The hospital’s fixed costs are $38 million:What is the hospital’s net income?Assume that half of the 100,000 covered lives in the commercial payer group 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 their Part a net income?What overall net income would be produced if the admission rate of the capitated group were reduced from the commercial level by 10 percent?Assuming that the utilization reduction also occurs, what overall net income would be produced if the variable cost per admission for the capitated group were lowered to $2,200?

To sum up, the financial evaluation of the hospital's activities offers insightful information about…

Answered: The hospital’s fixed costs are $38…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 5CE: Keating Hospital is considering two different low-field MRI systems: the Clearlook System and the...

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The hospital’s fixed costs are $38 million:

What is the hospital’s net income?
Assume that half of the 100,000 covered lives in the commercial payer group 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 their Part a net income?
What overall net income would be produced if the admission rate of the capitated group were reduced from the commercial level by 10 percent?

Assuming that the utilization reduction also occurs, what overall net income would be produced if the variable cost per admission for the capitated group were lowered to $2,200?

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