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Question 1. Your hospital has been approached by a major HMO to perform all their MS-DRG 470 cases (major joint procedures). They have offered a flat price of $10,000 per case. You have reviewed your charges for MS-DRG 470 during the last year and found the following profile:
Average Charge $15,000
Average LOS 5 Days
Routine Charge $3,600
Cost/Charge 0.80
Variable Cost % 60
Operating Room 2,657
0.80
80
Anesthesiology 293
Lab 1,035
0.70
30
Radiology 345
0.75
50
Medical Supplies 4,524
0.50
90
Pharmacy 1,230
Other Ancillary 1,316
60
Total Ancillary $11,400
Question 2. In the above data set, assume that the hospital's cost to charge ratio is 0.80 for routine services and 0.75 for all other ancillary services. Using this information, what would the average cost of MS-DRG 470 be?
Question 3. A free-standing ambulatory care center averages $70 in charges per patient. Variable costs are approximately $12 per patient, and fixed costs are about $1.5 million per year. Using these data, how many patients must be seen each day, assuming a 365-day operation, to reach the break-even point?
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