Question

1. Reimbursement Methods

A. A hospital admits 525 patients per month who stay an average of five (5.0) days per admission. This hospital charges $12,000 per admission and incurs $7,100 in costs ($4,000 fixed and $3,100 variable) per patient. Assume all patients are reimbursed under the same reimbursement method, complete the table and calculate net income for the hospital under each reimbursement method.

            A.         80% of Charges:

            B.         Cost:

            C.         $1,550 per diem:

            D.         $7,250 per case:

            E.         $195 capitation (per member per month): assume the number of covered lives is 15,000.

                                                Charge             Cost                 Per Diem          Per Case          Capitation

Total Revenue                        $ _______ _______ _______ _______ _______

Less: Contractual discounts    _______ _______ _______ _______ _______

Net Revenue                             _______ _______ _______ _______ _______

Less: Expenses                                    _______ _______ _______ _______ _______

Net Income                               $          _______ _______ _______ _______ _______

Calculate the expected net income for a hospital with the following patient mix:

80% of Charges: 95 admissions per month (18.1%)

Cost: 26 admissions per month (5.0%)

$1,550 per diem: 53 admissions per month (10.1%)

$7,250 per case: 262 admissions per month (49.9%)

$190 capitation (per member per month): 79 admissions per month (15.0%)

assume the number of covered lives is 2,250

No pay: 10 admissions per month (1.9%)

please explain how you got this answer

Answer 1

A) Reimbursement Methods

Reimbursement method	Capitation	Charge	Cost	Per diem	Per Case
$195 Capitation	80% of charges	Actual cost$7100	$1,550 per diem	$7,250 per case
Total Revenue	6,300,000	6,300,000	6,300,000	6,300,000	6,300,000
Less Contractual discounts	102,375	5,040,000	3,727,500	4,068,750	3,806,250
Net revenue	6,197,625	1,260,000	2,572,500	2,231,250	2,493,750
Less Expenses	3,727,500	3,727,500	-	3,727,500	3,727,500
Net Income	2,470,125	(2,467,500)	1,155,000	(1,496,250)	(1,233,750)

B. Calculate the expectednet income for the hospital with the following mix

Reimbursement methods	Capitation	charge	Cost	Per diem	Per Case	No Pay
$190 Capitation	80% of charges	Actual cost$7100	$1,550 per diem	$7,250 per case	0
No of Patients	79	95	26	53	262	10
Total Revenue	948,000	1,140,000	312,000	636,000	3,144,000	120,000
Less Contractual discounts	15,010	912,000	184,600	82,150	1,899,500	-
Net revenue	932,990	228,000	127,400	553,850	1,244,500	120,000
Less Expenses	560,900	674,500	184,600	376,300	1,860,200	71000
Net Income	372,090	(446,500)	(57,200)	177,550	(615,700)	49,000