Reference no: EM132473936

Assume that LIU Healthcare has the following cost structure

Fixed Costs $625,000

Variable Cost per procedure $42.50

Average revenue (charge) per procedure $130

Assume the group expects to perform 3,500 procedures during the coming year 3,500

a) Construct LIU Healthcare's base case projected P&L statement

b) What is LIU Healthcare's contribution margin?

c) What is the breakeven point using CM?

d) How many procedures must the practice do to make a $55,000 profit?

e) Now assume that the practice contracts with one HMO, and the plan proposes a 30% discount from charges on 15% of its patients.

Should the hospital accept the discount? YOU MUST SHOW PROFIT & LOSS STATEMENTS AND CONTRIBUTION MARGINS FOR BOTH SCENARIOS