Please help with these questions, I am so novice to finance:
Your Firm has an established debt policy of 60 percent for all capital expenditures. What targeted valuefor the replacement viability ratio must be set?
Your hospital has billed charges of $4,000,000 in February. If your
Collection experience indicates that 20 percent is paid in the month billed, 40 percent in the second month, 20 percent in the third month, and 5 percent in the fourth month,
determine the following value:
(a)Net patient revenue for February
(b) Collections of February charges in February
(c) Net accounts receivable at the end of March for February billings
Omega Health Foundation is considering buying personal computers to install in each patient’s room. The cost of the investment will be $1,400,000. It is expected that the technology will reduce nursing cost by $200,000 per year for the next seven years. If your discount rate is 10 percent, what is the profitability index of the investment?
You are reviewing your targets for short-term cash reserves next year. You wish to carry at least
twenty days of cash on hand. If annual budgeted cash expenses are $48Milion, what amount of short term reserves should be targeted?
Calculate the contribution margin per case based on the following information:
(a) Variable cost per case $2,000.
(b) Fixed cost per period $200,000.
(c) Price per case $4,800.
Dr. Mallory practices at your hospital and your competitor. Presented below are data for DRG 209 (major joint and limb reattachments,(lower extremity) that reflects practice patterns for Dr. Mallory at the two hospitals:
Your Hospital Competitor
_______________________________________
Discharges 150 90
Average age 68 50
Length of stay 4.4 4.1
Average cost $10,550 $7,108
Nursing cost 1,998 1,208
Ancillary cost 8,552 5,900
Operating room cost 2,405 2,158
Lab cost 836 484
Radiology cost 277 191
Medical Supplies cost 3,022 1,690
Pharmacy cost 857 335
Other costs 1,156 1,042
What do you think accounts for the difference in costs between the two hospitals?
Omega System Services, a member of the Omega Health Foundation operates a free-standing ambulatory care center that averages $60 in charges per patient. Variable costs are approximately $10 per patient, and fixed costs are about $1.2 million per year. Using this data, how many patients must be seen each day, assuming a 365-day operation, to reach the break- even point?
Your hospital has been approached by a major health maintenance organization (HMO) to perform all their diagnosis related group (DRG) 209 cases (major joint reattachment procedures). They have offered a flat price of $10,000 per case. You have reviewed your charges for DRG 209 during last year and found the following profile:
Average charge: $15,000
Average LOS: 12 days
Routine Charge Cost/Charge Variable Cost %
Routine charge $3,600 0.80 60
Operating Room 2,657 0.80 80
Anesthesiology 293 0.80 80
Lab 1,035 0.70 30
Radiology 345 0.75 50
Medical Supplies 4,524 0.50 90
Pharmacy 1,230 0.50 90
Other ancillary 1,316 0.80 60
Total Ancillary $11,400 0.75 50
In the above data set, assume that the hospital’s cost-to-charge ratio is 0.80for routine services
and 0.75 for all other ancillary services. Using this information, what would be the average cost of DRG 209 be?
Estimate the variable cost per DRG 209 using the department cost/charge ratio and variable
cost percentages.
The HMO in the above example has indicated that their doctors use less expensive joint implants. If this less expensive implant is used, your medical supply charges would be reduced by $2,000. What is the estimated reduction in variable cost?
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?
• Geisinger Health Plan has asked your hospital to provide all of its obstetric services. It has offered to pay your hospital $2,000 for a normal l delivery (DRG 373), without complications. You have reviewed the standard treatment protocol for this product line and discovered that your hospitals cost is $2,400. What should you do?
The essentiality of finance in the practical world and its applicable evolution is discussed in detail. Accompanying fields such as accounting, economics, audit etc; are discussed in brief. The article throws light on the allied practices of financial management and possible careers related to them. Though the main focus of the article is to expound modes of expert help for aspiring finance management grads, a deep look-in is discussed on the real world application of the said academic field in order to familiarize the subject to freshmen deciding finance as a course and pursuing grads looking for specializations effective for their career.
I need help.
Omega System Services, a member of the Omega Health Foundation operates a free-standing ambulatory care center that averages $60 in charges per patient. Variable costs are approximately $10 per patient, and fixed costs are about $1.2 million per year. Using this data, how many patients must be seen each day, assuming a 365-day operation, to reach the break- even point?
A free-standing ambulatory care center averages $60 in charges per patient. Variable costs are approximately $10 per patient, and fixed costs are about $1.2 million per year. Using these data, how many patients must be seen each day, assuming a 365-day operation, to reach the break-even point?
Question 1: Your Firm has an established debt policy of 60 percent for all capital expenditures. What targeted value for the replacement viability ratio must be set?
