Economics and Decision Making in Health Care-Developing a Business Case

Healthcare and business are intercepting fields, as discussed in the previous assignment. Businesses can succeed or fail due to internal and external factors affecting their existence. These include financial factors, ethics, competition, and internal and external policies. Healthcare leaders often start businesses to last for a long time; thus, projecting a business to understand factors such as feasibility and sustainability is vital. Understanding a business’s opportunities and risks is essential for financial planning.

Economics and Decision Making in Health Care-Developing a Business Case

The proposed obesity and overnight management service line will manage patients and accommodate patients with different types of needs, hence interchangeably using the name fitness center. This essay evaluates the opportunities and risk factors associated with the new business line, a fitness training center, within the next five years.

Economic Opportunities and Risks Associated with the Proposed Initiative

The hospital is located in a region with few modern fitness centers. A tour of these fitness facilities shows that they are few and lack extensive facilities for fitness training. They mainly focus on bodybuilding, thus serving a specific population of bodybuilders. Rivera-Torres et al. (2019) note that the elderly and the sick are unwelcome in many fitness centers due to their many needs, allowing the proposed service line to fill the gap. The hospital will offer services to its patients, referrals from other hospitals, and walk-in clients from the community, increasing its revenue collection. Turkina (2018) states that sound networking systems are vital in entrepreneurship and key to a business’s success.

Technology has infiltrated many fields, including fitness, and the shift to digital resources such as classes and exercise simulations can help improve the field (Anderson et al., 2022). Technology and digital resources are opportunities that the new line can utilize to reach a wider population. The center will also be located around the hospital, making it manageable for healthcare organization leaders. These opportunities will help reduce the economic costs associated with the proposed fitness center.

Some of the risks to the fitness center is competition from online education facilities growing in the fitness industry. According to Anderson et al. (2022), individuals opt for online training because they train in the comfort of their homes, and the lessons are cheaper than going to fitness centers. The industry was negatively affected by COVID-19, leading to the developments discussed.

According to Sayed et al. (2020), a negative perception of the fitness industry has developed gradually during the COVID-19 period. The negative perception increased exponentially after corona, and people often fear fitness centers, primarily due to fear of disease transmission. The negative perception has dramatically reduced the number of gym attendants, and the industry is still struggling to regain its regular operation. The situation has forced most fitness centers to engage in other businesses and others to close because they cannot keep up with the market and technological changes (Sayed et al., 2020). Most fitness centers face hidden economic risks, including member liability and accident losses.

Disasters and lawsuits are risks that can threaten the existence or continuity of a business. ­According to Tafoya (2020), more than 60% of businesses are underinsured, and most of these businesses (almost 100%) dissolve when disasters occur. A fitness center is an expensive service line, and financial setbacks from a disaster are difficult to recover without insurance coverage. It can cost a fitness center more than $ 100,000 for a modern fitness center to recover after a disaster strikes causing damage to it. Fitness training centers, especially those dealing with sick and weak individuals, are prone to injuries, the leading being treadmill injuries with an average cost of $250000 (Eickhoff-Shemek, 2020).

Individuals fall or cause injuries when using the machines at a much higher rate than in the hospital or other environments ((Eickhoff-Shemek, 2020)). The higher risks are due to their health and involvement in an activity. Member liability losses such as sexual and physical assault lawsuits may be undervalued but can cost the business a fortune, affecting the business’ existence within five years. Disaster and lawsuits associated with fitness centers can lead to a business dissolution after suffering a significant loss.

Despite the economic risks described above, the opportunities way overpower the risks. These risks are manageable, and the opportunities place the proposed new service line in a position able to mitigate the risks and promote better outcomes for the population. The economic activity selected has both positive economic and clinical outcomes for the patients. Thus, the business will likely be sustainable in the future.

Propose Ethical and Culturally Sensitive Solutions

The most significant risks to the healthcare organization are lawsuits and the increased negative attitude toward physical fitness centers. As identified earlier, health fitness centers are at more risk for injuries due to physical activity and health conditions. Even healthy people are at more risk due to the heavy and moving machines.

The increased negative attitude towards fitness centers can be managed by forming allies with other surrounding private and public hospitals to refer their patients to the facility. Most hospitals do not have these elaborate facilities, and forming allies with the public and private hospitals can help solve the problem. In addition, investing in digital resources will help promote the relevance of the new service line.

Digital resources such as online resources also act as marketing platforms and can help increase the familiarity of the program. Developing a solid marketing strategy that includes billboards, posters, and electronic and social media will increase the population’s knowledge of the gym and the number of people visiting the fitness center (Rangaswamy et al., 2020).

