Sabrina Hoffman is founder and CEO of Golden Care, Inc., which owns and operates several assisted-living facilities. The facilities are apartment-style buildings with 25 to 30 one- or two-bedroom apartments. While each apartment has its own complete kitchen, in every building Golden Care offers communal dining options and an on-site nurse who is available 24 hours a day. Residents can choose monthly meal options that include one or two meals per day in the dining room. Residents who require nursing services (e.g., blood pressure monitoring and injections) can receive those services from the nurse. However, Golden Care facilities are not nursing homes, all residents are ambulatory, and custodial care is not an option. In the five years it has been in operation, the company has expanded from one facility to five, located in southwestern cities. The income statement for last year follows.

Golden Care, Inc.
Income Statement for Last Year
Revenue		$2,880,000
Cost of services		2,016,000
Gross profit		$864,000
Marketing and administrative expenses		500,000
Operating income		$364,000

Basic Care				Lifestyle Care
Construction		$1,500,000		Construction		$2,000,000
Annual operating expenses:				Annual operating expenses:
Staff:				Staff:
RNs (3 $30,000)		90,000		RNs (3 $30,000)		90,000
LPNs (6 $22,000)		132,000		LPNs (6 $22,000)		132,000
Aides (6 $20,000)		120,000		Aides (6 $20,000)		120,000
Cooks (2 $15,000)		30,000		Physical and recreational therapists (2 $25,000)		50,000
Janitors (2 $18,000)		36,000		Cooks (1.5 $15,000)		22,500
Other* (60% variable)		300,000		Janitors (2 $18,000)		36,000
Debt service		150,000		Other (60% variable)		360,000
Depreciation (over 20 years)		75,000		Debt service		200,000
				Depreciation (over 20 years)		100,000

* Other includes supplies, utilities, food, and so on.

In both cases, total administrative costs for Golden Care would increase by $30,000 per year.

Medicaid patients, the state will reimburse at most $30,000 per year.

Private insurance policies will pay roughly $46,000 per year.

We can charge up to about $65,000 for private patients

PLEASE ANSWER:

Calculate the break-even number of patients (in total and for each type of reimbursement) for each of the following scenarios:

a. Basic Care option, 20 percent private insurance, and 80 percent Medicaid

b. Basic Care option, no Medicaid

c. Lifestyle Care option, no Medicaid, 75 percent private insurance, and 25 percent private pay

d. Lifestyle Care option, all insurance reimbursement