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Your facility has the following payer mix:

40% commercial insurances
25% Medicare insurance
15% Medicaid insurance
15% liability insurance
5% all others including self-pay

Suppose that for the time in problem you have 2000 cases in proportions. (What are the proportions of total cases for each payer?)
The average Medicare rate for each case is $6200- use this as the baseline. Commercial insurances average 110% of Medicare, Medicaid averages 65% of Medicare, Liability insurers average 200% of Medicare and the others average 100% of Medicare rates. (What are the individual reimbursement rates for all 5 payers?)

1. What are the anticipated rates of recompense for this time frame for each payer? What is your expected A/R?

2. What rate must you charge for such services (supposing one charge rate for all payers)? (This gives you your total A/R.) Compute the total charges for all cases based on this rate.

3. What is the differentiation between the two A/R rates above? Can you collect it from the patient? What takes place to the difference?

4. Which of these costs are fixed? Which are variable? Direct or indirect?

- Materials/supplies (gowns, drapes, bed sheets)
- Wages (nurses, technicians)
- Utility, building, usage exp (lights, heat, technology)
- Medications
- Licensing of facility
- Per Diem staff
- Insurances (malpractice, business etc.)

5. Evaluate the contribution margin for one case (in $) with the subsequent costs for this period, per case: a. materials/supplies: $2270 b. Wages: $2000 c. Building, Utility, usage exp: $1125 d. Insurances (malpractice, business etc.): $175

6. Using the above information, determine which is variable and which cost is fixed. Then compute the breakeven volume of cases in units for this period.

7. Assume you desire to make $150,000 profit between this period and subsequently period to fund an expansion to NICU, how many cases would you have to see? At what payer mix would this be optimal?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91596

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