Financial Analysis And Sensitivity Evaluation Of Electronic Medical Record (EMR) Implementation In Healthcare Settings

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Financial Analysis and Sensitivity Evaluation of Electronic Medical Record (EMR) Implementation in Healthcare Settings What is Payback Period? Payback period is the time period in which the cost of the project is recovered through the cash generated / cost saved by the project. In simple words it can be understood as if we purchase a truck worth $100 to lease it out and get $40 every year. If we need to expense $15 every year for its insurance and operation, we find that every year we save $40 - $15 = $25. So, in four years we may get $100. So, the payback period of this project (truck) is 4 years. A longer payback period is better or a shorter? The shorter it is, the better it is from financial point of view. A shorter payback period ensures that we get our original investment back in a short period. What is ROI? ROI is Return on Investment. A return on investment is usually calculated as a % of net profit on the investment. Taking the example of the truck, we find that the ROI is $25 on an investment of $100, so it is 25%. It may also be presented in absolute dollar term , as $25 . What is NPV? NPV is known as net present value. We know that a dollar today in our hand is more than a dollar we have one year from now. This is because of the interest impact. If we keep the $ in bank for a year, we will get more than a dollar after one year. This is also known as time value of money.
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