Financial Markets

Chapter 9 #11 & 20

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This is for Speccy-the-Prof. to complete a handshake. All calculaitons is needed. Chapter 9 questions 11 and 20.

Zelman, W., McCue, M., & Glick, N. (2009). Financial management of health care organizations. (3rd ed.). San Francisco, CA: John Wiley & Sons, Inc.

#11. Calculating break-even. Jasmine Gonzales, administrative director of Small Imaging Center, has been asked by the practice members to see if it’s feasible to add more staff to support the practice’s mammography service, which currently has 2 analogue film or screen units and 2 technologists. She has compiled the following information:

Reimbursement per screen	$66.05
Equipment costs per month	$1,450.00
Technologist cost per mammography	$15.60
Technologist aide per mammography	$3.10
Variable cost per mammography	$15.00
Equipment maintenance per month per machine	$916.66

a. What is the monthly patient volume needed per month to cover fixed and variable costs?

b. What is the patient volume needed per month if Small Imaging Center desires to cover its fixed and variable costs and make a $5,000 profit on this equipment to cover other costs associated with the organization?

c. If reimbursement decreases to $60 per screen, what is the patient volume needed per month to cover fixed and variable costs but not profit?

d. If a new technologist aide is hired, what is the patient volume needed per month at the original reimbursement rate to variable costs, but not profit?

#20. Break-even. Zack Millman Clinic is seeking to provide sports-related health care services to high schools in the area. Zack Millman estimates that the cost to provide care would be $1,000 plus $12 per athlete per month on a 9-month basis. The high schools jointly offered to pay the clinic $10,000 for a 9-month contract to cover 75 athletes.

a. If the clinic accepts this bid and contracts with the high schools, will it earn a profit or loss for the year? How much?

b. What would the contract price have to be for Millman to break even?

c. If Zack Millman Clinic wants to earn $5,000 in profit for the year, and the school system preferred to pay on per athlete per month basis, what would the price have to be?

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