To determine the targeted value for the replacement viability ratio, you need to consider the following formula:
Replacement Viability Ratio = Debt / Total Capital Expenditure
Given that the debt policy is 60 percent, this means that debt is 60 percent of the total capital expenditure. Therefore, you can calculate the targeted value for the replacement viability ratio by substituting the debt percentage into the formula.
For example, if the total capital expenditure is $1,000,000, then the debt would be $600,000 (60 percent of $1,000,000). So the replacement viability ratio would be:
Replacement Viability Ratio = $600,000 / $1,000,000 = 0.6 or 60%
Therefore, the targeted value for the replacement viability ratio in this case would be 60%.
Question 2: Your hospital has billed charges of $4,000,000 in February. If your Collection experience indicates that 20 percent is paid in the month billed, 40 percent in the second month, 20 percent in the third month, and 5 percent in the fourth month, determine the following values:
(a) Net patient revenue for February
To calculate net patient revenue for February, you need to multiply the billed charges by the collected percentages for each month.
Net patient revenue for February = Billed charges in February - (Collected in month 2 + Collected in month 3 + Collected in month 4)
Given that the billed charges in February are $4,000,000, and the collection percentages are 20%, 40%, 20%, and 5%, respectively, you can calculate the net patient revenue for February as follows:
Net patient revenue for February = $4,000,000 - ($4,000,000 * 0.4 + $4,000,000 * 0.2 + $4,000,000 * 0.05)
(b) Collections of February charges in February
To calculate the collections of February charges in February, you need to multiply the billed charges by the collection percentage for the month billed.
Collections of February charges in February = Billed charges in February * Collection in month 1
Given that the billed charges in February are $4,000,000, and the collection percentage for the month billed is 20%, you can calculate the collections of February charges in February as follows:
Collections of February charges in February = $4,000,000 * 0.2
(c) Net accounts receivable at the end of March for February billings
To calculate the net accounts receivable at the end of March for February billings, you need to subtract the collections in each month from the billed charges.
Net accounts receivable at the end of March for February billings = Billed charges in February - (Collections in month 2 + Collections in month 3 + Collections in month 4)
Given that the billed charges in February are $4,000,000, and the collection percentages are 20%, 40%, 20%, and 5%, respectively, you can calculate the net accounts receivable at the end of March for February billings as follows:
Net accounts receivable at the end of March for February billings = $4,000,000 - ($4,000,000 * 0.4 + $4,000,000 * 0.2 + $4,000,000 * 0.05)
Question 3: Omega Health Foundation is considering buying personal computers to install in each patient’s room. The cost of the investment will be $1,400,000. It is expected that the technology will reduce nursing cost by $200,000 per year for the next seven years. If your discount rate is 10 percent, what is the profitability index of the investment?
To calculate the profitability index of the investment, you need to compare the present value of the expected cash flows to the initial investment cost. The formula for calculating the profitability index is as follows:
Profitability Index = Present Value of Cash Flows / Initial Investment
The present value of the cash flows can be calculated using the present value formula:
Present Value = Cash Flow / (1 + Discount Rate)^n
where n is the number of years.
Given that the initial investment cost is $1,400,000, the expected annual cash flow is $200,000, and the discount rate is 10 percent, you can calculate the present value of the cash flows for each year and then calculate the profitability index as follows:
Present Value of Cash Flow (Year 1) = $200,000 / (1 + 0.10)^1 = $200,000 / 1.10
Present Value of Cash Flow (Year 2) = $200,000 / (1 + 0.10)^2 = $200,000 / 1.21
Present Value of Cash Flow (Year 3) = $200,000 / (1 + 0.10)^3 = $200,000 / 1.33
...
Present Value of Cash Flow (Year 7) = $200,000 / (1 + 0.10)^7 = $200,000 / 1.97
Total Present Value of Cash Flows = Sum of Present Value of Cash Flow for each year
Profitability Index = Total Present Value of Cash Flows / Initial Investment
With this information, you can calculate the profitability index for the investment.
Question 4: You are reviewing your targets for short-term cash reserves next year. You wish to carry at least twenty days of cash on hand. If annual budgeted cash expenses are $48 million, what amount of short-term reserves should be targeted?
To determine the amount of short-term reserves that should be targeted, you need to calculate the daily cash expenses and then multiply it by the desired number of days of cash on hand.
Daily Cash Expenses = Annual Budgeted Cash Expenses / Number of Business Days in a Year
Given that the annual budgeted cash expenses are $48 million and the desired number of days of cash on hand is twenty, you can calculate the daily cash expenses and the targeted amount of short-term reserves as follows:
Number of Business Days in a Year = 365 (assuming a year with no leap days or holidays)
Daily Cash Expenses = $48,000,000 / 365
Targeted Short-Term Reserves = Daily Cash Expenses * Number of Days
With this information, you can calculate the targeted amount of short-term reserves.