Posted: September 12th, 2015

Health care organization’s profitability

Case Study of a health care organization’s profitability
In this assessment you will use the data provided below and conduct a profit (CVP) analysis. You will be graded based on your understanding of profit (CVP) analysis, the accuracy of your calculations, the validity of you conclusions and your ability to clearly communicate your analysis. To complete this assignment, follow these steps.

Assume the following information about cost and charges for a hospital in 2014:

-Fixed Costs = $10,000,000
-Variable cost per inpatient Day = $200
-Charge Per Inpatient Day = $1,000.
-Initial volume of 15,000 inpatient days

1) Estimate the:
a) accounting breakeven point quantity (in terms of inpatient days) and breakeven dollar amount and
b) the economic breakeven point quantity (inpatient days) and dollar amount.
2) Explain the contribution margin.

Write a short paper in the following format:

For each measure estimated above, in a paragraph:

1) Define the measure, explain the importance of that measure to the healthcare services manager.
2) Explain how these breakeven points would vary in a capitated and non-capitated environment.
3)Provide a numerical example in a table to illustrate difference.

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