Question
A hospital expects 5,000 admissions for the year, but that number could vary by 1,000 more or less. its fee-for-service is $4,000 under the current
A hospital expects 5,000 admissions for the year, but that number could vary by 1,000 more or less. its fee-for-service is $4,000 under the current prospective payment system. Under a capitation reimbursement system, the hospital must cover 5,000 patients at a capitation payment of $4,000. the hospital's variable costs are $1,250 per admission and its fixed costs are $13,370,000. which of the following is most true?
a. The hospitals operating leverage is relatively low, so the capitation reimbursement method is riskier than the prospective payment method.
b. The hospitals operating leverage is relatively high, so the prospective payment reimbursement method is riskier than the capitation method.
c. The hospitals operating leverage is relatively high, so the capitation reimbursement method is riskier than the prospective payment method.
d. The hospitals operating leverage is relatively low, so the prospective payment reimbursement method is riskier than the capitation method.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started