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hospital breakeven analysis
The zipped folder has a word document and an excel file supporting it
You are the administrator of a pediatric out-patient clinic. You were asked to calculate the number of patients that need to be seen on a daily basis, assuming a 360-day operation, to reach the break-even point.
The center charges on average $50 per patient. Variable costs are $20 per patient, and fixed costs are $1,296,000 per year. Calculate the break-even point in patient days.
Now suppose that the variable cost per patient remains the same; however the fixed cost increases to $1,449,900 per year. Assuming a 365-day operation, what is the new number of patients that need to be seen on a daily basis to reach the break-even point?
Your hospital is going to sign a capitation contract with an HMO for 2010-2011. You are attempting to develop a break-even for this contract.
You were provided with the following information:
- The hospital committed to provide inpatient hospital services for 15,000 lives covered under the contract.
- The hospital will receive $ 40 per member per month (PMPM) to cover all inpatient services.
- It is anticipated that 100 admissions per 1000 covered lives will be provided with an average length of stay equal to 6.0, or 600 days per 1000.
- It is estimated that your hospital will incur a fixed cost of $2,000,000 for these 10,000 lives. Variable costs per patient day are expected to be $600.
Calculate the break-even point in patient days under this contract.
Now suppose that fixed costs remains the same, but the variable cost per patient day is $700. What is the new break-even point? Please interpret and explain.
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