Research on all significant fitness centers, national and international results, and expert reviews, the fitness industry has been adversely affected by COVID-19. The number of customers has increased, but the physical fields remain deserted due to the shift to digital resources. According to Anderson et al. (2022), the online industry has grown exponentially over the years, and the growth is expected to rise by over 200% in the next five years. Many organizations have invested in gym equipment which they sell to customers. Others have invested in simulations that give customers the desired experiences in the comfort of their homes (Du et al., 2021).

Besides, trainers record lessons and air them live on social media platforms, increasing access to these resources. Some have extended their services and have formed alliances with local stations where they air exercises and train people at their homes (Anderson et al., 2022). These practices have increased their competitiveness and compensated for the decrease in customers walking in to access their services. Lawsuits and similar losses are cushioned against by developing policies and insuring the institutions. Policies help prevent misconduct related to lawsuits.

Ethics and Care Quality

Networking, marketing, and digital resources are the solutions discussed above. These resources will increase the quality of care and help mitigate risks by ensuring clients can access resources in the comfort of their homes. The initiatives will give individuals who can afford equipment more advantages, such as lower costs, but will also increase access to individuals who cannot afford this equipment.

The proposed intervention does not pose any problem to any population. The center serves the population without placing any risk on any population in the community. Thus, the proposed solutions will increase population coverage and service quality and help serve populations without discrimination.

Health Fitness Center and Health Care Delivery Outcomes

Healthcare institutions focus on promoting the health of populations. Health directly affects productivity and the economic level of a nation. The health fitness center will not only promote the health of populations but also rehabilitate their health. Individuals suffering from morbidities such as hemiplegia, loss of function, fractures, contractures, and mobility issues will receive health training to regain their function and improve their quality of life.

The fitness center will thus improve the community’s productivity while bringing revenue to the healthcare facility. Making money while promoting facilities’ health care delivery and outcomes makes the new service line an excellent economic growth opportunity. The facility will receive more rehabilitation patients than an average health fitness center. Most of these individuals are vulnerable to diseases is thus a priority. Keeping the patients safe through practices such as

New Service Line Cost-Benefit Analysis Results

A cost-benefit analysis is vital for any business. The costs of this business, as explained in the table in the appendix, are relatively high. The fitness center is modern with a wide selection of equipment, many trainers, a simulation development team, and an online coaching team. Other costs include paying planners and authorities to get all relevant licenses from various boards, such as the health board (Andersson, Lundgren, & Berg, 2022). The investment will require a huge startup capital and an additional amount for electronic and social media marketing. Human resources or trainers also pose a high cost to the service line.

Andersson, Lundgren, and Berg (2022) note that the annual costs for the gym’s membership will be $800 for rehabilitation clients and $600 for the rest of the population. The three scholars explore the process of developing a fitness center, its implications, and the associated costs. The fitness center will have a capacity of 800 individuals at any one time (an extensive facility) and targets about 6,000 members each year, amounting to about $4000000 of revenue from gym membership each year.

The digital classes will have a limitless capacity with a target of over 10,000 attendees, each paying $300 annually. These numbers are expected to rise exponentially after the marketing and establishing its base. Online simulations are expensive to develop, and thus they sell at a higher price. The initial costs of the gym will be relatively high, but the revenues expected from the gym are high, making the new service line a viable idea. No profit might be realized in the first year of operation due to the high initial costs, but the profits will begin to set in within the second year.

The costs of simulations can increase the costs of the fitness center by over a million. The development, approval, and dissemination process of developing simulations is way too high, especially when factors such as quality and safety and considered. These costs create an alarm and create the need to cut costs and ensure the feasibility and sustainability of the program. These financial costs should be evaluated against the institution’s financial ability for feasibility and reduced costs to prevent overspending on the service line.

Ethical and Equitable Ways of Keeping the Costs under Control

The costs that can be reduced include equipment and human resources. There are various ways to reduce these costs. Getting donations and taking loans from commercial lending institutions ensure quality service delivery of the original plan without eliminating these services (Baker & Judge, 2020). In addition, reducing the volume of the three service offerings can reduce the prices. Purchasing simulations at the beginning instead of developing one will save the institutions a lot of costs. Purchasing fewer but quality resources (including human resources) is another strategy for reducing costs.

