SOLUTION: You have been asked to set a rate for a surgicenter. Costs are budgeted to be 4,000,000 per year for projected surgical procedures of 7,000. The surgicenter expects that 50% of i

Question 444831: You have been asked to set a rate for a surgicenter. Costs are budgeted to be 4,000,000 per year for projected surgical procedures of 7,000. The surgicenter expects that 50% of its procedures will be Medicare and that Medicare will pay 550.00 per procedure. The remainder will be charge payers at an expected discount of 29%. If a profit of 400,000 is required, what rate per procedure is required?

Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
You have been asked to set a rate for a surgicenter. Costs are budgeted to be 4,000,000 per year for projected surgical procedures of 7,000.
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The surgicenter expects that 50% of its procedures will be Medicare and that Medicare will pay 550.00 per procedure.
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The remainder will be charge payers at an expected discount of 29%.
If a profit of 400,000 is required, what rate per procedure is required?
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Cost = $4,000,000
Revenue = 550*3500 + (0.81r)(3500)
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Profit = Revenue - Cost
Solve: 550*3500 + (0.81*r)(3500)-4,000,000 > 400,000
rate = $873.02 per procedure
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Cheers,
Stan H.
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