Question
Problem 1 Tallahassee Clinic projected the following budget information for 2018: Total FFS Visit Volume 90,000 visits Payer Mix: Blue Cross 40% Celtic Insurance Company
Problem 1
Tallahassee Clinic projected the following budget information for 2018:
Total FFS Visit Volume | 90,000 visits |
Payer Mix: |
|
Blue Cross | 40% |
Celtic Insurance Company | 60% |
Reimbursement Rates: |
|
Blue Cross | $25 per visit |
Celtic Insurance Company | $20 per visit |
Variable Costs Resource Inputs: |
|
Labor | 48,000 total hours |
Supplies | 100,000 total units |
Variable Costs Input Prices: |
|
Labor | $25 per hour |
Supplies | $1.50 per unit |
Fixed Costs (overhead, plant, and equipment) | $500,000 |
Construct Tallahassee Clinics static operating budget for 2018. (See Exhibit 8.3, page 283. Note that there are four components that need to be included: Volume Assumptions, Revenue Assumptions, Cost Assumptions, and the Pro Forma Profit and Loss or P&L projected Statement.)
EXHIBIT 8.3 PAGE 283:
- Volume assumptions:
- FFS 36,000 visits
- Capitated lives 30,000 members
Number of member-months 360,000
Expected utilization per
Member-month 0.15
Number of visits 54,000 visits
- Total expected visits 90,000 visits
- Revenue Assumptions:
- FFS $25 per visit
X 36,000 visits
$900,000
- Capitated lives 3 PMPM
X 360,000 actual member months
$1,080,000
- Total expected revenues $1,980,000
- Cost Assumptions:
- Variable costs:
Labor $1,200,000 (48,000 hrs at $25/hr)
Supplies 150,000 (100,000 units at $1.50/unit)
Total variable costs $1,350,000
Variable cost per visit $ 15 ((1,350,000/90,000)
- Fixed costs:
Overhead, plant, & equip $500,000
- Total expected costs $1,850,000
- Pro Forma Profit and Loss (P&L) Statement:
Revenues:
FFS $900,000
Capitated 1,080,000
Total $1,980,000
Costs:
Variable:
FFS $540,000
Capitated 810,000
Total $1,350,000
Contribution Margin $630,000
Fixed Costs 500,000
Projected profit $130,000
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