Procedures and budgeted costs

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1. Your firm has $45.0 million invested in accounts receivable, which is 90 days of net revenues. If this value could be reduced to 50 days, what annual increase in income would your firm realize if the increase in cash could be invested at 7.5 percent?

2. Describe at least three ways a for-profit healthcare firm can increase equity. Include brief examples of each. Use the following information to answer questions 3, 4, and 5: 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: Payer Volume % Discount % Blue Cross 20 4 Unity 15 10 Kaiser 10 10 Self-Pay 5 40 50%

3. What rate must be set to generate the required $80,000 in profit in the preceding example?

4. If the forecasted volume increased to 12,000 procedures and budgeted costs increased to $440,000, while all other variables remained constant, what price should be established?

5. 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?

6. You wish to retire a $10,000,000 bond that can be called in 5 years for 110 percent of par value, or $11,000,000. You also need to make year-end interest payments of $700,000 per year in each of the next five years. If you can invest money at 8 percent, how much money must you set aside today to meet these obligations?

Reference no: EM13820865

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