspects can also be done which include the differences in the prices of the services provided by the two surgery units as well as the opening and closing times.
This information will help the management in developing recommendations to the inpatient surgery unit to increase its cash inflows. Some of the changes may include changing the price of services and increasing the period, which the inpatient unit provides its services. The handling of cannibalization would change if the local physicians opened an outpatient surgery center of their own. This would require the management to carry out a scenario analysis of the new surgical center, which would change the inpatient as well as the outpatient cash flow statements.
