Question

Assume your organization has 100 patients analyzed in the following manner.

15 Medicare patients who pay $2,000 per diagnosis

25 Medicaid patients who pay $1,800 per diagnosis

20 Managed Care patients who pay charges minus a 20% discount

10 Managed Care patients who pay charges minus a 25% discount

10 Private insurance patients who pay charges

10 Charity Patients who pay nothing

10 Bad debt patients who pay nothing

Assume those who pay charges will allow a maximum charge of $2,100. Calculate the amount of costs you will need to cut to break even.

PLEASE SHOW WORK

Answer 1

A	B	C	D	E	F	G	H
2
3		Maximum charge for patients who pays	$2,100
4
5		Number of patients	Type	Revenue per patient	Revenue
6		15	Medicare	$2,000	$30,000
7		25	Medicaid	$1,800	$45,000
8		20	Managed Care	$1,680	$33,600
9		10	Managed Care	$1,575	$15,750
10		10	Private Insurance	$2,100	$21,000
11		10	Charity	$0	$0
12		10	Bad Debt	$0	$0
13				Total	$145,350
14
15		At breakeven, the total costs equals the total revenue which leads to zero profit.
16
17		Total Cost at breakeven	=Total Revenue
18			$145,350	=F13
19
20		Hence Total Cost at breakeven	$145,350
21

Formula sheet

A	B	C	D	E	F	G	H
2
3		Maximum charge for patients who pays	2100
4
5		Number of patients	Type	Revenue per patient	Revenue
6		15	Medicare	2000	=C6*E6
7		25	Medicaid	1800	=C7*E7
8		20	Managed Care	=D3*(1-20%)	=C8*E8
9		10	Managed Care	=D3*(1-25%)	=C9*E9
10		10	Private Insurance	=D3	=C10*E10
11		10	Charity	0	=C11*E11
12		10	Bad Debt	0	=C12*E12
13				Total	=SUM(F6:F12)
14
15		At breakeven, the total costs equals the total revenue which leads to zero profit.
16
17		Total Cost at breakeven	=Total Revenue
18			=F13	=getformula(D18)
19
20		Hence Total Cost at breakeven	=D18
21