Your hospital is considering adding a new service, which encompasses several DRGs.

If you add the service, you will get patients in each of several DRGs for which you do not currently have any admissions. You are given the following data:

There will be no fixed cost specifically associated with any one of the three new DRGs. The fixed costs for the new service that makes up these three DRGs will be $25,000. The joint overhead costs of the hospital are $500,000, currently being allocated to the hospital's three existing services.
How many admissions in each of the new DRGs will be needed to break even on the new service?

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Reimbursement Variable Estimated Number Rate Costs of New Patients DRG (S) ($) 150 4 400 100 100 5 600 500 250 6 200 100