Dr. Mallory practices at your hospital and your competitor. Presented below are

ID: 2709299 • Letter: D

Question

Dr. Mallory practices at your hospital and your competitor. Presented below are data

for DRG 469 (major joint and limb reattachments,(lower extremity) with MCC that reflects practice patterns

for Dr. Mallory at the two hospitals:

Your Hospital Competitor

____________________________________________________________

Discharges 150 90

Average age 68 50

Length of stay 4.4 4.1

Average cost $10,550 $7,108

Nursing cost 1,998 1,208

Ancillary cost 8,552 5,900

Operating room cost 2,405 2,158

Lab cost 836 484

Radiology cost 277 191

Medical Supplies cost 3,022 1,690

Pharmacy cost 857 335

Other costs 1,156 1,042

Question: What do you think accounts for the difference in costs between the two hospitals?

2. Activity:

Calculate the contribution margin per case based on the following information:

(a) Variable cost per case $2,000.

(b) Fixed cost per period $200,000.

Question: What do you think accounts for the difference in costs between the two hospitals?

The difference is due to efficiency of performance & Price Variance

2. Activity:

Calculate the contribution margin per case based on the following information:

(a) Variable cost per case $2,000.

(b) Fixed cost per period $200,000.

Contribution margin per case = Price per case - Variable cost per case

Contribution margin per case = 4800 - 2000

Contribution margin per case = $ 2800

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