Question
Hospitals serve a wide variety of patients and are reimbursed in a number of different ways and at various rates. the facility fee for providing
Hospitals serve a wide variety of patients and are reimbursed in a number of different ways and at various rates. the facility fee for providing a hospital bed for one day is sometimes referred to as the daily "charge rate" or daily "bed rate". This rate, of course, does not include the actual cost of medical procedures, but it is the rate at which the gross bill for a bed may be calculated before the application of contractual and other adjustments. The charge rate has to cover all payer types, as well as charity care and bed debts. As a result, some "cost shifting" typical occurs, where one category or payer is charged more in order to cover costs for another category or payer.
Slippery Hospital anticipates serving 100 patients who will pay in the following manner:
Number of Patients | Patient Description | Reimbursements per Patient |
30 | Medicare patients | $1,900 |
30 | Medicaid patients | $1,700 |
20 | Managed care patients | 90% of charges |
10 | Private insurance patients | 100% of charges |
4 | Charity care patients | $0 |
6 | Bad debt patients | 25% of charges (75% loss) |
Assume that is actually costs $2,000 per day for the hospital to provide a patient bed exclusive of any medical procedures. Given he $2,000 cost per day per patient and the payer mix and payer rates provided, calculate the charge rate required for the hospital to cover its costs (break even).
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