### Valley Forge Hospital Payer AnalysisAssume that Valley Forge Hospital has only the following three payer groups:| Payer | Number of Admissions | Average Revenue per Admission | Variable Cost per Admission ||--------------------|----------------------|-------------------------------|-----------------------------|| **PennCare** | 1,000 | $5,000 | $3,000 || **Medicare** | 4,000 | $4,500 | $4,000 || **Commercial** | 8,000 | $7,000 | $2,500 |#### Fixed Costs- The hospital’s fixed costs are $38 million.#### Questions for Analysis1. **Net Income Impact from Reduced Admission Rate:** - If the admission rate for the capitated group (from part B above) were reduced from the commercial level by 10%, what would the overall net income be?2. **Net Income Impact from Reduced Variable Costs:** - For the same capitated group, assuming that utilization reduction also occurs, what would the overall net income be if the variable cost per admission were lowered to $2,200 from the original $2,500?---This analysis involves evaluating the financial outcomes of changing admission rates and variable costs for different payer categories, focusing on potential net income adjustments within the hospital's operational framework.

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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: 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)?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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please do them right. i will upvote.
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Can this be solved by hand, not excel and what are the formulas being used?