MHA FPX 5014 Assessment 3 Cost-Benefit Analysis for Transitional Management Care

MHA FPX 5014 Assessment 3 Cost-Benefit Analysis for Transitional Management Car


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Capella university

MHA-FPX 5014 Health Care Quality, Risk, and Regulatory Compliance

Prof. Name



Transitional Care Management (TCM) refers to the patient’s transition from hospital discharge to continued care in the community. This study will conduct a cost-benefit analysis (CBA) to evaluate the costs and benefits of the TCM program, analyzing its benefit-to-risk ratio. The benefits and objectives of TCM in a hospital setting include reducing patient readmissions, improving the quality of care outside the hospital, ensuring continuity of care, and promoting long-term health for discharged patients (Elsener et al., 2023). The CBA will help determine the cost-effectiveness of TCM by identifying its anticipated costs over five years and comparing them with the projected benefits, aiding in making informed decisions (Elsener et al., 2023).

Keywords: Transitional Care Management, Cost-Benefit Analysis, Continuity of Care, Readmissions, Centers for Medicare and Medicaid Services

Focus of Stakeholders for a Cost-Benefit Analysis

Identifying stakeholders involved in TCM from a hospital setting is crucial. Key stakeholders include patients and their caregivers and the hospital discharging the patient. External stakeholders encompass pharmacists, transitional care center management, payors, and community service agencies. The hospital and stakeholders aim to assess how TCM implementation will benefit patients upon discharge and reduce readmissions against the program’s costs over five years.

Patients discharged under TCM will have designated caregivers or facilities ensuring seamless care and treatment continuity. Once in the community, external medical professionals will oversee patients to bridge the gap from inpatient to outpatient services. Additionally, hospitals adopting TCM can benefit financially from the Centers for Medicare and Medicaid Services (CMS) Hospital Readmission Reduction Program (HRRP), which rewards hospitals that reduce readmissions within 30 days of discharge (CMS, 2021).

Value Proposition for Change Management

Initiating change in healthcare organizations often presents challenges that necessitate systematic strategies for smooth transitions. Change management is essential for TCM implementation as it is a new concept for healthcare organizations, providers, patients, and staff. Effective change management requires administrative, financial, provider support, and team collaboration. It ensures a smooth transition for patients, caregivers, team members, and healthcare providers during TCM implementation.

Through community partnerships, change management in TCM will highlight the program’s benefits (Nathan et al., 2021). A well-managed change initiative will enhance the quality of patient care and satisfaction during hospital stays and upon discharge for both short-term and long-term care. Failure to utilize change management can result in prolonged transition times, increased long-term patient care costs, and suboptimal care, leading to higher readmission rates. Mitigated risks include lower mortality and infection rates, fewer emergency room visits, and reduced readmissions. Moreover, TCM will reduce costs by decreasing readmissions and improving financial incentives under the CMS HRRP program (Nathan et al., 2021).

Strategies to Influence and Impact Changes for Quality Improvement

Research indicates that poor communication and coordination significantly contribute to preventable hospital admissions and readmissions. Hospitals without TCM models often experience higher readmission rates, mortality rates, infection rates, and long-term illnesses due to inadequate patient coordination upon discharge. Lack of TCM also indicates insufficient patient education, self-care, family involvement, and communication with external caregivers (Racheal & Shen, 2023).

The success of TCM requires strong leadership and support. Active leaders provide oversight and direction, ensuring strategic momentum and accountability during TCM implementation. Key strategies for quality improvement under the TCM model include ample internal and external communication and coordination led by strong leadership. Follow-up care within 14 days of discharge is crucial to ensure proper patient care. Additionally, creating a culture of safety and continuous improvement is vital when implementing TCM (Hughes, 2008).

Cost-Benefit Analysis and Assumptions

A CBA is necessary to project the costs associated with implementing a TCM program. As TCM is a service-based care model, predicting the return on investment (ROI) can be challenging. Research highlights the immediate benefits and potential cost savings of TCM, such as fewer readmissions within 30 days of discharge, higher patient satisfaction, better communication, and improved continuity of care.

The first-year cost of initiating TCM is estimated at $774,688. This includes leasing 1,000 square feet of clinical and office space, staffing four full-time Certified Family Nurse Practitioners (CFNPs), hiring non-clinical staff for administrative tasks, and utilizing the EPIC electronic health record system. Additional costs include consulting fees for a pharmacist and MD/director oversight, and office supplies. Over five years, the total cost is projected to be $4,613,707.92. The revenue from the TCM program in one year is estimated at $5,086,144.40, with a five-year future valuation of $5,083,156.44. The total five-year profit is projected at $29,051,622.13 (Pedrosa et al., 2022).

Internal and External Benchmarks

Benchmarking is essential in healthcare to analyze income and costs and improve inefficiencies. It involves implementing best practices at the lowest costs from a systems-based perspective (SBP). Continuous quality improvement (CQI) requires measuring quality indicators, performance, and collaboration. Benchmarking in TCM involves comparing data to reduce 30-day hospital readmissions.

