A dermatology clinic expects to contract with an HMO for an estimated 160,000 enrollees

Question # 8 (5 points)

A dermatology clinic expects to contract with an HMO for an estimated 160,000 enrollees. The HMO expects 1 in 4 of its enrolled members to use the dermatology services per month.

At the end of the year, the dermatology clinic’s business manager looked at her monthly figures and saw that the number of enrolled members had increased by 5% over the budgeted amount, and that 1 in 3 of the total HMO members had used the dermatology services per month.

Actual and budgeted statistics are presented below. The total variance is $120,000 and is unfavorable:

Question # 9 (5 points)

Determine the enrollment variance for the month.

Question # 10 (5 points)

Determine the utilization variance for the month.

Question # 11 (5 points)

Determine the efficiency variance for the month.

Question # 12 (16 points)

Your hospital has billed charges of $10,000,000 in February. If your collection experience indicates that 20 percent is paid in the month billed, 40 percent in the second month, 20 percent in the third month, and 5 percent in the fourth month, determine the following values:

Net patient revenue for February

Collections of February charges in February

Net accounts receivable at the end of March for February billings

Use the following information for Questions 13–15

You have been asked to establish a pricing structure for radiology on a per-procedure basis. Present budgetary data is presented below:

Budgeted Procedures 15,000

Budgeted Cost $600,000

Desired Profit $120,000

It is estimated that Medicare patients comprise 40 percent of total radiology volume and will pay on average $38.00 per procedure. Approximately 10 percent of the patients are cost payers. The remaining charge payers are summarized below:

Payer Volume % Discount %

Blue Cross 20 4

Unity PPO 15 10

Kaiser 10 10

Self Pay 5 40

50%

Question # 13 (10 points)

What rate must be set to generate the required $120,000 in profit in the preceding example?

Question # 14 (10 points)

If the forecasted volume increased to 18,000 procedures and budgeted costs increased to $684,000, while all other variables remained constant, what price should be established?

Question # 15 (10 points)

Assume that the only change in the original example data is that Blue Cross raises their discount to 20 percent. What price should be set?