EBK HEALTHCARE FINANCE: AN INTRODUCTIO
6th Edition
ISBN: 9781567938111
Author: Gapenski
Publisher: VST
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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?
Problem 1c: Consider the following information for Rosebud Lane Hospital. The number of admissions for the year are expected to equal 1000, but could vary from 750 to 1250. Rosebud's fee-for-service is $2,000 under a prospective payment system. Under a capitation reimbursement system, Rosebud must cover 1000 patients at a capitation payment of $2,000. Rosebud's annual fixed costs are $500,000 and it variable cost per admission is $1,500.
1c. Calculate Rosebud's net profit under the Fee For Service Reimbursement method if admissions are 1250. (Answer to the nearest dollar. Do not include the dollar sign in your answer.)
1d. Calculate Rosebud's net profit under Capitation if admissions are 1250. (Answer to the nearest dollar. Do not include the dollar sign in your answer.)
Assume that the manager of the rehabilitation department of Getwell Hospital is setting the price on a new outpatient service for electrical stimulation of muscles. Here are the relevant data estimates:
Variable cost per visit: $15.00
Annual direct fixed costs: $650,000
Annual overhead allocation: $75,000
Expected annual visits: 8,000
What price per visit must be set for the service to breakeven?
Chapter 5 Solutions
EBK HEALTHCARE FINANCE: AN INTRODUCTIO
Ch. 5.1 - Prob. 1.1STQCh. 5.1 - Prob. 1.2STQCh. 5.1 - Prob. 1.3STQCh. 5.1 - Prob. 2.1STQCh. 5.1 - Prob. 2.2STQCh. 5.1 - Prob. 2.3STQCh. 5.1 - Prob. 2.4STQCh. 5 - Prob. 1.1STQCh. 5 - Prob. 1.2STQCh. 5 - Prob. 2.1STQ
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