Week 2_ Case Study_ Breakeven Analysis_Pricing Directions - Word A Jason Knickerbocker X X File Home Insert Design Layout References Mailings Review View Help Tell me what you want to do &Share do Cut Find Calibri - 11 - A A Aa A AaBbCcI AaBbCcI AaBbCCD AaBbCCD AaBBC Add AaB AaBbCCI Reading list a Copy Gac Replace Paste BI U~ abe X2 X AZA. 1 Normal 1 No Spac.. 1 Heading 1 1 Heading 2 1 Heading 3 1 Title 1 Subtitle Subtle Em.. Format Painter Select Clipboard Font Paragraph Styles Editing 1. Assume that you are looking at each specialty separately. What will each specialty have to charge in order to breakeven. (remember: charge is equivalent to price). (8) 2. You have been approached by a managed care corporation who wants to reimburse you as follows: Specialty Reimbursement Rate Int. Med. $50 Gen. Surg $105 Peds. $55 OB-GYN $95 A. Looking at each program separately, how many patients would you need to see in each service in order to break even if you accept the managed care company's offer? (remember: the reimbursement rate is equivalent to price) (8) . Would you accept the managed care company's offer overall? Why or why not? Would you accept the offer for any of the departments? Keep in mind the behavior of fixed costs in your discussion. What argument would you make to the managed care company to improve their offer? (5) Page 1 of 3 531 words + 100% 8:25 PM Type here to search O M O w 76 F AQI 63 E 7/19/2021Week 2_ Case Study_ Breakeven Analysis_Pricing Directions - Word A Jason Knickerbocker X X File Home Insert Design Layout References Mailings Review View Help Tell me what you want to do &Share do Cut Find Calibri - 11 - A A Aa A AaBbCcI AaBbCcI AaBbCCD AaBbCCD AaBBC Add AaB AaBbCCI Reading list a Copy Gac Replace Paste BI U~ abe X2 X AZA . 1 Normal 1 No Spac. 1 Heading 1 1 Heading 2 1 Heading 3 1 Title 1 Subtitle Subtle Em.. Format Painter Select Clipboard Font Paragraph Styles Editing The malpractice insurance rate for OB-GYN is going up by 20% and their variable costs have risen to $65. In addition, their anticipated number of patients will decrease to 2000 due to the retirement of one of their physicians. You have been told that the customary rate for OB-GYN cannot exceed $100. Will this price allow your OB-GYN department to break even? Show your work. (8) 5. What strategies (more than one) can you put in place in order to operate at a price of $100? (8) 6. Contribution Margin a. Assume you want to calculate the contribution margin of General Surgery to the practice. See their activity for 2019 below Actual Number of Visits: 1950 Charge per visit: $135 Variable Cost per visit: $ 65 Total Fixed Cost: $75,000 Using the formula in your textbook on page 73, calculate the contribution margin and the operating income that General Surgery will contribute to the practice. (4) Contribution Margin: Operating Income: b. Assume that Internal Medicine had the following activity: Actual Number of Visits: 4500 Charge per visit: $60 Variable Cost per visit: $40 Page 2 of 3 531 words X + 100% 8:27 PM Type here to search O 9 w 75 F Sunny E 7/19/2021X Week 2_ Case Study_ Breakeven Analysis_Pricing Directions - Word A Jason Knickerbocker X File Home Insert Design Layout References Mailings Review View Help Tell me what you want to do &Share & Cut Find Calibri - 11 - A A Aa A AaBbCcI AaBbCcI AaBbCCD AaBbCCD AaBBC Add AaB AaBbCCI Reading list a Copy Gac Replace Paste Format Painter BI U~ abe X2 X AZA . 1 Normal 1 No Spac. 1 Heading 1 1 Heading 2 1 Heading 3 1 Title 1 Subtitle Subtle Em.. Select Font Paragraph Styles Editing Clipboard Total Fixed Cost: $60,000 Calculate the contribution margin and operating income that Internal Medical will contribute to the practice. (4) Contribution Margin: Operating Income: c. If Internal Medicine sees two times more patients than General Surgery, why is their contribution margin so much less? (5) Page 2 of 3 531 words X + 100% 8:28 PM Type here to search W 75 F Sunny E 7/19/2021Week 2_ Case Study_ Breakeven Analysis_Pricing Directions - Word A Jason Knickerbocker X X File Home Insert Design Layout References Mailings Review View Help Tell me what you want to do &Share do Cut Calibri - 11 - A A Aa A Find a Copy AaBbCcI AaBbCcI AaBbCCD AaBbCCD AaBBC Add AaB AaBbCCI Reading list Gac Replace Paste Format Painter BIU~ abe X2 X AZA . E 1 Normal 1 No Spac.. 1 Heading 1 1 Heading 2 1 Heading 3 1 Title 1 Subtitle Subtle Em.. Select Clipboard Font Paragraph Styles Editing HCMG750 Case Study: Breakeven Analysis/Pricing/Contribution Margin Week 2 Points: 50 Use the information below to answer the questions that follow. Put your answers on a separate document and show your work. (Review Chapter 8) You are heading up a large multi-specialty group practice. There are four specialties in the group: Internal Medicine, General Surgery, Pediatrics, and OB-GYN. You anticipate a total of 12,500 patients per month between the four specialties. The fixed costs for each specialty are listed in the table below: Internal Medicine General Surgery Pediatrics OB-GYN Rent 1,000 1,500 1,200 1,400 Malpractice 2,000 2,750 2,100 3,250 Insurance Depreciation 900 1,500 1,000 950 Salaries (clerical 56,100 59,250 12,700 90,400 and professional) Total 60,000 75,000 47,000 96,000 The variable costs and estimated number of patients are as follows: Speciality Estimated # of Patients Variable Costs Int. Med. 5000 $40 Gen. Surg. 1875 $65 Peds. 3125 $35 OB-GYN 2500 $60 Total 12,500 Page 1 of 3 531 words + 100% Type here to search O w 8:23 PM 76 F AQI 63 E 7/19/2021