If this less expensive implant is used your medical supply charges would be reduced by $2000. What is the estimated reduction in variable cost?
(major joint Show more 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 $10000 per case. You have reviewed your charges for MS-DRG 470 during the last year and found the following profile: Average Charge $15000 Average LOS 5 Days Cost/Charge Variable Cost % Routine Charge $3600 0.80 60 Operating Room 2657 0.80 80 Anesthesiology 293 0.80 80 Lab 1035 0.70 30 Radiology 345 0.75 50 Medical Supplies 4524 0.50 90 Pharmacy 1230 0.50 90 Other Ancillary 1316 0.80 60 Total Ancillary $11400 0.75 50 1. In the above data set assume that the hospitals 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? 2. Estimate the variable cost per MS-DRG 470 using the departmental cost/charge ratios and variable cost percentages. 3. The HMO in the above example has indicated that their doctors use less expensive joint implants. If this less expensive implant is used your medical supply charges would be reduced by $2000. What is the estimated reduction in variable cost? 4. Management has studied work patterns in the housekeeping department and estimates the number of hours to be worked as follows. Hours worked = (1500 hours per month) + (0.50 RVUs). For the coming month management expects RVUs to be 5800. What should budgeted labor for the month be? Show less
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