Glendale City Hospital uses a facility-wide cost-to-charge ratio to estimate the cost of prooviding a variety of medical services. The hospital has the following departments and associated financial information:

a. Calculate the facility-wide cost-to-charge ratio for Glendale City Hospital.

b. Assume a cardiology patient is charged \(\$ 75,000\) for a procedure. Using the cost-tocharge ratio, calculate the cost to Glendale of performing the procedure.

c. Assume a family is charged \(\$ 10,000\) for the normal delivery of an infant. Using the cost-to-charge ratio, calculate the cost to Glendale of delivering the infant.

d. Compare your answers from parts

(b) and (c). What is your impression of the cost-tocharge ratio as a tool to help hospitals understand costs?

Transcribed Image Text:

Costs Emergency $2,000,000 Charges $3,750,000 Labor and delivery 3,000,000 4,000,000 Laboratory 750,000 900,000 Cardiology 4,000,000 6,000,000 Radiology 1,000,000 1,500,000