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ABC, Resource Drivers, Service Industry Glencoe Medical Clinic operates a cardiology care unit and a maternity care unit Cara Abadi, the clinic's administrator, is investigating
ABC, Resource Drivers, Service Industry Glencoe Medical Clinic operates a cardiology care unit and a maternity care unit Cara Abadi, the clinic's administrator, is investigating the charges assigned to cardiology patients. Currently, all cardiology patients are charged the same rate per patient day for daily care services. Dally care services are broadly defined as occupancy, reeding, and nursing care. A recent study, however, revealed several interesting outcomes. First, the demands patients place on dally care services vary with the severity of the case being treated. Second, the occupancy activity is a combination of two activities: lodging and use of monitoring equipment. Since some patients require more monitoring than others, these activities should be separated. Third, the daily rate should reflect the difference in demands resulting from differences in patient typo. Separating the occupancy activity into two separate activities also required the determination of the cost of each activity. Determining the costs of the monitoring activity was fairly easy because its costs were directly tractable. Lodging costs, however, are shared by two activities: lodging cardiology patients and lodging maternity care patients. The total lodging costs for the two activities were $5,547,000 per year and consisted of such items as building depreciation, building maintenance, and building utilities. The cardiology floor and the maternity floor each occupy 21,900 square feet. Abadi determined that lodging costs would be assigned to each unit based on square feet To compute a dally rate that reflected the difference in demands, patients were placed in three categories according to illness severity, and the following annual data were collected: Activity Cost of Activity Activity Driver Quantity Lodging $ 587,600 Patient days 22,600 Monitoring Monitoring hours used 30,160 406,800 Patient days 22,600 Nursing care Nursing hours 222,500 2,201,680 Feeding 5,117,500 Total $8,313,580 The demands associated with patient severity are also provided: Severity Patient Days Monitoring Hours Nursing Hours High 7,090 15,030 134,000 Medium 11,850 12, 140 72,500 Low 3,660 2,990 16,000 30,160 22,600 222,500 Monitoring 2,201,680 Monitoring hours used Feeding 406,800 Patient days Nursing care 5,117,500 Nursing hours Total $8,313,580 The demands associated with patient severity are also provided Severity Patient Days Monitoring Hours Nursing Hours High 7,090 15,030 134,000 Medium 11,850 12,140 72,500 Low 3,660 2,990 16,000 Required: 1. Suppose that the costs of daily care are assigned using only patient days as the activity driver (which is also the measure of output), Compute the daily rate using this unit-based approach of cost assignment. If required, round your answer to the nearest cent. per day 2. Compute activity rates using the given activity drivers (combine activities with the same driver). If required, round your answers to the nearest cent. Rate 1 per patient day Rate 2 per monitoring hour per hour of nursing care 3. Compute the charge per patient day for each patient type using the activity rates from Requirement 2 and the demands on each activity Round your interim calculations and final answers to the nearest cent. High severity per patient day Rate 3 Medium severity per patient day Low severity per patient day
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