--%>

Healthcare Finance Issues

Question 1

A. What per visit price must be set for the service to break even? To earn an annual profit of $100,000?

(10,000 * 5.00 - $500,000 - 50,000 = 0

(10,000 * 5.00) -$50,000=0

10,000 = $600,000

600,000 + 10,000 = $60.00 per visit break even

600,000 + 100,000=700,000

700,000/10,000=$70 per visit for annual profit of $100,000

B. Repeat part a, but assume that the variable cost per visit is $10.00.

10,000 * 10.00 - $5000,00 - $50,000 =0

10,000*10.00=500,000 -50,000=0

10,000* *10.00=650,000.00

650,000.00 +10,000=$65.00 Break Even Point

650,000.00+100,000.00=750,000.00

750,000.00/10,000.00=$75.00 per visit for annual profit

C. Again repeat part a,but assume that direct fixed costs are$1,000,000.

(10,000.00 * 5.00) - 1,000,000.00 -50,000.00

10,000.00*5.00=1,000,000.00-50,000.00=0

10,000.00*5.00=1,100,000.00

1,100,000.00/10,000.00=$110.00 per visit

1,100,000+100,000=1,200,000.00/10,000.00 =$120,00 per visit for annual profit

D. Repeat Part a assuming both $10..00 in variable costs and $1,000,000 in direct fixed costs.

(10,000.00*10.00)-1,000,000.00-50,000=0

10,000.00*10.00=1,000,000.00-50,000=0

10,000*10.00=1,150,000.00

1,150,000/10,000.00=$115.00 per visit breakeven point

1,150,000.00 +100,000.00=1,250,000.00

1,250,000.00/10,000=$125.00 per visit for annual profit

Question 2:

A. What is the fee schedule for these services, assuming that the goal is to cover only variable and direct fixed costs/

Basic Examination

(3,000*Price) ($5*3,000)-$50,000=$0

3,000*Price=$65,000

Price=$65,000/3,000=$22.00

Advanced Examination

(1,500*Price) ($7*1,500)-$30,000=$0

(1,500*Price)-$40,500

Price=$40,5000/1,500=$27.00

Therapy Session

(500*Price)-(10*500)-40,000

(500*Price)-$45,000

Price=$45,000/500=$90.00

B. What is the fee schedule assuming that these overhead costs must be covered?

Basic Examination

(3,000*Price) ($5.00* 3000)-$50,000 - $50,000=$0

(3,000*Price)-$115,000=$0

3,000 * Price=$115,000

Price=$115,000/3,000=$38.00

Advanced Examination

(1,500*Price) ($7*1,500)-50,000-30,000

(1,500*Price)-$90,500=$0

(1,5000 *Price=$90,500

Price=$90,000/1,500=$60.00

Therapy Session

(500*Price)($10*500)-$50,000-$40,000

(500*Price)-$95,000=$0

Question 3:

As a starting point, what is the price of the combined test assuming marginal cost pricing/

A. Test A                                  Test B                 Test C

$3.00                           $3.00                  $3.00

1.00                               1.00                    1.00

.15                                   .15                       .15

.80                                   .60                    1.20

.10                                   .10                      .10

.05                                   .05                      .05

5.10 Total                       4.90 Total           $5.50 Total

B.

Test A $10+5.10=$15.10

Test B $10+4.90=$14.90

Test C $10+5.50=$15.50

C. 

2,000 Test

40,000.00 Overhead

Test A

2,000*5.10=10,200.00

10,000.00+40,000=50,200.00

50,200.00/2,000=$25.10

Test B

2,000*4.90=9,800.00

9,800.00+40,000=49,800.00

49,800.00/2,000=$24.90

Test C

2,000*5.50=11,000.00

11,000.00+40,000=51,000

51,000.00/2,000=$25.50

A. What is the hospitals net income?

Payer                #of Admissions   Avg. Rev   Per Admissions      Rev.By Payer  VC per Adm Total VC.         Contribution Margin

PennCare           1,000      $5,000           $5,000,000.00           3,000           3,000,000.00                2,000,000.00

Medicare            4,000       4,500           18,000,000.00            4,000           16,000,000.00              2,000,000.00

Commercial        8,000    7,000              56,000,000.00            2,500           20,000,000.00              36,000,000.00

Total                13,000   16,500,000.00   79,000,000.00            9,500          39,000,000,00              40,000,000.00

Total Revenues $79,000,000.00

B.Assume that half of the 100,000 covered lives in the commercial payer group will be moved into a capitated plan. What Pmpm rate will the hospital have to charge to retain its Part a net income?

   Related Questions in Finance Basics

  • Q : Define the term Surplus Define the term

    Define the term Surplus: It is an outdated term for a fund’s excess of assets (or resources) over liabilities.

  • Q : Growth rate of its real GDP Normal 0

    Normal 0 false false

  • Q : Depict the slope of the line Normal 0

    Normal 0 false false

  • Q : Describe matching principle of working

    Describe matching principle of working capital financing? Explain the benefits of following this principle? The matching principle is while short-term financing is utilized for temporary current assets while long-term financing is utilized for

  • Q : What is Uniform Codes Manual Uniform

    Uniform Codes Manual (UCM): It is a document sustained by the Department of Finance that sets standards for codes and different other information employed in state fiscal reporting systems. Such codes recognize, for illustration, prog

  • Q : Define the term Chapter Chapter : The

    Chapter: The reference allotted by the Secretary of State to an enacted bill, numbered in sequence in order of enactment each calendar year. The enacted bill is then termed to by this "chapter" number and the year in which it became law. For illustrat

  • Q : For banking services how competitive is

    For banking services how competitive is the market?Along with more than 7,000 banks and thrifts in the U.S., banking is one of the most competitive industries in the world. Assume the following characteristics of the American financial services

  • Q : Meaning of invisible hand Normal 0

    Normal 0 false false

  • Q : Define Subcommittee Subcommittee : The

    Subcommittee: The smaller groupings into which the Senate or Assembly committees are frequently divided. For illustration, the fiscal committees which hear the Budget Bill are classified into subcommittees usually by departments or subject area (examp

  • Q : Describe primary reasons that companies

    Describe primary reasons that companies hold cash? Companies hold cash to make essential payments, to take benefit of opportunities as they arise, and to cover unforeseen emergencies.