Cutting these costs can negatively affect business operations. Reducing the number of staff and equipment will reduce the business’s capacity to deliver quality and safe services. The strategies that could help maintain the service line’s benefits include increasing the trainers’ shifts and hiring the most qualified staff to handle the clients. The quality of the staff goes a long way toward enhancing the productivity and quality of care a business offers its clients

Costs are essential for any business, but there are important considerations to ensure ethical and equitable care. The costs should be cut from items that aren’t urgent. The costs cut will be attention to maintaining high-quality care and client safety. For example, fewer treadmills (20 instead of 35) and weights can be bought instead of the planned quantity (35) but of poor quality at a lower price. The cost reductions will thus cut across the three offerings: physical and online classes and simulation resources. Such considerations will thus be ethical and equitable.


The obesity and overweight management service line will serve as a fitness center for many clients and offer physical and online classes. The business will maximize digital resources given the risks of physical businesses and the potential for the rise in online business. The initial costs are high, but the proceeds from the business will cater to the costs hence the feasibility and sustainability of the business. Securing loans or grants and reducing the fitness center’s equipment and human resources will reduce the costs while maintaining the maximum benefits of the business.


  • Anderson, D. J., Bo, H. H., Zhao, T. T., & Zhang, J. J. (2022). The Digital Fitness Industry in the United States. The Digital Transformation of the Fitness Sector: A Global Perspective (pp. 67–72). Emerald Publishing Limited.
  • Andersson, S., Lundgren, A., & Berg, E. (2022). Digital Marketing Strategies for Startups in the Fitness Industry: A research paper providing a clear picture of how startups in the fitness industry should allocate their resources to achieve the most output.
  • Baker, T. H., & Judge, K. (2020). How to help small businesses survive COVID-19. Columbia Law and Economics Working Paper, (620).
  • Du, X., & Deng, J. (2021, December). Design and exploration of digital fitness equipment based on the Internet of Things. Second International Conference on Industrial IoT, Big Data, and Supply Chain (Vol. 12128, pp. 23-28). SPIE.
  • Eickhoff-Shemek, J. M. (2020). Top five reasons to make fitness safety priority no. 1. ACSM’s Health & Fitness Journal24(1), 37-38.
  • Rangaswamy, A., Moch, N., Felten, C., Van Bruggen, G., Wieringa, J. E., & Wirtz, J. (2020). The role of marketing in digital business platforms. Journal of Interactive Marketing51, 72-90.
  • Rivera-Torres, S., Fahey, T. D., & Rivera, M. A. (2019). Adherence to exercise programs in older adults: informative report. Gerontology and geriatric medicine5, 2333721418823604.
  • Sayed, M. A., Walsh, K., & Sheikh, Z. (2020). COVID-19 and the rise of the full ‘Fitness’ friction burn. Burns46(7), 1717.
  • Tafoya, D. W. (2020). Crisis, Catastrophe, and disaster in organizations. Springer Books.
  • Turkina, E. (2018). The importance of networking to entrepreneurship: Montreal’s artificial intelligence cluster and its born-global firm element AI. Journal of Small Business & Entrepreneurship30(1), 1–8.


Costs Benefits
Item Total Price (estimated for the first year) Item Total Price (Estimated annually)
Facility building and finishing- making it fit for a gym $1,000,000 Online classes target 10,000 online members, each $300 annually $3,000,000
Registration fee and logistics $1000 Physical members, targeting 6,000 each contributing $600-$800 annually $4200000
Marketing $3000 Hiring a personal trainer for $1000 annually (It is estimated that 400 patients will need a personal trainer) $400000
Human resources (trainers, managers, cleaners, etc.) $4000000    
Gym equipment (treadmills, weights, cable, lever, smith machines, uniform, etc.) $1000000    
Maintenance (cleaning, spraying, inspections, etc.) $1000    
Business website $1000    
Startup expenses (stationery, electricity, water, etc.) $1000    
CCTV and other security details $5000    
Insurance $50,000    
Total $6,062,000   $7,600,000

Assessment 2 Instructions: Developing a Business Case

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Bottom of Form

Develop a 4-7-page business case for the initiative you proposed in Assessment 1. Examine feasibility and cost-benefit considerations over a 5-year period, analyze ways to mitigate risks, and complete a cost-benefit analysis.


Note: Each assessment in this course builds upon the work you have completed in previous assessments. Therefore, you must complete the assessments in the order in which they are presented.

As a master’s-level health care practitioner, you are expected to consider a number of factors when analyzing the feasibility of a new initiative. For example, you must consider the various types of risk (such as patient safety, physical plant, financial, or reputation), as well as the present and future value of the service line or economic opportunity in which you are investing. You must also balance your ethical and moral responsibility to provide quality care to patients and populations with your responsibility to protect your organization’s assets and economic viability in the near and long terms.


Develop a business case for the economic initiative you proposed in Assessment 1. Examine the feasibility and cost-benefit considerations of implementing your proposed initiative over the next five years. Analyze ways to mitigate risks and complete a cost-benefit analysis.

