WEEK 4 AAPLICATION-General Hospital a not-for-profit acute care facility, has the following cost structure.....
Question;1. General Hospital a;not-for-profit acute care facility, has the following cost structure for its;inpatient services.;Fixed costs;$10,000,000;Variable cost;per inpatient day;$ 200;Charge;(revenue)per inpatient day;$ 1,000;The hospital;expects to have a patient load of 15,000 inpatient days next year.;a. Construct the hospital?s;base case projected P&L statement.;b. What is the hospital?s;breakeven point;c. What volume is required to;provide a profit of $1,000,000? A profit of $500,000?;d. Assume 20% of the;hospital?s inpatient days come from a managed care plan that wants a 25%;discount from charges. Should the hospital agree to the discount proposal?;2. You are considering;starting a walk-in clinic. Your financial projections for the first year of;operations are as follows;Revenues (10,000) visits;$400,000;Wages and benefits;$220,000;Rent;$ 5,000;Depreciation;$ 30,000;Utilities;$ 2,500;Medical supplies;$ 50,000;Administrative supplies;$ 10,000;Assume that all costs are fixed, except supply costs, which are;variable. Furthermore, assume that the clinic must pay taxes at a 30% rate.;a. Construct the clinic?s;projected P&L statement.;b. What number of visits is;required to breakeven?;c. What number of visits is;required to provide you with an after tax profit of $100,000?
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