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Devry HSM340 quiz 3




Question;Page 1;Question 1.1.(TCO 3) When considering;how changes in volume affect total fixed costs, it is important to;consider: (Points: 5);the relevant rangethe variable cost per unitpriceboth A and Bboth B and C;Question 2.2.(TCO 3) To maximize the;amount of profit realized from a rate increase, charges should be;increased most in departments with: (Points;5);High charge payer mix/high;write-offs for bad debt, charity, & discountsLow charge payer mix/low;write-offs for bad debt, charity, & discountsHigh charge payer mix/low;write-offs for bad debt, charity, & discountsLow charge payer mix/high;write-offs for bad debt, charity, & discounts;Question 3.3.(TCO 3) Your controller has;told you that the marginal profit of DRG 209 (major joint procedure) for;a Medicare patient exceeds the marginal profit for an average charge;patient. Why might this occur? (Points;5);High fixed costs of treatmentLow Medicare paymentHigh pricesLow prices;Question 4.4.(TCO 3);Your hospital has been;approached by a major HMO to perform all their DRG 225 cases (foot;surgeries). They have offered a flat payment of $8,000 per case. You have;reviewed your charges for DRG 225 during the last year and found the;following profile;Average Charge: $11,300;Average LOS: 4.5 Days;Cost/Charge;Variable Cost %;Routine;Charge;$3,200;0.75;65;Operating;Room;1,850;0.7;80;Anesthesiology;210;0.7;75;Lab;575;0.65;40;Radiology;275;0.65;50;Medical;Supplies;3,220;0.6;85;Pharmacy;955;0.55;85;Other;Ancillary;1,015;0.75;55;Total;Ancillary;$8,100;0.7;75;In the above data set;assume that the hospital?s cost-to-charge ratio is 0.75 for routine;services and 0.70 for Total Ancillary services. Using this information;what would the average cost of DRG 225 be? (Your answer might be slightly;different due to rounding. Pick the closest.);(Points: 5);$7,613$8,100$7,613$8,000$8,070;Question 5.5.(TCO 3) David Jones, the new administrator for;a surgical clinic, was trying to determine how to allocate his indirect;expenses. His staff was complaining that the current method of taking a;percentage of revenues was unfair. He decided to try to allocate utilities;based on square footage of each department, administration based on direct;costs, and laboratory based on tests. Use the information in the chart;below to answer the question.;Square Footage;Direct Expenses;Lab Tests;Utilities;200,000;Administration;2,000;500,000;Laboratory;2,000;625,000;Day-op Suite;3,000;1,400,000;4,000;Cystoscopy;1,500;350,000;500;Endoscopy;1,500;300,000;500;Total;10,000;3,375,000;5,000;Based on the scenario above, what are the Day Op Suite's total expenses? (Points: 10);Question 6.6.(TCO 3) Your hospital has been approached by a;major HMO to perform all their MS-DRG 470 cases (major joint procedures).;They have offered a flat price of $10,000 per case. You have reviewed your;charges for MS-DRG 470 during the last year and found the following;profile;Average Charge;$15,000;Average LOS;5 Days;Routine Charge;$3,600;Cost/Charge;0.80;Variable;Cost % 60;Operating Room;2,657;0.80;80;Anesthesiology;293;0.80;80;Lab;1,035;0.70;30;Radiology;345;0.75;50;Medical Supplies;4,524;0.50;90;Pharmacy;1,230;0.50;90;Other Ancillary;1,316;0.80;60;Total Ancillary;$11,400;0.75;50;The HMO in the above example has indicated that their doctors use less;expensive joint implants. If this less expensive implant were used, your;medical supply charges would be reduced by $2,000. What is the estimated;reduction in variable cost? (Points;10);Question 7.7.(TCO 3) How are costs classified? (Points: 10)


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