Question

Using the example attached, solved the following problem: Medicare and Medicaid presently accourt for O% of the vo kame. The hospital wishes to red ce its dependence on Overnment iyers Assure hir Meda evolu ne se od io 0 sto sad Media volume is reduced to 90 patients. The volume from managed-care plan rises to 320 patients from 300. The volume from managed care plan 82 increases to T10 patients Thus, total velume is unchanged at L000 visits. What is the new price necessary assuming all other factors are unchanged For the following four problems, start with the price-setting example from the text. The initial assumptions are provided in the table below. Total cost $100,000 Total volume 1,000 Average cost $100 Payer volumes 400 Medicare (payment rate -$95) Medicaid (payment rate $75) Managed Care 1 (payment rate $110) Managed Care i 2 (pay 80% of charges) 300 100 Uninsured(pay 10% of eharges)--1000 Total all payers 1,000 Desired net income $5,000 O A. 200 。B.210 ○ C.275 OD.uechanged Hesnt Selection

Answer 1

Solution

Step 1: Find the new price

Price = Average cost + (Required net income + loss of fee scheduled payers / Volume of charge payers) / 1- Average discount on charged payers

Average cost = $100

Required net income = $5000

Loss of fee scheduled payers = 950

Volume of charge payers = 210 (100 +110)

Average discount on charged payers = 53.33% = 0.5333332

Step 2:

By substituting on the above formula

Price = 100 + (5000 + 950) / 210 / 1-0.5333332

= 100 + (5950 /210) / 0.4667

= 100 +28.33 /0.4667

= 128.33 / 0.4667

= 274.97

= $ 275

Step 3:

Therefore the new price is $275. Hence the option C. 275 is correct.