7.5. Bay Pines Medical Center estimates that a capitated population of50,000 would have the following base case utilization and total costcharacteristics:Service CategoryInpatient Days per1,000 EnrolleesAverage Costper DayGeneral150$1,500Surgical1251,800Psychiatric70700Alcohol/drug abuse38500Maternity421,500Total425$1.367In addition to medical costs, Bay Pines allocates 10 percent ofthe total premium (total capitated revenue) for administration/reserves.a. What is the PMPM rate that Bay Pines must set to cover medicalcosts plus administrative expenses?b. What would be the rate if a utilization management programwere to reduce utilization within each patient service category by10 percent? By 20 percent?c. Return to the initial base case utilization assumption. What ratewould be set if the average cost on each service were reduced by10 percent?d. Assume that both utilization and cost reductions were made.What would the premium be

Conclusion: The PMPM rate that Bay Pines must set depends on the specific utilization and cost…

Answered: 7.5. Bay Pines Medical Center estimates…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 5MAD

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Assume that Valley Forge Hospital has only the following three payer groups: Number of Average Revenue Payer Cost Admissions Admission PennCare $3,000 Medicare $4,000 Commercial $2,500 1,000 4,000 8,000 per Admission $5,000 $4,500 $7,000 Variable per The hospital's fixed costs are $38 million. c. What overall net income would be produced if the admission rate of the capitated group (from part B above) were reduced from the commercial level (originally listed as $2,500 total from above) by 10 percent? d. For this same capitated group, assuming that utilization reduction also occurs, what overall net income would be produced if the variable cost per admission for this same capitated group were lowered to $2,200 (from the original $2,500 listed above)?
Assume that Valley Forge Hospital has only the following three payer groups: Payer Number of Average Revenue Cost Admissions Admission PennCare $3,000 Medicare $4,000 Commercial $2,500 1,000 4,000 8,000 per Admission $5,000 $4,500 $7,000 Variable per The hospital's fixed costs are $38 million. a. Using the profit/loss format from our textbook and PowerPoints in this module, determine the hospital's net income, therefore showing your work to demonstrate how you got to the net income answer. b. Assume that half of the 100,000 covered lives in the commercial payer group (above) will be moved into a capitated plan. All utilization and cost data remain the same. What PMPM rate will the hospital have to charge to retain its Part A net income (what you calculated above)?
How to solve 4.5 parts a through d?
What is the value of the cost pool and allocation rate if patient service is used as cost driver and hours of housekeeping used as a cost driver? $100,000 in direct costs, $5 million in patient service revenues, & 5,000 hrs of housekeeping
H3. Sacramento Memorial Hospital has the following financial data and operational metrics: Number of beds--> 250 Total inpatient stays--> 12,250 Total outpatient visits--> 90,754 Total patient revenues--> $111,900,050 Outpatient mix--> 16.2% Medicare payment percentage(revenues)--> 28.0% Average length of stay--> 5.8 days Net price per discharge--> $7,653 Cost per discharge--> $6,292 f. What is the hospital’s occupancy rate? (Hint: Start by calculating available bed days.) Show proper step by step calculation
3. Determine common size expense and explain what the percentages mean. This is the Healthy Hospital, and the operating rooms are given. Operating Operating room 1 Room 2 24 $1,600,000.00 $850,000.00 Doctor Salary Nurse Salary Anesthesiologist $610,000.00 salary $750,000.00 $450,000.00 $780,000.00 $3 Technician $250,000.00 salary 10,000.00 ?????? ???????? ?????? ?????
Now assume that the additional patients will add $200,000 in total to theCenter’s fixed costs. Now what is the expected profit on 20 new patients?On 40 new patients? (No new fixed costs are required to support the secondgroup of 20 patients.)
In the cost formula, the term 12,000 a. is the variable rate. b. is the dependent variable. c. is the independent variable. d. is the intercept. e. cannot be determined from the above formula. Use the following information for Multiple-Choice Questions 3-4 through 3-7: The following cost formula was developed by using monthly data for a hospital. Total Cost = 128,000,000 + (12,000 Number of Patient Days)
In the cost formula, the term 128,000,000 a. is the total variable cost. b. is the dependent variable. c. is the variable rate. d. is the total fixed cost. e. cannot be determined from the above formula. Use the following information for Multiple-Choice Questions 3-4 through 3-7: The following cost formula was developed by using monthly data for a hospital. Total Cost = 128,000,000 + (12,000 Number of Patient Days)
7.2. The audiology department at Randall Clinic offers many services to the clinic's patients. The three most common, along with cost and utilization data, are as follows: Service Basic examination Advanced examination Therapy session Variable Cost Annual Direct Annual Number of Visits Fixed Costs 3,000 1,500 500 per Service $5 7 10 $50,000 30,000 40,000 a. What is the fee schedule for these services, assuming that the goal is to cover only variable and direct fixed costs? b. Assume that the audiology department is allocated $100,000 in total overhead by the clinic, and the department director has allocated $50,000 of this amount to the three services listed above. What is the fee schedule assuming that these overhead costs must be covered? (To answer this question, assume that the allocation of the $50,000 in overhead costs to each service is made on the basis of number of visits.) c. Assume that these services must make a combined profit of $25,000. Now what is the fee schedule? (To…
General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services Fixed $10,000,000 Variable cost per inpatient day 200 Charge (revenue) per inpatient day 1000 The hospital expects to have a patient load of 15,000 inpatient days next year. a. Construct the hospital’s base case projected P&L statement. b. What is the hospital’s breakeven point? c. What volume is required to provide a profit of $1,000,000? A profit of $500,000? d. Now, assume that 20 percent of the hospital’s inpatient days come from a managed care plan that requests a 25 percent discount from charges. Should the hospital agree to the discount proposal?
calculated the problem step by step . The following information relates to the wards in the cardiology department of Good Health Hospital for one accounting period Wards 1 2 3 Number of Beds 12 10 20 Total number of Patients 48 32 108 Total ward staff (excluding consultants) 8 8 12 Ward staff – full-time equivalent 5 4 6 Variable operating costs for period £58,000 £66,000 £98,000 Operating fixed costs £85,000 £67,000 £88,000 General overhead costs £40,000 £40,000 £40,000 General overhead costs are made up of recharges from support services. The total cost of £120,000 is split equally between the three wards. The hospital manager is concerned about the high costs of running the three heart-care wards. She has asked you to investigate their performance. Calculations must include: Patient (turnover) per bed, FTE Staff per bed & per patients, Variable Cost per bed & per patient and Fixed cost per…

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