Question
You have just started as the administrator at a SNF (skilled nursing facility). In the past the facility has marketed and served exclusively private pay
You have just started as the administrator at a SNF (skilled nursing facility). In the past the facility has marketed and served exclusively "private pay" patients who pay for their care themselves and to patients with long-term care insurance policies. For the past two years the facility has been losing money and as a result the facility's owners decided to let the previous administrator go.
Current census (number of residents)- 60
Empty beds- 40
Building rent- $30,000/month
Food- $12 per resident per day
Staffing- $75 per resident per day (this can be adjusted up and down with the SNF's census)
Price paid by a commercially insured or private pay resident- $102 per day
Medicaid rate for a day of patient care- $95
- What is the average cost of caring for one patient for one day given the current census of 60 residents? (Hint: To do this you'll need to divide building rent by the number of days in a month... assume 30... and the number of residents cared for each day. The food and staffing costs are already provided as per patient day amounts).
- Is the accountant correct that Medicaid doesn't pay enough to cover your costs?
- What would happen to your per-patient-day cost for rent if you had more residents?
- What is the contribution margin for a commercially insured/self-pay resident?
- What is the contribution margin for a Medicaid patient?
- At this point do you think you should pursue your idea to market to Medicaid patients further? Why or why not?
- How much are you currently losing each month at your current census level (60 private pay patients)?
- How much would your total profit (or loss) be each month if you added a total of 10 Medicaid residents in addition to the 60 private pay residents? If it's a loss, put a negative.
- How much would your profit (or loss) be each month if you added a total of 20 Medicaid residents in addition to the 60 private pay residents?
- Which scenario is most profitable? Keeping only self-pay patients. Or Adding Medicaid residents, even though Medicaid doesn't pay their full cost of care.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started