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Your hospital has been approached by a major HMO to perform all their MSDRG 505 cases (foot surgeries). They have offered a flat payment of $8,000 per case. You have reviewed your charges for MSDRG 505 during the last year and found the following profile:
Average Charge: $11,300
Average LOS: 4.5 Days
Cost/Charge
Variable Cost %
Routine Charge
$3,200
0.75
65
Operating Room
1,850
0.70
80
Anesthesiology
210
75
Lab
575
0.65
40
Radiology
275
50
Medical Supplies
3,220
0.60
85
Pharmacy
955
0.55
Other Ancillary
1,015
55
Total Ancillary
$8,100
Estimate the total variable cost (i.e., including both routine and ancillary) per MSDRG 505 using the departmental cost/charge ratios and variable cost percentages. (Your answer might be slightly different due to rounding. Pick the closest.)
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