Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can someone walk me through how to solve Part 1 steps 1, 2 and 3 of the Denison Hospital Case Study? Extended Problem (2-36) Denison

image text in transcribed

image text in transcribed

image text in transcribed

Can someone walk me through how to solve Part 1 steps 1, 2 and 3 of the Denison Hospital Case Study?

image text in transcribedimage text in transcribedimage text in transcribed

Extended Problem (2-36) Denison Specialty Hospital- Part I Denison Specialty Hospital is planning its master budget for the coming year. The budget will include operating, capital, cash, and flexible budgets. The hospital is noted for its three fine programs: oncology (cancer), cardiac (heart), and rhinoplasty (nose jobs) Section A The managers at Denison have been busy working. They have reviewed past records and considered changes in competition, the general economy, and overall medical trends. Using past charges and anticipated rates of medical inflation, they have also made a first attempt at setting their prices. Based on a thorough review and discussion of these data, they have projected that next year they will have 240 patients. They expect 120 oncology patients, 80 cardiac patients, and 40 rhinoplasty patients. The charge, or list price, for oncology patients will average $50,000. Cardiac patients will be charged an average of $40,000, and rhinoplasty, $25,000 per patlent. However, those charges often are not the actual amount ultimately received The amount the hospital receives depends on whether patients pay their own hospital bills or have healthcare insurance. Assume that private insurance companies pay the full charge or list price. However, Medicare and Medicaid have announced rates they will pay for the coming year as follows: oncology patients $40,000, cardiac patients $30,000, and rhinoplasty patients S10,000. Self-pay patients are supposed to pay the full charge, but generally 25 percent 62% to pay the full charge, but generally 25 percent of self-pay charges becomes a bad debt. Note that bad debts are treated as an expense in healthcare. They may not be shown as a reduction lowering revenues. The full charge for self-pay patients is shown as revenue, and then the uncollectible amount is shown as an expense. No payment for charity care is ever received, and charity care is not shown as a revenue or expense. The payer mix is as follows: Gift shop revenue is projected to be $120,000 for the current year and is expected to remain the same. However, this revenue will increase or decline in proportion to changes in patient volume Denison Hospital has an endowment of $1,000,000. It is invested as follows: $500,000 in 6 percent U.S. Government Bonds that pay interest annually $250,000 in AT&T stock, which pays a dividend of 8 percent annually $250,000 in growth stocks that pay no dividend Section A Requirements: 1. Calculate patient revenue on an accrual basis for the coming year. Subdivide revenue by program, and within each program subdivide it by type of payer 2. Calculate endowment revenue on an accrual basis for the coming year 3. Prepare a revenue budget on an accrual basis, including all sources of revenue discussed previously. The revenue budget does not have to show all of the detail from requirements 1 and 2, but should show each Section A Requirements: 1. Calculate patient revenue on an accrual basis for the coming year. Subdivide revenue by program, and within each program subdivide it by type of payer 2. Calculate endowment revenue on an accrual basis for the coming year. 3. Prepare a revenue budget on an accrual basis, including all sources of revenue discussed previously. The revenue budget does not have to show all of the detail from requirements 1 and 2, but should show each major source of revenue, such as patient services and endowment Section B The hospital expects to employ workers in the following departments Supplies are expected to be purchased throughout the year for the departments, as follows: Total $360,000 160,000 Radiology Nursing Administration20,000 Total Assume that all supply use varies with the number of patients. Denison Hospital currently pays rent on its buildings and equipment of $300,000 per year 9:46 14 & f+D15*C15 A1. Patie A2. Endo A3. Rev B1. Bad 1 CASE STUDY: DENISON SPECIALTY HOSPITAL 5 Part 7 Section A. 9 1 Calculation of patient revenue. mVolume Net Price Net Revenue Mix Volume ncolo 6 Medicaid/Medicare 8Charit 20 Private Insurance Private Insurance 7 Self-Pa Cardiac $50.000 40,000 0,000 21 Medicaid/Medicare 30,000 10,000 Self-Pa 24Rhinopla 25 Private Insurance Medicaid/Medicare 10,000 27 Self-Pa 28 Chari Total Patient Revenue 47 57 9:46 14& LTE .111 56% A1. Patie A2. Endo A3. Rev B1. Bad 2 Section A. 4 2 Calculation of endowment revenue Investment RateIncome $0 6% 8% 090 7 U.S. Bond AT&T Div Growth Stoclk 10 12 13 14 15 16 17 18 19 20 21 23 24 25 26 27 28 29 30 31 32 34 35 36 37 38 39 42 43 45 46 9:47 14& fx 120000 A3. Rev B1. Bad A1. Patie A2. Endo 1 Section A. 2 3 3 Revenue Budget. 