Hi! I'm looking for some help answering these 5 practice finance (healthcare related) problems.

1.The York Hospital is considering opening a new Urgent Care Center in a neighboring town. You, a York University MHA student intern, have been asked to evaluate the proposed Urgent Care Center's potential profitability and make a recommendation to either pursue or not pursue this project. You have estimated the following data:

Expected number of annual visits10,000

Average revenue per visit$200

Salaries and benefits$1,000,000

Drugs400,000

Supplies200,000

Rent200,000

Utilities100,000

Assume that all costs are fixed except supplies and drugs, which are variable.

a.Prepare the Urgent Care Center's base case projected P&L Statement.

b.What is the Urgent Care Center's per visit contribution margin and total contribution margin?

c.What volume of visits are required to breakeven?

d.What would be the profit margin if Aetna Insurance Company that comprises 15% of the visit volume requests a 10% price discount per visit?

e.Explain if you would recommend accepting the Aetna discount request. Why?

2.The York Hospital Oncology Clinic performs five visit levels that vary in complexity i. e. Levels 1-5. A relative value analysis (RVU) indicates the following RVU values and number of visits.

Visit LevelRVU's Visits

1205,000

2304,000

3403,000

4502,000

5601,000

The total annual costs to operate the Oncology Clinic are $7,500,000.

a.Using the RVU methodology, what is the estimated cost per visit level?

b.What price should be set for each visit level if the goal is to have a 12% profit margin on each visit?

3.The York Hospital Home Care Department has the following three payer groups:

NUMBER AVG. REVENUEVARIABLE COST

PAYER VISITSPER VISITPER VISIT

Medicare35,000$100$40

Medicaid5,0008040

Commercial10,00015040

The Home Care Department's fixed costs are $2,800,000

a.Prepare the Home Care Department's base case P&L Statement.

b.Assume that 30% of the commercial payer 50,000 covered lives move to a capitated plan. All utilization and cost data remain the same. What PMPM rate will the Home Care Department have to obtain to retain the same net income that you calculated in part a?

c.What overall net income would be generated if the commercial payer capitated visit rate was reduced by 15%?

d.Assuming that in addition to the commercial capitated 15% visit rate reduction achieved in c. (above) the remaining commercial capitated visits achieved a $5 variable cost reduction per visit. What is the Home Care Department's revised net income?

4.The York Hospital is considering opening a new Ambulatory Surgery Center (ASC) in a new service area 30 miles from the main campus. The Hospital CFO is somewhat concerned that this is the first time the Hospital has considered opening up a freestanding ASC. You, a York University MHA student intern, have been asked to evaluate the proposed ASC's profitability potential and make a recommendation to either pursue or not pursue this project. The building and equipment costs are estimated at $3,000,000. The ASC is expected to perform 5,000 surgeries in year one and increase by 300 surgeries annually for each of the next four years. Although the ASC should have a useful life beyond five years, the CFO wishes to assume only five years of cash flow due to the risk of this project. The Hospital assumes a 9% discount rate for average risk projects and adds 3% for above average risk projects and deducts 2% for below average risk projects.The incremental cash flow from the project is $800,000 the first year of operation and is estimated to increase by 5% annually for each of the next four years.

a.Explain what discount rate you would choose to evaluate the ASC project. Why?

b.Calculate the payback period.

c.Calculate the proposed ASC net present value (NPV).

d.What is the proposed ASC's profitability index?

e.Should the Hospital proceed with the ASC project? Why?

5.Consider the following data for the York Hospital's Endoscopy Center for fiscal year ended, September 30, 2014.

Static BudgetFlexible BudgetActual Results

Revenues$9,000,000$8,500,000$8,800,000

Costs8,600,0008,400,0008,500,000

Profit$400,000$100,000$300,000

a.Calculate and interpret the profit variance.

b.Calculate and interpret the revenue variance.

c.Calculate and interpret the cost variance.

d.Calculate and interpret the volume and price variances on the revenue side.

e.Calculate and interpret the volume and management variances on the cost side.