You are a financial consultant and have been asked to forecast how much revenue your client organization must generate per case to meet its financial requirements. Your client has provided you with the information below. You need to provide the following information to your client:
• The target case rate
• A brief analysis of the impact of a 5% reduction in the budgeted expense.
Annual Case Volume
Medicare 1,500
Cost-paying cases 600
Charge-paying cases 750
Charity care cases 150
Total cases 3,000
Financial data
Budgeted expense $7,290,000
Debt principal payment $350,000
Working capital increase $425,000
Capital expenditure $515,000
Current payment structure
Medicare pays $3,150 per case for a total of $4,650,000
Cost payers pay their full share of existing expenses