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?