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Question - St. Elsewhere is preparing to open a 30-bed med/surg unit later this year. The established cost center will be 1001, with a designated internal name "Inpatient".
The unit will specialize in cardiac rehabilitative services and follow an interdisciplinary model of care specializes in that management CHF patients across the continuum of care. The goal of the program will be to decrease the inpatient average length of stay for CHF patients from 5.3 to 3.5 days through evidenced-based best practice protocols designed to improve quality, standardize patient care practices, and improve cost efficiency. Last year, St. Elsewhere treated 8,500 CHF patients. DRG 127 Congestive Heart Failure is reimbursed by Medicare at $5,250 per patient. The average reimbursement from insurance companies is $7,680 per CHF patient. The average cost of treating the CHF patient is $1,150 per day.
Required -
1. Calculate St. Elsewhere's gross margin. (difference between cost and revenue).
2. If the CHF Interdisciplinary program achieved its goal of decreased LOS from 5.3 days to 3.5 days, what would the cost savings or loss be for St. Elsewhere annually?
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