Question
General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services:Fixed costs $10,000,000Variable cost per inpatient days $200 Charge (revenue)
General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services:Fixed costs $10,000,000Variable cost per inpatient days $200 Charge (revenue) per inpatient day $1,000 The hospital expects to have a patient load of 15,000 inpatient days next year.a. Construct the hospitals base case projected P&L statement.b. What is the hospitals breakeven point?c. What volume is required to provide a profit of $1,000,000? A profit of $500,000?d. Now assume that 20 percent of the hospitals inpatient days come from a managed care plan that wants a 25 percent discount from charges. Should the hospital agree to the discount proposal?
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