Financial Analysis Archive
Calculate Demand Year One
 

It’s not easy to think about a whole year at a time, so instead, hospitals consider demand per day, and then they use that number to estimate the demand for the whole year (which is just the same demand repeated 365 times, or however many days the service will be offered). You can even break down the calculation further; instead of jumping directly from a day to a year, you can think about the daily demand and then determine the weekly demand from that, and then use the weekly demand to come to a yearly total.

Weekly Demand
So let’s start there. What is weekly demand? If you take the demand for each day of the week and add that all up, you get demand for the whole week. You’re usually not going to know enough to predict different levels of demand for different days; maybe weekends will be different than weekdays, for example, but that’s hard to know in advance. Instead, you typically have an estimate of the daily demand, and you’ll know how many days per week the hospital expects to offer a particular service, so using those numbers, you can figure out the demand for the whole week.

An Example – A Hospital’s New X-ray Machine
Imagine a hospital that is putting in a new X-ray machine. Experts have projected that the hospital will perform 50 procedures per day. The hospital thinks they’ll have the machine available 6 days per week. 50 procedures per day, multiplied by 6 days, gives you the weekly demand. Here’s what that looks like more formally:

Daily demand x number of days in operation = demand per week

50 procedures/day x 6 days/week = 300 patients/week

Annual Demand
Calculating annual demand works the same way. You take the demand each week, add it all up for the whole year, and you have the annual demand. Again, you’re probably not going to know enough to estimate the ups and downs of the demand each week, so you determine an average weekly demand and based on how many weeks out of the year the service will be provided. If you know the weekly demand, and if you know how many weeks out of the year the hospital will be offering the particular service, you can figure out the demand for the whole year.

An Example – The X-ray Machine
Let’s continue with the X-ray example. We just figured out that this hospital plans on performing 300 procedures per week with the X-ray machine. If the hospital plans to use the machine for 50 weeks out of the year, that’s 300 procedures per week, multiplied by 50 weeks, for the annual demand. In other words:

Weekly demand x number of weeks in operation during the year= demand per year

300 procedures/week x 50 weeks out of the year= 15,000 procedures/year

So, this X-ray machine would be expected to perform 15,000 procedures per year. That’s your annual demand.