Question

Assume your organization has 100 patients analyzed in the following manner.

15 Medicare patients who pay $2,000 per diagnosis

25 Medicaid patients who pay $1,800 per diagnosis

20 Managed Care patients who pay charges minus a 20% discount

10 Managed Care patients who pay charges minus a 25% discount

10 Private insurance patients who pay charges

10 Charity Patients who pay nothing

10 Bad debt patients who pay nothing

Your organization's average cost per patient is $2000. Calculate the charge necessary to recover your cost.

PLEASE SHOW WORK

Answer 1

The total cost of organization = 100patients *$2000 =$200000

The total charges collected are as follows :

15 Medicare patients *$2000 = $30000

25 Medicaid patients *$1800 = $45000

Let us consider the charge as 'x'

20 managed care patients pays charges with 20% discount

Therefore 20x -0.2 x = 19.8x

10 managed care patients pays charges with 25% discount

Therefore 10x - 0.25x = 9.75x

10 private Insurance patients pay charges = 10x

To recover the cost , the charge necessary to collect is calculated as below

$200000 = $ 30000+$45000+19.8x + 9.75x +10x

$200000 = $75000 + 39.55x

$200000 - $75000 = 39.55x

$125000 = 39.55x

x = $125000/39.55

Therefore x = $ 3160.55

So the charge necessary to recover the cost = $3,160 per diagnosis.

Note :10 charity patients and 10 bad debt patients pay nothing.So we donot consider them while calculating.