4. Denison Specialty Hospital Revenue Budget for Next Year $0 120,000 9Net Patient Revenue 10 Gift Shop Revenue 11 Endowment Income 12 Total Budgeted Revenue$120,000 15 16 17 18 19 20 21 23 24 25 26 27 28 29 30 31 32 Extended Problem (2-36) Denison Specialty Hospital- Part I Denison Specialty Hospital is planning its master budget for the coming year. The budget will include operating, capital, cash, and flexible budgets. The hospital is noted for its three fine programs: oncology (cancer), cardiac (heart), and rhinoplasty (nose jobs) Section A The managers at Denison have been busy working. They have reviewed past records and considered changes in competition, the general economy, and overall medical trends. Using past charges and anticipated rates of medical inflation, they have also made a first attempt at setting their prices. Based on a thorough review and discussion of these data, they have projected that next year they will have 240 patients. They expect 120 oncology patients, 80 cardiac patients, and 40 rhinoplasty patients. The charge, or list price, for oncology patients will average $50,000. Cardiac patients will be charged an average of $40,000, and rhinoplasty, $25,000 per patlent. However, those charges often are not the actual amount ultimately received The amount the hospital receives depends on whether patients pay their own hospital bills or have healthcare insurance. Assume that private insurance companies pay the full charge or list price. However, Medicare and Medicaid have announced rates they will pay for the coming year as follows: oncology patients $40,000, cardiac patients $30,000, and rhinoplasty patients S10,000. Self-pay patients are supposed to pay the full charge, but generally 25 percent 62% to pay the full charge, but generally 25 percent of self-pay charges becomes a bad debt. Note that bad debts are treated as an expense in healthcare. They may not be shown as a reduction lowering revenues. The full charge for self-pay patients is shown as revenue, and then the uncollectible amount is shown as an expense. No payment for charity care is ever received, and charity care is not shown as a revenue or expense. The payer mix is as follows: Gift shop revenue is projected to be $120,000 for the current year and is expected to remain the same. However, this revenue will increase or decline in proportion to changes in patient volume Denison Hospital has an endowment of $1,000,000. It is invested as follows: $500,000 in 6 percent U.S. Government Bonds that pay interest annually $250,000 in AT&T stock, which pays a dividend of 8 percent annually $250,000 in growth stocks that pay no dividend Section A Requirements: 1. Calculate patient revenue on an accrual basis for the coming year. Subdivide revenue by program, and within each program subdivide it by type of payer 2. Calculate endowment revenue on an accrual basis for the coming year 3. Prepare a revenue budget on an accrual basis, including all sources of revenue discussed previously. The revenue budget does not have to show all of the detail from requirements 1 and 2, but should show each Section A Requirements: 1. Calculate patient revenue on an accrual basis for the coming year. Subdivide revenue by program, and within each program subdivide it by type of payer 2. Calculate endowment revenue on an accrual basis for the coming year. 3. Prepare a revenue budget on an accrual basis, including all sources of revenue discussed previously. The revenue budget does not have to show all of the detail from requirements 1 and 2, but should show each major source of revenue, such as patient services and endowment Section B The hospital expects to employ workers in the following departments Supplies are expected to be purchased throughout the year for the departments, as follows: Total $360,000 160,000 Radiology Nursing Administration20,000 Total Assume that all supply use varies with the number of patients. Denison Hospital currently pays rent on its buildings and equipment of $300,000 per year 9:46 14 & f+D15*C15 A1. Patie A2. Endo A3. Rev B1. Bad 1 CASE STUDY: DENISON SPECIALTY HOSPITAL 5 Part 7 Section A. 9 1 Calculation of patient revenue. mVolume Net Price Net Revenue Mix Volume ncolo 6 Medicaid/Medicare 8Charit 20 Private Insurance Private Insurance 7 Self-Pa Cardiac $50.000 40,000 0,000 21 Medicaid/Medicare 30,000 10,000 Self-Pa 24Rhinopla 25 Private Insurance Medicaid/Medicare 10,000 27 Self-Pa 28 Chari Total Patient Revenue 47 57 9:46 14& LTE .111 56% A1. Patie A2. Endo A3. Rev B1. Bad 2 Section A. 4 2 Calculation of endowment revenue Investment RateIncome $0 6% 8% 090 7 U.S. Bond AT&T Div Growth Stoclk 10 12 13 14 15 16 17 18 19 20 21 23 24 25 26 27 28 29 30 31 32 34 35 36 37 38 39 42 43 45 46 9:47 14& fx 120000 A3. Rev B1. Bad A1. Patie A2. Endo 1 Section A. 2 3 3 Revenue Budget. 4. Denison Specialty Hospital Revenue Budget for Next Year $0 120,000 9Net Patient Revenue 10 Gift Shop Revenue 11 Endowment Income 12 Total Budgeted Revenue$120,000 15 16 17 18 19 20 21 23 24 25 26 27 28 29 30 31 32

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fraud Smart

Authors: K. H. Spencer Pickett

1st Edition

0470682582, 978-0470682586

More Books

Students also viewed these Accounting questions

Question

Describe a persuasive message.

Answered: 1 week ago

Question

Identify and use the five steps for conducting research.

Answered: 1 week ago

Question

List the goals of a persuasive message.

Answered: 1 week ago