Cost-shifting Problem

Assume your organization has 100 patients analyzed in the following manner:

• 15 Medicare patients, who pay $2,000 per diagnosis
• 25 Medicaid patients, who pay $1,800 per diagnosis
• 20 managed care patients, who pay charges minus a 20% discount
• 10 managed care patients, who pay charges minus a 25% discount
• 10 private pay insurance patients, who pay charges
• 10 charity care patients, who pay nothing
• 10 bad debt patients, who pay nothing

1. Your organization's average cost per patient is $2,000. Calculate the charge necessary to recover your cost.

Financial Class	No.	Cost	Charges	Collections	Profit
Medicare	15	30,000	30,000	30,000	0
Medicaid	25	50,000	50,000	45,000	-5,000
Managed Care #1	20	40,000	40,000	32,000	-8,000
Managed Care #2	10	20,000	20,000	15,000	-5,000
Private	10	20,000	20,000	20,000	0
Charity	10	20,000	20,000	0	-20,000
Bad Debt	10	20,000	20,000	0	-20,000
Total:	100	200,000	200,000	142,000	-58,000