Activity: I have selected the 7th Home Work Assignment (HWA) from the material i

Question

Activity: I have selected the 7th Home Work Assignment (HWA) from the material in chapters 14 and 15 in our text, please complete the assignment and post your responses to blackboard. Dr. Mallory practices at your hospital and your competitor. Presented below are data for DRG 469 (major joint and limb reattachments,(lower extremity) with MCC that reflects practice patterns for Dr. Mallory at the two hospitals:

Your Hospital Competitor ____________________________________________________________

Discharges 150 90

Average age 68 50

Length of stay 4.4 4.1

Average cost $10,550 $7,108

Nursing cost 1,998 1,208

Ancillary cost 8,552 5,900

Operating room cost 2,405 2,158

Lab cost 836 484

Radiology cost 277 191

Medical Supplies cost 3,022 1,690

Pharmacy cost 857 335

Other costs 1,156 1,042

Question1: What do you think accounts for the difference in costs between the two hospitals?

Question 2 : Calculate the contribution margin per case based on the following information:

(a) Variable cost per case $2,000. (b) Fixed cost per period $200,000. (c) Price per case $4,800.

Explanation / Answer

Question -2 :    contribution margin per case

     Contribution margin = (sales price - variable cost) / Sales price

   = ($4800 - $2000) / $4800

   = $2800 / $4800

= $ 0.583 per case

So, Contribution Margin per case = 58.3% per case

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