Financial modeling in medicine: cash flow, basic metrics, the time value of money, discount rates, and internal rate of return.
In this article, the authors cover tools for financial modeling. Commonly used time lines and cash flow diagrams are discussed. Commonly used but limited terms such as payback and breakeven are introduced. The important topics of the time value of money and discount rates are introduced to lay the foundation for their use in modeling and in more advanced metrics such as the internal rate of return. Finally, the authors broach the more sophisticated topic of net present value.
Lexa
Frank James
FJ
Department of Marketing, Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104, USA. lexa@wharton.upenn.edu
Berlin
Jonathan W
JW
D002017:Budgets; D003363:Cost Control; D005249:Fees and Charges; D005376:Financial Management / Q000191:economics / Q000379:methods*; D007449:Investments; D008962:Models, Theoretical; D011871:Radiology / Q000191:economics / Q000458:organization & administration; D012051:Reimbursement Mechanisms; D040841:Resource Allocation; D014481:United States