Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Fargo Memorial Hospital has annual net patient service revenues of $128,977. It has two major third-party payers, and some of its patients are self-payers.

Fargo Memorial Hospital has annual net patient service revenues of $128,977. It has two major third-party payers, and some of its patients are self-payers. The hospital's patient accounts manager estimates that 20 percent of the hospital's billings are paid (received by the hospital) on Day 30, 34 percent are paid on Day 60, and the remainder are paid on Day 90. (Assume 360 days per year.) The hospital is considering a proposed electronic claims system that would result in collecting from third-party payers in 45 and 75 days, instead of in 60 and 90 days. Suppose the hospital's annual cost of carrying receivables is 11 percent. If the electronic claims system costs $366 a year to lease and operate, what is the annual net benefit of the new system? (Do not round intermediate calculations. Round the final answer to the nearest dollar amount. Omit the "$" sign and commas in your response. For example, $123,456.78 should be entered as 123457. If your answer is negative, enter a minus sign (-) before your answer.)

Step by Step Solution

3.44 Rating (157 Votes )

There are 3 Steps involved in it

Step: 1

Average collection period ACPO 203034604690 678 days ACPn20303445... 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

Advanced Accounting

Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng

11th edition

538480289, 978-0538480284

More Books

Students also viewed these Accounting questions