Dear staff: This is Yu.zhou. May anybody who is good at the Health Care Organiza
ID: 2337822 • Letter: D
Question
Dear staff:
This is Yu.zhou. May anybody who is good at the Health Care Organization Finance class help me with the problem below. I would like to have clear steps on how to get to the answer. Thank you, sincerely.
Assume your organization has 100 patients analyzed in the following manner:
15 Medicare patients, who pay $2,000 per diagnosis
25 Medicaid patients, who pay $1,800 per diagnosis
20 managed care patients, who pay charges minus a 20% discount.
10 managed care patients, who pay charges minus a 25% discount.
10 private insurance patients, who pay charges
10 charity care patients, who pay nothing
10 bad debt patients, who pay nothing.
Your organization's average cost per patient is $2,000. Calculate the charge necessary to recover your cost.(Answer on back of the textbook:$3,731)
Using the data from the self-quiz problem on cost shifting, assume those who pay charges will allow a maximum charge of $2,100. Calculate the amount of costs you will need to cut to break even.(Answer on back of the textbook:$54,650)
Explanation / Answer
Total cost = $2,000 * 100 = $200,000
Let charges be x
Total Revenue -
Medicare patients = 15 * $2,000 = $30,000
Medicaid patients = 25 * $1,800 = $45,000
Managed care patients = 20 * 0.8x = 16x
Managed care patients = 10 * 0.75x = 7.5x
Private insurance patients = 10 * x = 10x
Charity care patients = 10 * 0 = $0
Bad debts patients = 10 * 0 = $0
Total revenue = $30,000 + $45,000 + 16x + 7.5x + 10x
$200,000 = $75,000 + 33.3x
33.3x = $125,000
x = $125,000 / 33.5
x = $3,731
Hence, the charges are $3,731
If charges are $2,100
Then total revenue = $75,000 + (33.5 * $2,100)
Total revenue = $75,000 + $70,350 = $145,350
Cost that needs to be cut = $200,000 - $145,350 = $54,650
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.