Your hospital has been approached by a major HMO to perform all their MS-DRG 470 cases (major joint procedures). They have offered a flat price of $10,000 per case. You have reviewed your charges for MS-DRG 470 during the last year and found the following profile:

Estimate the variable cost per MS-DRG 470 using the departmental cost/charge ratios and variable cost percentages. PLEASE show how you have achieved your answer. Thanks!

Average charge: $15,000 Average LOS: 5 Days Cost/Charge Variable Cost % Routine charge Operating room Anesthesiology Lab Radiology Medical supplies Pharmacy Other ancillary Total ancillary $3,600 0.80 2.657 0.80 293 0.80 1,035 0.70 345 0.75 4,524 0.50 1.230 0.50 1,316 0.80 $11,400 0.75 60 80 80 30 50 90 90 60 50