HEALTHCARE FINANCE

Assignment Details
Your facility has the following payer mix:

40% commercial insurances
25% Medicare insurance
15% Medicaid insurance
15% liability insurance
5% all others, including self-pay

Write a 3–4-page report that addresses the following requirements:

Assume that for the time in question, you have 2,000 cases in the proportions above.

What are the proportions of the total cases for each payer?

The average Medicare rate for each case is $6,200. Use this as the baseline. Commercial insurances average      110% of Medicare, Medicaid averages 65% of Medicare, liability insurers average 200% of Medicare, and the others average 100% of Medicare rates.

What are the individual reimbursement rates for all 5 payers?
What are the expected rates of reimbursement for this time frame for each payer? What is your expected       A/R?
What rate should you charge for these services (assuming one charge rate for all payers)? (This gives you       your total A/R.)

Calculate the total charges for all cases based on this rate.

What is the difference between the two A/R rates above? Can you collect it from the patient? What happens to       the difference?
Which of the following costs are fixed, which are variable, and which are direct or indirect:

Materials/supplies (gowns, drapes, bedsheets)
Wages (nurses, technicians)
Utility, building, usage exp (lights, heat, technology)
Medications
Licensing of facility
Per diem staff
Insurances (malpractice, business, and so on)

Calculate the contribution margin for one case (in $) with the following costs for this period, per case

Materials/supplies: $2,270 
Wages: $2,000 
Utility, building, usage exp: $1,125 
Insurances (malpractice, business, and so on): $175

Using the above information, determine which is fixed and which cost is variable. Then, calculate the       breakeven volume of cases in units for this period.
Suppose you want to make $150,000 profit between this period and next period to fund an expansion to the       NICU. How many cases would you have to see? At what payer mix would this be optimal?