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Patient Health is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 50%. As
Patient Health is an outpatient surgical clinic that was profitable for many years, but Medicare has cut its reimbursements by as much as 50%. As a result, the clinic wants to better understand its costs. It decides to prepare an activity-based cost analysis, including an estimate of the average cost of both general surgery and orthopedic surgery. The clinics three cost centers and their cost drivers follow.
Cost Driver Driver Quantity Cost Center Professional salaries Patient services and supplies Building cost Cost $2,520,000 Professional hours 39,000 Number of patients 441,000 Square feet 10,000 600 3,500 The two main surgical units and their related data follow. Service General surgery Orthopedic surgery Hours 4,000 6,000 Patients 450 150 Square Feet* 800 2,700 Orthopedic surgery requires more space for patients, supplies, and equipment
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