# Cost Behavior Profit Analysis Cost Allocation Business And Finance Homework Help

Class: Financial Management of Healthcare Organizations

Text-book: Healthcare Finance: An Introduction to Accounting andFinancial Management

· Cost Behavior & Profit Analysis

· Cost Allocation

· Pricing & Service Decisions

· Planning & Budgeting

Analyzing Bay Pines Medical Center’s Financial Statement

After gaining anunderstanding of the components of a financial statement, analyzing andapplying what the components represent, in terms of future planning, are themost important aspects of working in healthcare finance. Consider the followingdata and make your best analysis of per member per month (PMPM) rates,considering reductions in utilization or pricing.

Bay Pines Medical Centerestimates that a capitated population of 50,000 would have the following basecase utilization and total cost characteristics:

Service Category

Inpatient Days
per 1,000 Enrollees

Average Cost
per Day

General

150

\$1,500

Surgical

125

\$1,800

Psychiatric

70

\$700

Alcohol/Drug Abuse

38

\$500

Maternity

42

\$1,500

Total

425

\$1,367

On the basis of yourdata analysis, respond to the following:

• What is the PMPM rate that Bay Pines must set to covermedical costs plus administrative expenses?
• What would be the rate if a utilization managementprogram were to reduce utilization within each patient service category by10 percent? And by 20 percent?
• Consider the initial base case utilization assumption.What rate would be set if the average cost on each service were reduced by10 percent?
• Assume that both utilization and cost reductions weremade. What would the premium be?

Submission Details:

• Present your analysis as a 3-page report in a MicrosoftWord document formatted in APA style.
• On a separate page, cite all sources using APA format.
• By Tuesday,June 9, 2015, submit your assignment to the W3 Assignment 2Dropbox.

Maximum Points

Calculated the PMPMrate to cover medical and administrative costs.

40

Calculated utilizationrates reduced by 10 percent.

36

Calculated utilizationrates reduced by 20 percent.

36

Calculated the ratewith the average service cost reduced by 10 percent.

40

Calculated the PMPMpremium after utilization and cost reductions.

40

Wrote in a clear,concise, and organized manner; demonstrated ethical scholarship in accuraterepresentation and APA style attribution of sources; displayed accuratespelling, grammar, and punctuation.

8

Total:

200

Criteria

Unsatisfactory

Emerging

Proficient

Exemplary

Score

Assignment Components:

Calculated the PMPM rate to cover medical and administrativecosts

0-14 Points

The calculation of the PMPMrate is unclear and inaccurate.

15-24Points

The calculation of the PMPMrate is somewhat clear and accurate.

25-35Points

The calculation of the PMPMrate is clear and mostly accurate.

36-40Points

The calculation of the PMPMrate is clear and accurate and is supported by a peer reviewed reference.

__of 40

Calculated 10% reduced utilization rates

0-12Points

The calculation of the PMPMrate is unclear and inaccurate.

13-25Points

The calculation of the PMPMrate is somewhat clear and accurate.

26-32Points

The calculation of the PMPMrate is clear and mostly accurate.

33-36Points

The calculation of the PMPMrate is clear and accurate and is supported by a peer reviewed reference.

__of 36

Calculated 20% reduced utilization rates

0-12Points

The calculation of the PMPMrate is unclear and inaccurate.

13-25Points

The calculation of the PMPMrate is somewhat clear and accurate.

26-32Points

The calculation of the PMPMrate is clear and mostly accurate.

33-36Points

The calculation of the PMPMrate is clear and accurate and is supported by a peer reviewed reference.

__of 36

Calculated the rate with reduced average service cost by 10%.

0-14Points

The calculation of the PMPMrate is unclear and inaccurate.

15-24Points

The calculation of the PMPMrate is somewhat clear and accurate.

25-35Points

The calculation of the PMPMrate is clear and mostly accurate.

36-40Points

The calculation of the PMPMrate is clear and accurate and is supported by a peer reviewed reference.

__of 40

Calculated the PMPM premium after utilization and costreductions

0-14Points

The calculation of the PMPMrate is unclear and inaccurate.

15-24Points

The calculation of the PMPMrate is somewhat clear and accurate.

25-35Points

The calculation of the PMPMrate is clear and mostly accurate.

36-40Points

The calculation of the PMPMrate is clear and accurate and is supported by a peer reviewed reference.

__of 40

Presentation andWriting Components:

Organization

Introduction

Transitions

Conclusion

0Points

Introduction is limited or missingentirely.

Transitions between ideas areinfrequent, illogical, or missing entirely.

Conclusion is limited or missingentirely.

0.5Point

Introduction is present butincomplete or underdeveloped.

Conclusion is recognizable, butincomplete or underdeveloped.

1 Point

Introduction has an opening,provides some background information, and states the topic.

Transitions between ideas arepresent.

Conclusionsummarizes main argument and has a clear ending.

2Points

Introduction catches theaudiences’ attention, provides compelling and appropriate backgroundinformation, and clearly states the topic.

Thoughtful transitions betweenideas are appropriate and help the flow of ideas.

Conclusionleaves the audience with a sense of closure and provides concluding insights.

__of 2

Style

Tone

Audience

Word Choice

0Points

Presentation (including backgroundimages, text, choice of words, and appropriateness of tone) is lacking orcompletely overpowers the presentation to the point of interfering withcomprehension, or design is inappropriate for the assignment.

0.5Point

Presentation (such as backgroundimages, text, choice of words, and appropriateness of tone) upstages thewriting, or design is too understated at points, or design is inconsistent.

1 Point

Presentation (such as backgroundimages, text, choice of words, and appropriateness of tone) is clear,appropriate for the assignment, balanced, and compliments the writing.

2Points

Presentation (such as backgroundimages, text, choice of words, and appropriateness of tone) is clear, appropriate for theassignment, balanced, and compliments the writing throughout thepresentation. The design engages the audience and does not distract frominformation.

__of 2

Usage and Mechanics

Grammar

Spelling

Sentence structure

0Points

Anywritten portion contains numerous errors in spelling, grammar, and/or hassentence structure that severely interferes with readability andcomprehension.

0.5Point

Anywritten portion contains errors in spelling and grammar that somewhatinterfere with comprehension.

1 Point

Anywritten portion follows conventions of spellingand grammar throughout. Errors are infrequent and do not interfere withcomprehension.

2Points

Thepresentation is basically error free in terms of mechanics. In any writtenportion, grammar and mechanics help establish a clear idea and aid the readerin following the writer’s logic.

__of 2

APA Elements

Paraphrasing

Quotations

When appropriate or assigned

0Points

No attempt at APA formatting in presentation.

0.5Point

APA format is attempted toparaphrase, quote, and cite, but errors are significant.

1 Point

Used APA format, accuratelyparaphrased, quoted, and cited in most areas throughout when appropriate orcalled for. Errors present are mostly minor.

2Points

Used APA format, accurately paraphrased, quoted, and cited throughoutwhen appropriate or called for. Only a few minor errors present.

__of 2