# How much is the net revenue per procedure for each payer, and how much is the contractual allowance per procedure for each payer?

As a follow-up to the previous Practice Exercise, new assumptions are as follows:

1. Your unit’s gross charges for the period to date amount to \$200,000. 2. The uniform gross charge for each procedure in your unit is \$100. 487 488 3. The unit receives revenue from four major payers. The number of procedures performed for the period totals 2,000. Of that total, the number of procedures per payer (stated as a percentage) is as follows: Payer 1 = 30% Payer 2 = 40% Payer 3 = 20% Payer 4 = 10% 4. The following contractual payment arrangements are in effect for the current period. The percentage of the gross charge that is currently paid by each payer is as follows: Payer 1 = 80% [Medicare] Payer 2 = 70% [Commercial managed care plans] Payer 3 = 50% [Medicaid] Payer 4 = 90% [Self-pay] Q: How many procedures are attributed to each payer? Q: How much is the net revenue per procedure for each payer, and how much is the contractual allowance per procedure for each payer? Q: How much is the total net revenue for each payer, and how much is the total contractual allowance for each payer?

Assignment Exercise 13–4.1: Forecast Capacity Levels

Review the information in Exhibit 13–1. The exhibit assumes three chairs and one 40-hour RN, for a realistic capacity level of seven patients infused per day. Required

Prepare another Infusion Center Capacity Level Forecast as follows:

Assume the same three infusion chairs, but add another nurse for either four or six hours per day. How would this change the daily capacity level for number of patients infused per day? Assignment Exercise 13–4.2 Required

Prepare another Infusion Center Capacity Level Forecast as follows:

Increase the number of infusion chairs to four, and add another nurse for either four or six hours per day. How would this change the daily capacity level for number of patients infused per day?

Assignment Exercise 14–2: Cumulative Inflation Factor for Comparable Data

Review Table 14–3 and the accompanying text. Assumptions

Two hospitals report their annual projected revenue for five years to the local newspaper for a story on the area’s future economic outlook. However, Hospital 1 has applied a cumulative inflation factor of 5% per year while Hospital 2 has not applied any inflation factor. Thus the information is not properly comparable.

Projected Revenue

Year 1

Year 2

Year 3

Year 4

Year 5

Hospital 1

\$20,000,000

\$22,500,000

\$27,500,000

\$27,500,000

\$30,000,000

Hospital 2

\$20,000,000

\$21,000,000

\$25,000,000

\$24,000,000

\$26,000,000 Required

Revise Hospital 2’s projections by applying a cumulative inflation factor of 5% per year. Assignment Exercise 14–3

The head of your department is a prominent researcher. A health research foundation has asked him travel to London to give an important speech at a conference. He will then travel to Paris to tour a research facility before returning home. Although his travel expenses are being funded by the foundation, he will still need to take along some personal money. Consequently, he asks you to figure the exchange rates for \$500 and for \$1,000 in both pounds and euros. He explains that he is trying to judge the spending power of U.S. dollars when converted to the other currencies so he can decide how much personal money to take on the trip. 489 490 Required

Locate the current exchange rates for pounds and euros and compute the currency conversion for \$500 and for \$1,000.

Assignment Exercise 14–4: The Discovery

The Chief Financial Officer at Sample General Hospital has just discovered that the hospital’s Chief of the Medical Staff’s son Jason, a student at the local community college, is paid \$100 per week year-round for grounds maintenance at the hospital’s Outpatient Center.

The CFO, no fan of the Chief of Medical Staff, now wants you to prepare a report that compares the relative costs of lawn care at each of three locations: the hospital itself, the outpatient center, and the hospital-affiliated nursing home down the block. Required

Review the available information for grounds maintenance at the three facilities. Decide how to convert this information into comparable data. Then prepare a report, based on your assumptions, that presents comparable costs of grounds care. Also provide your assessment of what the best future course of action should be. Relevant Information

So far you have assembled the following information. Now you need to decide how it can be converted into comparable data.

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