# contractual allowance per procedure for each payer?

Assignment Exercise 133 PERFORM A CONTRACTUAL ALLOWANCE:
¢Â Â  Â 1. Your units gross charges for the period to date amount to \$200,000.
¢Â Â  Â 2. The uniform gross charge for each procedure in your unit is \$100.
¢Â Â  Â 3. The unit receives revenue from four major payers. The number of procedures performed

for the period totals 2,000. Of that total, the number of procedures per payer (stated as a

percentage) is as follows: Payer 1 = 30%Payer 2 = 40%Payer 3 = 20%Payer 4 = 10%
¢Â Â  Â 4. The following contractual payment arrangements are in effect for the current period.

The percentage of the gross charge that is currently paid by each payer is as follows: Payer 1 =

80% [Medicare]Payer 2 = 70% [Commercial managed care plans]Payer 3 = 50% [Medicaid]Payer 4 = 90%

[Self-pay]
¢Â Â  Â Q: How many procedures are attributed to each payer?
¢Â Â  Â Q: How much is the net revenue per procedure for each payer, and how much is the

contractual allowance per procedure for each payer?
¢Â Â  Â Q: How much is the total net revenue for each payer, and how much is the total contractual

allowance for each payer?
Assignment Exercise 134.1: Forecast Capacity Levels
Review the information in Exhibit 131. The exhibit assumes three chairs and one 40-hour RN, for a

realistic capacity level of seven patients infused per day.
Exhibit 131  illustrates the array of elements that should be taken into account when computing

maximum capacity levels. This computation is important because your forecast should take maximum

capacity into account. (Alternative assumptions can also be made, of course. See the sensitivity

analysis discussion in a following chapter.)
Exhibit 131 Capacity Level Checkpoints for an Outpatient Infusion Center
Outpatient Infusion Center Capacity Level Checkpoints
# infusion chairsÂ Â  Â 3 chairs
# staffÂ Â  Â 1 RN
# weekly operating hoursÂ Â  Â 40 hours
# of hours per patient infusionÂ Â  Â average 2 hours (for purposes of this

example)

Required
Prepare another Infusion Center Capacity Level Forecast as follows:
Assume the same three infusion chairs, but add another nurse for either four or six hours per day.

How would this change the daily capacity level for number of patients infused per day?
Assignment Exercise 134.2
Required
Prepare another Infusion Center Capacity Level Forecast as follows:
Increase the number of infusion chairs to four, and add another nurse for either four or six hours

per day. How would this change the daily capacity level for number of patients infused per day?

Assignment Exercise 142: Cumulative Inflation Factor for Comparable Data
Review Table 143 and the accompanying text.
SEE SEPARATE ATTACHMENT FOR TABLE 14-3
Assumptions
Two hospitals report their annual projected revenue for five years to the local newspaper for a

story on the areas future economic outlook. However, Hospital 1 has applied a cumulative

inflation factor of 5% per year while Hospital 2 has not applied any inflation factor. Thus the

information is not properly comparable.
Projected Revenue
Year 1Â Â  Â Year 2Â Â  Â Year 3Â Â  Â Year 4Â Â  Â Year 5
Hospital 1Â Â  Â \$20,000,000 Â Â  Â \$22,500,000 Â Â  Â \$27,500,000 Â Â  Â \$27,500,000 Â Â  Â \$30,000,000
Hospital 2Â Â  Â \$20,000,000 Â Â  Â \$21,000,000 Â Â  Â \$25,000,000 Â Â  Â \$24,000,000 Â Â  Â \$26,000,000

Required
Revise Hospital 2s projections by applying a cumulative inflation factor of 5% per year.
Assignment Exercise 143

travel to London to give an important speech at a conference. He will then travel to Paris to tour

a research facility before returning home. Although his travel expenses are being funded by the

foundation, he will still need to take along some personal money. Consequently, he asks you to

figure the exchange rates for \$500 and for \$1,000 in both pounds and euros. He explains that he is

trying to judge the spending power of U.S. dollars when converted to the other currencies so he

can decide how much personal money to take on the trip.
Required
Locate the current exchange rates for pounds and euros and compute the currency conversion for

\$500 and for \$1,000.
Assignment Exercise 144: The Discovery
The Chief Financial Officer at Sample General Hospital has just discovered that the hospitals

Chief of the Medical Staffs son Jason, a student at the local community college, is paid \$100 per

week year-round for grounds maintenance at the hospitals Outpatient Center.
The CFO, no fan of the Chief of Medical Staff, now wants you to prepare a report that compares the

relative costs of lawn care at each of three locations: the hospital itself, the outpatient

center, and the hospital-affiliated nursing home down the block.
Required
Review the available information for grounds maintenance at the three facilities. Decide how to

convert this information into comparable data. Then prepare a report, based on your assumptions,

that presents comparable costs of grounds care. Also provide your assessment of what the best

future course of action should be.
Relevant Information
So far you have assembled the following information. Now you need to decide how it can be

converted into comparable data.
Introduction to the Three Facilities
Sample General Hospital is an older 100-bed hospital. The new Outpatient Center, built last year,

is across the street and the Golden Age Nursing Facility is down one block, on the corner. All

three facilities are part of the Metropolis Health System. (Appendix 28-A contains some financial

details about Sample Hospital.) The hospital is located in the midwestern sunbelt; there is

occasional frost in the winter but no snow.
SEE SEPARATE ATTACHMENT FOR APPENDIX 28-A
Grounds Maintenance Tasks That Should Be Performed at All Three Sites
¢Â Â  Â ¢ Mowing and edging
¢Â Â  Â ¢ Walk sweeping
¢Â Â  Â ¢ Raking leaves
¢Â Â  Â ¢ Blowing off parking lot
¢Â Â  Â ¢ Flower bed maintenance (where necessary)
¢Â Â  Â ¢ Hedge trimming and minor tree pruning (major tree trimming is performed by a contractor

on an as-needed basis and thus should be disregarded)
https://strayer.vitalsource.com/books/9781284061727/content/id/bm02fig1
https://strayer.vitalsource.com/books/9781284061727/content/id/ch28a

https://strayer.vitalsource.com/books/9781284061727/content/id/ch14tab3
https://strayer.vitalsource.com/books/9781284061727/content/id/ch13exh1

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