Question
5. Hospitals measure their volume in terms of patient days, which are defined as the number of patients multiplied by the number of days that
5. Hospitals measure their volume in terms of patient days, which are defined as the number of patients multiplied by the number of days that the patients are hospitalized. Suppose a large hospital has fixed costs of Br. 18 million per year and variable costs of Br. 300 per patient day. Daily revenues vary among classes of patients. For simplicity, assume that there are two classes: (1) self pay patients (s) who pay an average of Br. 500 per day and (2) non-self-pay (G) who are the responsibility of insurance companies and government agencies and who pay an average of Br. 400 per day. Twenty percent of the patients are self pay. Instructions: a) Compute the BEP in-patient days, assuming that the planned mix of patients is maintained. b) Suppose that 150,000 patient days were achieved but that 25% of the patient days were self pay (instead of 20%). Compute the net income. Compute the BEP.
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