General hospital a not-for-profit acute care facility has, Ask an Expert

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General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services: Fixed costs: $10,000,000; Variable cost per inpatient day $200; Charge (revenue) per inpatient da $1,000. The hospital expects to have a patient load of 15,000 inpatient days next year.

a. Construct the hospital's base case projected P&L statement.

b. What is the hospital's breakeven point?

c. What volume is required to provide a profit of $1,000,000? A profit of $500,000?

d. Now assume that 20% of the hospital's inpatient days come from a managed care plan that wants a 25% discount from charges. Should the hospital agree to the discount proposal?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91669275

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