Health service finance


You have been asked to establish a pricing structure for radiology on a per-procedure basis. Present budgetary data is presented below:

Budgeted Procedures 10,000

Budgeted Cost$400,000

Desired Profit $80,000

It is estimated that Medicare patients comprise 40 percent of total radiology volume and will pay on average $38.00 per procedure. Approximately 10 percent of the patients are cost payers. The remaining charge payers are summarized below:

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Payer Volume % Discount %
Blue Cross 20 4
Unity PPO 15 10
Kaiser 10 10
Self Pay 5 40

Assume that the only change in the original example data is that Blue Cross raises their discount to 20 percent. What price should be set?  (Points : 10)


Assume that a certain nursing home has two categories of payers. Medicaid pays $60.00 per day and private pay patients pay the established per diem, but approximately 10 percent of private-pay charges are not collected. If 50 percent of the patients are Medicaid and 50 percent are private pay, what rate must be set to generate $150,000 in profit? Variable costs are $45.00 per day and fixed costs are expected to be $1,000,000. Expected volume is 50,000 patient days.  (Points : 10)
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