Would like to learn how to work the numbers on Eagan Family Practice case study. Thanks.

6 Cases in Healtheare Finance EXHIBIT 4.1 Eagan Family Practice: Departmental Revenue Revenues $12,000,000 Adult Medicine 6,000,000 2,000,000 and Cost ProjectionsObstetrics $20,000,000 Total revenues Direct Costs Patient Services $6,000,000 Adult Medicine 3,600,000 Obstetrics Pediatrics 1,200,000 Subtotal $10,800,000 Support Administration 1,000,000 Facilities 4.400,000 Finance 1,800,000 Subtotal $ 7,200,000 Total expenses $18,000,000 Pretax proft $ 2,000,000 Case 4: Eagan Family Practice 37 EXHIBIT 4.2 Percentage of Services Provided by Eagan Family Practice: Allocation Percentages Services Provided to Administration Facilities Finance Administration 5% 5% Facilities 10% Finance 10 10 Adult Medicine 55 A250 25 35 Obstetrics 20 10 Pediatrics 25 20 15 Total 100% 100% 100% Percentage to support departments 20% 15% Percentage to patient service departments 80% 85% The allocation percentages are based on a two-year analysis of the actual services provided by t, upport departments to other de merits Notes 1 2 To use the percentages to perform an allocation, they may have to be adjusted to ensure that the entire amount of the cost pool is allocated. To Bustrate, in the drect method, all of Administration's costs ($500,0001 have to be allocated drectly in a single alocation to the three patient service departments. If the raw percentages were used. Only 35%+20% +25% "80% ofthe cost pool would be alocated so the allocation percentages have to be adjusted so that 80 percent represents the entire allocation (100 percent Thus, insteed of a 35 percent allocation to Adut Medicine, its adjusted allocation 35%80% " 43 75% in a smlar marrer the adjusted allocation to Obstetrics0N90%-25%, wNe the adinted aloc!on to Podiatrics is 25%80%-31,25% Whendone correcth the abated percent,ges 100% must sum to 100% 43.75% + 25% + 3125% 25-25 6 12 The Egan Family Practice [Case 4]. Write a paper of 5 to 10 pages (APA Format); noting at least 4 peer reviewed sources. Consider the following issues surrounding the Egan Family Practice: Analyze and explain the sensitivity of patient services department profitability to a. The allocation method b. The relative sizes of the overhead cost pools c. The allocation rates Describe what the analysis indicates about the true (but not really observable) Discuss and defend your recommendation regarding the appropriate cost allocation method for the practice? In your opinion, what are three key learning points from this case? Note: It is recommended that students conduct the proper research via the online library, and its databases. 6 Cases in Healtheare Finance EXHIBIT 4.1 Eagan Family Practice: Departmental Revenue Revenues $12,000,000 Adult Medicine 6,000,000 2,000,000 and Cost ProjectionsObstetrics $20,000,000 Total revenues Direct Costs Patient Services $6,000,000 Adult Medicine 3,600,000 Obstetrics Pediatrics 1,200,000 Subtotal $10,800,000 Support Administration 1,000,000 Facilities 4.400,000 Finance 1,800,000 Subtotal $ 7,200,000 Total expenses $18,000,000 Pretax proft $ 2,000,000 Case 4: Eagan Family Practice 37 EXHIBIT 4.2 Percentage of Services Provided by Eagan Family Practice: Allocation Percentages Services Provided to Administration Facilities Finance Administration 5% 5% Facilities 10% Finance 10 10 Adult Medicine 55 A250 25 35 Obstetrics 20 10 Pediatrics 25 20 15 Total 100% 100% 100% Percentage to support departments 20% 15% Percentage to patient service departments 80% 85% The allocation percentages are based on a two-year analysis of the actual services provided by t, upport departments to other de merits Notes 1 2 To use the percentages to perform an allocation, they may have to be adjusted to ensure that the entire amount of the cost pool is allocated. To Bustrate, in the drect method, all of Administration's costs ($500,0001 have to be allocated drectly in a single alocation to the three patient service departments. If the raw percentages were used. Only 35%+20% +25% "80% ofthe cost pool would be alocated so the allocation percentages have to be adjusted so that 80 percent represents the entire allocation (100 percent Thus, insteed of a 35 percent allocation to Adut Medicine, its adjusted allocation 35%80% " 43 75% in a smlar marrer the adjusted allocation to Obstetrics0N90%-25%, wNe the adinted aloc!on to Podiatrics is 25%80%-31,25% Whendone correcth the abated percent,ges 100% must sum to 100% 43.75% + 25% + 3125% 25-25 6 12 The Egan Family Practice [Case 4]. Write a paper of 5 to 10 pages (APA Format); noting at least 4 peer reviewed sources. Consider the following issues surrounding the Egan Family Practice: Analyze and explain the sensitivity of patient services department profitability to a. The allocation method b. The relative sizes of the overhead cost pools c. The allocation rates Describe what the analysis indicates about the true (but not really observable) Discuss and defend your recommendation regarding the appropriate cost allocation method for the practice? In your opinion, what are three key learning points from this case? Note: It is recommended that students conduct the proper research via the online library, and its databases