Reference no: EM131121888

1. An HMO has just proposed an offer to promote your facility as the region's "Center of Excellence" for obstetrical deliveries. The HMO covers 700,000 lives in the community served by your facility. The HMO has provided the following information for your consideration: the hospital cost for a normal uncomplicated delivery is $1,800 and for a complicated cesarean delivery is $3,500. Furthermore, the annual rate per 100,000 lives for a normal uncomplicated delivery is 6.0 while for a complicated Cesarean delivery is 1.5. The HMO proposes a capitated per member per month (PMPM) premium to the hospital to provide obstetrical services to their members. What would the break-even premium be?

2. You have acquired a new CT scanner at a cost of $750,000. You expect to perform 7,000 procedures per year over the estimated 5-year life of the scanner. Assuming no salvage value and an annual increase in replacement cost of 10 percent, what capital charge per procedure should the hospital levy to provide for replacement cost in the second year? (Ignore financing costs or investment income offsets.)

3. 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?

4. Revenues increased by 30 percent in your firm during the past year while total assets increased only 5 percent and Equity Financing Ratios remained constant at 50.0 percent. Return on Equity remained constant at 12.0 percent. Why didn't Return on Equity increase?

5. You have been asked to develop a capitation rate for a primary care group based on the following projections:

Service    Annual Frequency/1,000                      Cost per Service

Inpatient Visits                     100                       $7,000.00

Office Visits                           3,000                    $45.00

Lab/X-ray                             500                        $25.00

What per-member per-month (PMPM) rate would be required to break even, ignoring any copayments?

6. An HMO has a Point of Service (POS) option for its members, but will pay only 80 percent of approved charges. If a member goes out of network for a medical procedure with a charge of $2,000, of which $1,200 is approved, how much must the member pay?

7. During the year, Calabash Clinic made a $50,000 cash payment toward its bank loan which it had previously recorded; $40,000 was for principal, and $10,000 was to pay the full amount of interest due. How should this transaction be recorded (choose the best answer available)?

A. Decrease Cash by $50,000, increase Accounts Receivable by $40,000, and increase Prepaid Interest by $10,000
B. Decrease Cash by $50,000, decrease Notes Payable by $40,000, and decrease Equity by $10,000
C. Decrease Cash by $50,000, decrease Notes Payable by $40,000, and decrease Interest Liability by $10,000 As a general rule, there is no such thing as Interest Liability. Interest is usually simply an expense.
D. Decrease cash by $50,000, decrease Notes Payable by $40,000, and decrease Prepaid Interest by $10,000
E. Decrease Revenues by $50,000, decrease Accounts Receivable by $40,000, and decrease Interest Expense by $10,000

8. A High Deductible Health Plan with a Savings Option does not include the following?

A. first dollar payment for health services
B. a bank administered medical savings account.
C. Links to traditional health plans such as HMOs and PPOs
D. high deductibles