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General Hospital is introducing a new service that anticipates having 550 patient visits per year at...

General Hospital is introducing a new service that anticipates having 550 patient visits per year at an average cost per visit of $2,250 and average billed charges per visit of $4,400. Determine the amount of gross revenue, contractual deductions, net patient revenue, total costs, and net operating income that would result for both Medicare and Medicaid. Must show all work and calculations.

Payor Class Number of pt visits Payment /case Gross Revenue Contractual Deductions Net Pt Revenue Total Costs Net Operating Income

Medicare 350 $2,050

Medicaid 200 $1,650

Expert Solution

Answer : Below is the calculation showing amount of gross revenue, contractual deductions, net patient revenue, total costs, and net operating income that would result for both Medicare and Medicaid

For Medicare :

Gross Revenue = Number of Pts visit * Average Billed charges

= 350 * 4400

= 1,540,000

Contractual Deduction = Net revenue - Gross Revenue

= 717500 - 1,540,000

= -822,500

Net Revenue = Number of Pts visit * Payment / case

= 350 * 2050

= 717500

Total Costs = Number of Pts visit * Cost per visit

= 350 * 2250

= 787500

Net operating Income / loss =Net Revenue - Total Cost

= 717500 - 787500

= -70000

For Medicaid :

Gross Revenue = Number of Pts visit * Average Billed charges

= 200 * 4400

= 880,000

Contractual Deduction = Net revenue - Gross Revenue

= 330,000 - 880,000

= -550,000

Net Revenue = Number of Pts visit * Payment / case

= 200 * 1650

= 330,000

Total Costs = Number of Pts visit * Cost per visit

= 200 * 2250

= 450,000

Net operating Income / loss =Net Revenue - Total Cost

= 330,000 - 450,000

= -120,000

jeff jeffy answered 2 years ago

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