Question
Acadia Healthcare (Acadia) operates a general hospital but rents space to separately owned entities rendering specialized services such as pediatrics and oncology. Acadia charges
Acadia Healthcare (Acadia) operates a general hospital but rents space to separately owned entities rendering specialized services such as pediatrics and oncology. Acadia charges each separate entity for patients' services (meals and laundry) and for administrative services (billings and collections). Space and ACADIA HEALTHCARE bed rentals are fixed charges for the year, based on bed capacity rented to each entity. Acadia charged the following costs to Pediatrics this year: Dietary Janitorial Laundry Laboratory Pharmacy Repairs and Maintenance General and Administrative Rent Patient Services (Variable) $800,000 375,000 600,000 460,000 Bed Capacity (Fixed) $95,000 40,000 Billings and Collections Total 400,000 $2,635,000 1,250,000 3,000,000 $4,385,000 In addition to these charges from Acadia, Pediatrics incurred the following personnel costs: Annual Salaries* Supervising Nurses Nurses $185,000 270,000 Assistants 240,000 Total $695,000 *These salaries are fixed within the ranges of annual patient-days considered in this problem. During the year, Pediatrics charged each patient $400 per day, had a capacity of 80 beds, and had revenues of $8,000,000 for 365 days. Pediatrics operated at 100 percent capacity on 87 days during this period. It is estimated that during these 87 days, the demand exceeded 100 beds. Acadia will have 20 additional beds available for rent next year. If Pediatrics rents the beds from Acadia, the additional rental would proportionately increase Pediatrics' annual fixed charges that are based on bed capacity.
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