Question 8.A dermatology clinic expects to contract with an HMO for an estimated 160,000 enrollees. TheHMO expects 1 in 4 of its enrolled members to use the dermatology services per month.At the end of the year, the dermatology clinic's business manager looked at her monthly figuresand saw that the number of enrolled members had increased by 5% over the budgeted amount,and that 1 in 3 of the total HMO members had used the dermatology services per month.Actual and budgeted statistics are presented below. The total variance is $120,000 and is unfavorable:
Budgeted Enrollees 160,000 Usage Rate0.25 Visits40,000 Cost$440,000 Cost Per Visit$11.00
Question 9.Determine the enrollment variance for the month.
Actual168,0000.333356,000$560,000$10.00
Question 10.Determine the utilization variance for the month.
Question 11.Determine the efficiency variance for the month.
Question 12.Your hospital has billed charges of $10,000,000 in February. If your collection experienceindicates that 20 percent is paid in the month billed, 40 percent in the second month, 20 percentin the third month, and 5 percent in the fourth month, determine the following values:a) Net patient revenue for Februaryb) Collections of February charges in Februaryc) Net accounts receivable at the end of March for February billings.
Use the following information for Questions 13-15You have been asked to establish a pricing structure for radiology on a per-procedure basis.Present budgetary data is presented below:
Budgeted ProceduresBudgeted CostDesired Profit
15,000$ 600,000$ 120,000
It is estimated that Medicare patients comprise 40 percent of total radiology volume and will payon average $38.00 per procedure. Approximately 10 percent of the patients are cost payers. Theremaining charge payers are summarized below:
PayerBlue CrossUnity PPOKaiserSelf Pay
Volume %201510550%
Discount %4101040
Question 13.What rate must be set to generate the required $120,000 in profit in the preceding example?
Question 14.If the forecasted volume increased to 18,000 procedures and budgeted costs increased to$684,000, while all other variables remained constant, what price should be established?
Question 15.Assume that the only change in the original example data is that Blue Cross raises their discountto 20 percent. What price should be set?