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me understand this chemistry proFinkler Residential Treatment Facility
anticipates that it will have 25000 patient-days next year. This is
substantially below its capacity of 35000 patient-days per year. The facility
has variable costs of $75 per patient-day. Its fixed costs are $1500000 per
year. a. Calculate the average cost per patient-day for Finkler Residential Treatment
Facility at a volume of 25000 patient-days and at 30000patient-days. b. Assume that an HMO offers to generate 5000 patient-days per year. It
currently sends no patients to Finkler Residential Treatment Facility. It is
willing to pay a maximum flat amount of $90 per patient-day. Assuming that its
case mix is similar to the current 25000 patient-days should Finkler accept
its business? (Finkler Ward & Baker 2007 p. 95)3. The health hospital has been pushed by
its physician to add an open heart surgery unit. This has always been resisted
on the grounds that there was not adequate demand to make the unit financially
reasonable. Under the DRG system Healthy could expect to receive average
reimbursement of $56000 per open heart surgery for each of an anticipated 100
open heart surgeries per year. Incremental costs would be expected to $60000
per case so a loss would be incurred.
However the prestige associated with offering open heart surgery would
attract new affiliations. It is expected that 10 additional general practice physicians
would join the staff and each of these 10 physicians would generate 20 patients
per year spread across a wide variety of DRGs. Struggling has excess capacity
and would welcome additional patients.
It is expected that the average DRG reimbursement for these new patients
would be $28000. The average cost is expected to be $27800. The average
marginal cost is expected to be $26400. Should health add open heart surgery as
a loss leader/

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