Question

Total Cost $342,000 Average Cost $114.00 Desired Net Income $16,000 Total Volume 3,000 Payer Volumes Medicare (payment rate = $99) 800 Medicaid (payment rate = $84) 250 Health Plan 1 (payment rate = $134) 1,400 Health Plan 2 (pay = 75% of charges) 400 Uninsured (pay = 15% of charges) 150 Total all payers 3,000 INCOME STATEMENT DATA INPUT Revenue Sources Medicare $78,800.00 Medicaid $20,875.00 Health Plan 1 $187,600.00 Health Plan 2 $65,790.70 Uninsured $4,934.30 TOTAL REVENUE $358,000.00 Less: Total Cost $342,000 PROFIT $16,000.00 Using the DATA INPUT and INCOME STATEMENT DATA INPUT TABLES above, determine the hospital's required price?

Answer 1

The hospital's required price is $119.33 per service, calculated by adding the desired net income to the total cost to determine the total revenue needed, and then dividing by the total volume of services provided.

Step-by-step explanation:

The hospital's required price can be determined by calculating the total revenue needed to achieve the desired net income and then dividing it by the total volume of services provided. First, we add the desired net income to the total cost to find the total revenue needed:

Total Revenue Required = Total Cost + Desired Net Income

Total Revenue Required = $342,000 + $16,000

Total Revenue Required = $358,000

Next, we calculate the average payment rate by dividing the total revenue required by the total volume:

Average Payment Rate = Total Revenue Required / Total Volume

Average Payment Rate = $358,000 / 3,000

Average Payment Rate = $119.33

Therefore, the hospital's required price, on average, is $119.33 per service to meet its desired net income.