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The student, functioning as a Director of Finance Department in a hospital setting, was approached by Mr . Finkler, the Chief Executive Officer ( CEO
The student, functioning as a Director of Finance Department in a hospital setting, was approached by Mr Finkler, the Chief Executive Officer CEO whereby he expressed a concern about the variances in costs under inpatient capitated contract. The CEO requested a financial analysis that would help explain these variances. Taking into consideration the request expressed by Mr Finkler and based on information presented in the financial data below, information obtained from credible outside sources, and your professional experience, prepare a business report to Mr Finkler addressing the following questions.
What dollar amount of the total variance is attributed to enrollment variance?
What dollar effect did the increased admission rate have on cost
The intensity of care delivered dropped from a budgeted case mix of to an actual case mix of What dollar effect did this have on actual costs?
Costs per case increased to $ from a budgeted value of $ By what amount did this increase the actual total costs?
Explain how capitation changes the way in which profit analysis is conducted in terms of utilizations number of admissions and in terms of membership covered lives Does each admission or patient stay increase both costs and revenues? Does each additional member contribute positively to profits?
If reimbursement is exclusively capitated, then the providers financial risk is minimized if all costs are fixed or variable?
Budget
Actual
Inpatient Costs $ $
Members
Admission Rate
Case Mix Index
Cost per Case CMI $ $
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