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HEALTHCARE FINANCE/AN INTRODUCTION TO ACCOUNTING AND FINANCIAl MANAGEMENT 6TH EDITION, I NEED HELP WITH CHAPTER 7 PROBLEMS 7.4, 7.7, AND 7.9

7.4 7.4 Assume that Valley Forge Hospital has only the following three payer group:

The hospitals fixed costs are $38 million.

• What is the hospitals net income?

• Assume that half of the 100,000 covered lives in the commercial payer group will be moved into a capitated plan. All utilization and cost data remain the same. What PMPM rate will the hospital have to charge to retain their Part a net income?

• What overall net income would be produced if the admission rate of the capitated group were reduced from the commercial level by 10 percent?

• Assuming that the utilization reduction also occurs, what overall net income would be produced if the variable cost per admission for the capitated group were lowered to $2,200?

• 7.7 Consider the following data for a clinic laboratory:

• Using ABC techniques, determine the allocation rate for each activity

• Now, using this allocation rate, estimate the total cost of performing each test.

• Verify that the total annual costs aggregated from individual test costs equal the total annual cost of the laboratory given in the table above.

• 7.9 Consider the following data for a primary care practice that provides two types of services, A and B:

• Using ABC techniques, determine the allocation rate for each activity.

• Determine the costs per visit for each type of service

• Verify that the total annual costs aggregated from individual visit costs equal the total annual costs of the practice given in the table above.

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