Question - Assume the following information about cost and charges for a hospital in 2014:

For the initial profit/loss calculation assume the volume of 15,000 inpatient days

Fixed Costs = $10,000,000

Variable cost per inpatient Day = $200

Revenue Per Inpatient Day = $1,000.

1. Calculate the hospital's profit and loss statement (assuming volume of 15,000 inpatient days)

2. Define and calculate the hospital's break even point?

3. Define the contribution margin? What is it's economic meaning?

4. What volume is required to provide a profit of $1 million?

5. What volume is required to provide a profit of $500,000?

6. Explain in general how break even points vary in a capitated vs. non-capitated environment.