WEEK 4 AAPLICATION-General Hospital a not-for-profit acute care facility, has the following cost structure…..

Home Blog WEEK 4 AAPLICATION-General Hospital a not-for-profit acute care facility, has the following cost structure…..

WEEK 4 AAPLICATION-General Hospital a not-for-profit acute care facility, has the following cost structure…..

1. General Hospital a not-for-profit acute care facility, has the following cost structure for its inpatient services.

Fixed costs $10,000,000
Variable cost per inpatient day $ 200
Charge (revenue)per inpatient day $ 1,000

The hospital expects to have a patient load of 15,000 inpatient days next year.

a. Construct the hospital’s base case projected P&L statement.

b. What is the hospital’s breakeven point

c. What volume is required to provide a profit of $1,000,000? A profit of $500,000?

d. Assume 20% of the hospital’s inpatient days come from a managed care plan that wants a 25% discount from charges. Should the hospital agree to the discount proposal?

2. You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows:

Revenues (10,000) visits $400,000
Wages and benefits $220,000
Rent $ 5,000
Depreciation $ 30,000
Utilities $ 2,500
Medical supplies $ 50,000
Administrative supplies $ 10,000

Assume that all costs are fixed, except supply costs, which are variable. Furthermore, assume that the clinic must pay taxes at a 30% rate.

a. Construct the clinic’s projected P&L statement.

b. What number of visits is required to breakeven?

c. What number of visits is required to provide you with an after tax profit of $100,000?



Add comment

Academic Research Pro