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Module 6 Question/ Problem Set Directions: Answer each of the following questions. Submit an excel document that contains your calculations and a word document that contains your answer to each question. Please also bold your final calculation in the excel document. Scenario 1 The Neonatal intensive Care Unit (NICU) is developing a budget for NICU Admissions. This year the department saw 600 admissions which were distributed in the following way: ELBW Infants (Birthweight < 1000 grams) 10% of admissions, Average length of stay of 90 days, Charges $250,000. VLBW Infants (Birthweight 1001-1500 grams) 20% of admissions, Average length of stay 45 days, Charges $100,000. LBW Infants (Birthweight 1501-2500 grams) 40%, Average length of stay 21 days, Charges $75,000 Other infants (Birthweight >2500g) 30%, Average length of stay 30 days, Charges $95,000 The budget committee is projecting a 5 percent increase in admissions for next year, analyzed in the same proportions. The payer mix for the NICU is consistent across all types of admissions and is as follows: Medicare: 10% of patients, pays 80% of charges Medicaid: 50% of patients, pays 60% of charges Commercial Insurance: 30% of patients, pays 85% of charges Self-Pay: 5% of patients, pays 90% of charges Charity Care: 5% of patients, pays 2% of charges The department expenses are as follows: Labor: Non-Labor Expenses and Supplies: $5,000,000 Overhead: We expect labor to increase 3%, Non-Labor and Supplies to increase 2%, and Overhead to increase 1%. HINT: You should use days to determine RVUs. Using the budgeting steps, address the following: A. B. C. D. E. Calculate the volumes, Collected revenues, Collected expenses, Adjustments for NICU admissions. Discuss whether the NICU is an area of loss or gain for the hospital. What does this mean a hospital might want to do with the NICU strategically in the future? (HINT: Is this a service line to grow? Is this a service line that needs to be targeted for cost cutting?, etc...) Scenario 2 Main Hospital wants to buy equipment for $200,000 with projected cash flows of $45,000 per year during the equipment's five-year useful life. Calculate the following: A. What is the payback period? B. What is the net present value at 8 percent with a salvage value of $25,000? C. What is the internal rate of return?