In: Finance
Assume that Valley Forge Hospital has only the following three payer groups:
Payer |
Number of Average Admissions |
Revenue per Admission |
Variable Cost per Admission |
PennCare |
1,000 |
$5,000 |
$3,000 |
Medicare |
4,000 |
4,500 |
4,000 |
Commericial |
8,000 |
7,000 |
2,500 |
The hospital’s fixed costs are $38 million:
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?