Solution to Assignment Exercise 13-3
Q: How many procedures are attributed to each payer?
Solution : The unit has performed a total of 2,000 procedures. Of these,
Payer 1 = 30% x 2,000 = 600 procedures
Payer 2 = 40% x 2,000 = 800 procedures
Payer 3 = 20% x 2,000 = 400 procedures
Payer 4 = 10% x 2,000 = 200 procedures
____
Proof Total = 2,000
Q How much is the net revenue per procedure for each payer, and how much is the contractual allowance
per procedure for each payer?
Solution: The computation is as follows:
Payer #
Gross Charges
% Paid by Each
Payer
Net Revenue
per Procedure
Contractual
Allowance per
Procedure
1
$100.00
80%
$80.00
$20.00
2
$100.00
70%
$70.00
$30.00
3
$100.00
50%
$50.00
$50.00
4
$100.00
90%
$90.00
$10.00
Q: How much is the total net revenue for each payer, and how much is the total contractual allowance for
each payer?
Solution part one: The total net revenue computation for each payer is as follows:
Payer #
Times
Equals
Number of
Net Revenue
Total Net
Procedures
per Procedure
Revenue
per Payer
per Payer
1
600
$80.00
$48,000
2
800
$70.00
$56,000
3
400
$50.00
$20,000
4
200
$90.00
$18,000
Total
2,000
$142,000
Solution part two: The total contractual allowance computation for each payer is as follows:
Payer #
Times
Equals
Number of
Contractual
Total
Procedures
Allowance
Contractual
per Procedure
Allowance
per Payer
per Payer
1
600
$20.00
$12,000
2
800
$30.00
$24,000
3
400
$50.00
$20,000
4
200
$10.00
$ 2,000
Total
2,000
$58,000
Solution Proof Total: $142,000 plus $58,000 = $200,000.
Solution to Assignment 13-4.1
There is no specific solution to this assignment.
Remember, all infusions average two hours apiece. Adding another nurse for six hours means you could
probably fill chair numbers 1, 2 and 3 each with 3 patients each if the patient arrival times were staggered
and all factors worked smoothly. This scenario would amount to a capacity level total of 9 patients in an
ideal day, versus 7 patients as shown in Exhibit 13-1, for a net gain of 2 patients. Adding another nurse
for four hours, however, means you could probably fill chair number 1 and 2 each with 3 patients and
chair number 3 would remain at 2 patients per day. Compared to 7 patients per day in Exhibit 13-1, this is
a net gain of 1 patient.
Solution to Assignment 13-4.2
If you have 4 chairs, you have to have the second nurse for at least four hours. The daily capacity level
would probably amount to 3 patients in Chairs #1 and 2 and 2 patients in Chairs #3 and 4, for a capacity
level total of 10 patients in an ideal day. Compared to 7 patients per day in Exhibit 13-1, this is a net gain
of 3 patients. If you have 4 chairs and have the second nurse for six hours, the daily capacity level would
probably amount to 3 patients in Chairs #1, 2 and 3 and 2 patients remaining in Chair #4. This capacity
level total amounts to 11 patients in an ideal day, for a net gain of 4 patients over the 7 patients assumed
in Exhibit 13-1.
Solution to Assignment Exercise 14-2
Projected Revenue
Hospital 1
Year 1
Year 2
Year 3
Year 4
Year 5
$20,000,00
$22,500,00
$27,500,00
$27,500,00
$30,000,00
0
Hospital 2
0
$20,000,00
0
0
$22,050,00
0
0
$27,550,00
0
0
$27,744,00
0
$31,616,00
0
5-Year Projected Revenue Totals:
Hospital 1 = $125,500,000
Hospital 2 = $128,960,000 including inflation adjustment, as shown in solution above
Hospital 2 = $116,000,000 before inflation adjustment, as shown in assignment assumptions above
Inputs for solution:
(A)
(B)
(C)
(D)
Year per the
Dollars before
Cumulative
Nominal
Inflation Factor*
Dollars**
Look-Up
Inflation
Table
1
21,000,000
(1.05)1 = 1.050
22,050,000
2
25,000,000
(1.05)2 = 1.102
27,550,000
3
24,000,000
(1.05)3 = 1.156
27,744,000
4
26,000,000
(1.05)4 = 1.216
31,616,000
* Assume an annual inflation rate of 5%. Thus 1.00 + 0.05=the 1.05 factor in Column C.
** Column D “Nominal Dollars” equals Column B times Column C.
SOURCE OF FACTOR IN COLUMN C ABOVE:
From the Compound Interest Look-Up Table
“The Future Amount of $1.00” (Appendix 14-B)
Year per the 5-Year
Projected Revenue Table
Year per the
Look-Up Table
Factors at 5% as shown
in column C above
2
1
1.050
3
2
1.102
4
3
1.156
5
4
1.216
Solution to Assignment Exercise 14-3:
Provide exchange rates for both pounds and euros and should provide computations for both $500 and
$1,000 in each currency. As to the actual computations, for example, assume the Wall Street Journal
“Currencies” section shows the euro (shown under “Europe: Euro area) is trading as follows:
“in US$$” = 1.425 and “per US$$” = .7010
Thus at this exchange rate 500 U.S. dollars would be converted into about 350 euros (500 times .7010
equals 350 euros [rounded]), and 1,000 U.S. dollars would be converted into about 700 euros (1,000 times
.7010 equals 700 euros [rounded]).
Furthermore, assume the Wall Street Journal “Currencies” section shows the British pound (shown under
“Europe: UK [United Kingdom] pound)” is trading as follows:
“in US$$” = 1.500 and “per US$$” = .6667
At this exchange rate 500 U.S. dollars would be converted into about 333 pounds (500 times .6667 equals
333 pounds [rounded]), and 1,000 U.S. dollars would be converted into about 667 pounds (500 times
.6667 equals 667 pounds [rounded]).
Solution to Assignment Exercise 14-4:
While solutions will vary, this should be covered:

review the information provided within this assignment for all three sites

refer to Appendix 25-A for additional information

organize the relevant information provided

make and document a series of assumptions

determine costs for each site, based on the information and the assumptions

prepare a report that presents the cost comparisons for grounds care between and among the
three sites

.
prepare an assessment of what the best future course of action should be.