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[answered] Assume that a certain nursing home has two categories of pa


Assume that a certain nursing home has two categories of payers. Medicaid pays $60.00 per day and private pay patients pay the established per diem, but approximately 10 percent of private pay charges are not collected. If 50 percent of the patients are Medicaid and 50 percent are private pay, what rate must be set to generate $150,000 in profit? Variable costs are $45.00 per day and fixed costs are expected to be $1,000,000. Expected volume is 50,000 patient days.

?

Medicaid = $60 X 50,000 = $3,000,000/ 0.50 = $1,500,000

Break even = $3,250,000 -$1,500,000 =$1,750,000

Profit = $1,750,000 + 150,000 (profit) = $1,900,000

Variable costs = $45 X 50,000 = $2,250,000

Fixed costs = $1,000,000Total costs = $3,250,000

Rate = 1,900,000 / 50,000

=$ 38.00

?

2.Using this data and assuming that the nursing home charges $100 per day, what would be the nursing home?s required volume (in patient days) in order to make $150,000 profit?

?I need help for the 2nd portion of the question

 


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