Homework Help: Finance

Posted by Karam on Friday, June 24, 2011 at 9:25am.

You have been asked by management to explain the variances in cost under your inpatient
capitated contract. The following data is provided:
Budget Actual
Inpatient costs $12,568,500 $16,618,350
Members 42,000 42,000
Admission rate 0.070 0.095
Case mix index 0.90 0.85
Cost per case (CMI= 1.0) $4,750 $4,900

What dollar amount of the total variance is attributed to enrollment variance?
(a) $299,250
(b) 0
(c) None of the above

What dollar effect did the increased admission rate have on cost?
The intensity of care delivered dropped from a budgeted case rate of 0.90 to an actual case mix of
0.85. What dollar effect did this have on costs?

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