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5.4. General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services: Fixed costs Variable cost per procedure Charge

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5.4. General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services: Fixed costs Variable cost per procedure Charge (revenue) per procedure $10,00,000 200 1,000 The hospital expects to have a patient load of 15,000 inpatient days next year. a. Construct the hospital's base case projected P&L statement. b. What is the hospital's accounting breakeven point? c. What volume is required to produce a profit of $1,000,000? A profit of $500,000? d. Now assume that 20 percent of the hospital's inpatient days come from a managed care plan that wants a 25 percent discount from charges. If the hospital does not agree, assume it will lose the inpatient days to another provider. Should the hospital agree to the discount proposal?

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