Class: Financial Management of Healthcare Organizations
Text-book: Healthcare Finance: An Introduction to Accounting andFinancial Management
This weeks readings:
· 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
In addition to medicalcosts, Bay Pines allocates 10 percent of the total premium foradministration/reserves.
Tasks:
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.
- Name your documentSU_MHC6305_W3_A2_LastName_FirstInitial.doc.
- By Tuesday,June 9, 2015, submit your assignment to the W3 Assignment 2Dropbox.
Assignment 2 Grading Criteria
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
Additional Rubric
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.
Transitions between ideas aresporadic.
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
Attribution
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
Comments TotalScore ___200
