Part 1 The Brimford General Hospital is a Trust Hospital and operates within the market for healthcare in the National Health Service. As a consequence much greater attention is now being paid to costs and operational efficiency. The management is in the process of developing a full Profit Centre System within the hospital. One of the consequences of this is that specialist departments such as Orthopaedics; Paediatrics, Surgery and so on make charges internally for their services. The specialist departments in turn are charged for the services they use, for example, General Nursing, Maintenance, Pharmacy, Laundry and so on. Some of these services are charged according to patientdays whilst others are on a fixed yearly basis.
In order to assess how the system is working and to gain information about the costs and operations of the Specialist Departments it has been decided to examine each Department in turn. The first to be examined is the Orthopaedics Department and the following information was obtained relating to the last year.

General Nursing Staff are supplied from a general pool. Each nurse costs £20,000 per year and at the end of the year the specialist Departments are charged according to the following schedule:

The Consultants and Registrars in Orthopaedics cost a total of £172,000 for the year.

Questions:-

1. Calculate the number of patient days in Orthopaedics last year.
2. What was the Bed-Occupancy percentage?
3. How many Nurses will be charged for the year? At what cost?
4. What was the cost per patient-day for the year.
5. Excluding consultants’ fees how many patient-days were required to break-even last year.
6. Including consultants’ fees how many patient-days were required to break even?
7. What was the margin of safety percentage for last year? Comment on the value you have calculated.

Part 2 The budget for next year is being considered and the following cost increases have been forecast:

All other costs are expected to increase by 6%.
It is anticipated that the number of patient days will increase by 15% over last year.

Questions:-

1. Calculate the anticipated Bed-Occupancy percentage for next year.
2. Calculate the anticipated cost per patient day.
3. Calculate the Break-Even point in patient days, assuming that the same price per day is charged as last year.
4. What is the margin of safety percentage? Comment on your result.
5. How many patient-days would be required next year to achieve the same profit as last year assuming the anticipated costs and last year’s charging price?
6. A possibility is being considered of charging Nursery Costs to the specialist Departments at £35 per patient-day instead of the 3-tier system used at present. Evaluate the position for Orthopaedics if this proposal is adopted for next year.

Transcribed Image Text:

Orthopaedics Department No of beds Gross Revenue Received Charging rate 50 1,533,000 125 per patient day