The requirements for your business case, outlined below, correspond to the scoring guide criteria, so be sure to address each main point. Read the performance-level descriptions for each criterion to see how your work will be assessed. In addition, be sure to note the requirements for document format and length and for supporting evidence.

    • Analyze the potential economic opportunities and risks associated with your proposed initiative.
      • How do the potential opportunities benefit your organization or care setting?
      • How could potential risks pose a threat to the financial security of your organization or care setting?
      • How do the potential economic opportunities compare to the potential economic risks?
    • Propose ethical and culturally sensitive solutions that address the risks associated with your initiative to the future economic security of your organization or care setting.
      • Which risks are potentially the most significant for your organization or care setting?
        • How could you modify your proposed initiative to mitigate those risks?
        • How have other organizations and experts in the field dealt with similar risks?
      • How do ethics and equality factor into your proposed solutions?
        • Are your solutions unfairly burdening or disadvantaging any specific groups?
      • How will this proposal affect community health care delivery outcomes?
        • What makes this a great opportunity for economic growth?
        • What potential issues should be considered?
    • Analyze the economic costs and benefits of your proposed initiative over a five-year period.
      • Use the Cost-Benefit Analysis Template [XLSX] for your calculations. Add the worksheet to your business case as an appendix.
      • Does your analysis warn against specific aspects of your proposed initiative?
      • How would you recommend that your findings be incorporated into decisions about the feasibility of your proposed initiative?
    • Propose ethical and culturally equitable ways of keeping costs under control, while maximizing the benefits of your initiative.
      • What costs are you most likely to be able to control or reduce?
        • How would you go about ensuring this?
      • How could controlling or reducing these costs affect the benefits of your proposed initiative?
        • What strategies could you employ to maintain or maximize these benefits, while controlling or reducing costs?
      • How do you plan to ensure that any cost controls or benefit reductions are ethical and equitable?
    • Justify the relevance and significance of the quantitative and qualitative economic, financial, and scholarly evidence you used to support your business case.
      • This criterion applies to any evidence you cited throughout your business case. Your evidence should be persuasive and relevant to your findings, proposals, and recommendations. Consider one or more of the following questions when citing support evidence:
        • How is the evidence relevant to your organization or care setting?
        • How is the evidence relevant to your proposed economic initiative?
        • How does the evidence illustrate a solution that has been successful in the past?
        • How does the evidence illustrate that an initiative or solution is likely to be a net benefit to the organization or care setting?
    • Write concisely and directly, using active voice.
      • Proofread your document before you submit it to minimize errors that could distract readers and make it more difficult for them to focus on the substance of your business case.
    • Apply current APA formatting to in-text citations and references.

Example Assessment: You may use the following to give you an idea of what a Proficient or higher rating on the scoring guide would look like:


Your assessment should also meet the following requirements:

    • Format: Format your business case using APA current style. Use the APA Style Paper Tutorial [DOCX] to help you in writing and formatting your business case. Be sure to include:
      • A title page and references page. An abstract is not required.
      • A running head on all pages.
      • Appropriate section headings.
    • Length: Your business case should be 4–7 pages in length, not including the title page and references page.
    • Supporting evidence: Cite 4–5 authoritative and scholarly resources to support your business case. Be sure that your sources include specific economic data.

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment scoring guide criteria:

    • Competency 1: Analyze the effects of financial and economic factors (such as cost-benefit, supply and demand, return on investment, and risks) in a health care system on patient care, services offered, and organizational structures and operation.
      • Analyze the potential economic opportunities and risks associated with a proposed initiative.
      • Analyze the economic costs and benefits of a proposed initiative over a five-year period.
    • Competency 2: Develop ethical and culturally equitable solutions to economic problems within a health care organization in an effort to improve the quality of care and services offered.
      • Propose ethical and culturally equitable ways of keeping costs under control, while maximizing the benefits of an initiative.
    • Competency 3: Justify the qualitative and quantitative information used to guide economic decision making to stakeholders and colleagues.
      • Justify the relevance and significance of the quantitative and qualitative economic, financial, and scholarly evidence used to support a business case.
    • Competency 4: Develop ethical and culturally equitable economic strategies to address dynamic environmental forces and ensure the future security of an organization’s resources and its ability to provide quality care.
      • Propose ethical and culturally sensitive solutions that address the risks associated with an initiative to the future economic security of the organization or care setting.
    • Competency 5: Produce clear, coherent, and professional written work, in accordance with Capella writing standards.
      • Write concisely and directly using active voice.
      • Apply APA formatting to in-text citations and references.