CMS’s TCM initiative aims to enhance patient safety, improve outcomes, and reduce unnecessary costs. The TCM program allows hospitals to document post-acute conditions within 30 days of discharge and monitor patient satisfaction. Implementing TCM reduces penalties by 50%, increasing hospital revenue. Improved benchmarks include better patient quality measures, reduced hospital-acquired conditions (HACs) and infections (HAIs), and incentivized value-based care (Marques et al., 2023).


Recent studies show that one in five Medicare patients are readmitted to the hospital within 30 days of discharge, costing nearly $26 billion annually. Implementing a TCM program enhances public relations and requires stakeholder buy-in both internally and externally. Collaboration between internal staff and external caregivers ensures better patient safety, satisfaction, and outcomes beyond the 30-day mark.


AAPC. (2022). CPT® code 99496 – Transitional Care Evaluation and Management Services – codify by AAPC. Retrieved April 12, 2022, from (2021, July). Transitional Care Management Services. Medicare Learning Network. Retrieved February 18, 2022, from

Elsener, M., Santana Felipes, R., Sege, J., Harmon, P., & Jafri, F. N. (2023). Telehealth-based transitional care management programme to improve access to care. BMJ Open Quality, 12(4).

MHA FPX 5014 Assessment 3 Cost-Benefit Analysis for Transitional Management Car

Hughes, R.G. (2008). Tools and Strategies for Quality Improvement and Patient Safety. In R.G. Hughes (Ed.), Patient Safety and Quality: An Evidence-Based Handbook for Nurses. Agency for Healthcare Research and Quality (US). Retrieved from

Jessica, R., Racheal, E., & Shen, W. (2023). Building a Financially Sustainable Transitional Care Management Workflow. Family Practice Management, 30(1), 18. Retrieved from

Marques, E. A., De Gendt, S., Pourtois, G., & van Setten, M.J. (2023). Benchmarking First-Principles Reaction Equilibrium Composition Prediction. Molecules, 28(9), 3649.

Nathan, A. S., Martinez, J. R., Giri, J., & Navathe, A. S. (2021). Observational study assessing changes in timing of readmissions around postdischarge day 30 associated with the introduction of the Hospital Readmissions Reduction Program. BMJ Quality & Safety, 30(6), 493-499.

Pedrosa, R., Ferreira, Ó., & Baixinho, C. L. (2022). Rehabilitation Nurse’s Perspective on Transitional Care: An Online Focus Group. Journal of Personalized Medicine, 12(4), 582.



The table below provides a detailed breakdown of costs for the current year and projections for the next five years. The categories include hospital TCM outpatient space, EMR provider contracting, clinical and non-clinical support staff, office supplies and IT support, pharmacist consultant, and MD/director leadership. Each category’s cost is listed per year, along with the total future and present value costs.


Current Year (CY)

CY +1

CY +2

CY +3

CY +4

CY +5

Total Costs

Hospital TCM Outpatient Space* $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00
EMR Provider Contracting** $12,000.00 $12,000.00 $12,000.00 $12,000.00 $12,360.00 $12,720.00
Clinical Support Staff, (4 CFNPs)* $492,688.00 $504,688.00 $516,688.00 $528,688.00 $540,688.00 $552,688.00
Non-Clinical Support Staff** $110,000.00 $112,500.00 $115,000.00 $118,000.00 $120,500.00 $123,000.00
Office Supplies and IT Support $12,000.00 $12,000.00 $12,000.00 $12,000.00 $12,000.00 $12,000.00
Pharmacist Consultant $45,000.00 $45,000.00 $45,000.00 $45,000.00 $45,000.00 $45,000.00
MD/Director Leadership $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00
Total Costs (Future Value) $771,688.00 $786,188.00 $800,688.00 $815,688.00 $830,548.00 $845,408.00
Total Costs (Present Value) $771,688.00 $770,772.55 $769,596.31 $768,641.02 $767,297.97 $765,712.07 $4,613,707.92


The table below outlines the benefits projected for the current year and the next five years. The benefits are categorized under HRRP 50% cost reduction, CPT 99495 (Moderate Complexity), and CPT 99496 (High Complexity). The total future and present value benefits are also calculated for each year.


Current Year (CY)

CY +1

CY +2

CY +3

CY +4

CY +5

Total Benefits
HRRP 50% Cost Reduction $384,475.66 $384,475.66 $384,475.66 $384,475.66 $384,475.66 $384,475.66
CPT 99495 (Mod) / $205.36 $1,996,099.20 $1,996,099.20 $1,996,099.20 $1,996,099.20 $1,996,099.20 $1,996,099.20
CPT 99496 (High) / $278.21 $2,704,201.20 $2,704,201.20 $2,704,201.20 $2,704,201.20 $2,704,201.20 $2,704,201.20
Total Benefits (Future Value) $5,084,776.06 $5,084,776.06 $5,084,776.06 $5,084,776.06 $5,084,776.06 $5,084,776.06
Total Benefits (Present Value) $5,084,776.06 $4,985,074.57 $4,887,328.01 $4,791,498.05 $4,697,547.11 $4,605,438.34 $29,051,662.13

Present Value Discount Rate

Present Value Discount Rate

PV Denominator
1.00 1.02
1.04 1.06
1.08 1.10

MHA FPX 5014 Assessment 3 Cost-Benefit Analysis for Transitional Management Car

Net Benefit

The overall net benefit is calculated using the present value of the costs and benefits over the specified period.

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