Health Care Services Reimbursement

Question Description

In 2013, the Gastroenterology Clinic of Pearland Medical Center had revenue totaling $14,550,400. The Gastroenterology Clinic costs data for a 12-month period from January 2013 through December 2013 were reported as follows:

Month, 2013 Number of Patient Visits Gastroenterology Clinic Costs, $
January 6,755 945,700
February 6,620 946,660
March 5,834 880,934
April 6,228 927,972
May 7,554 944,250
June 7,620 914,400
July 7,136 949,088
August 7,440 959,760
September 6,453 942,138
October 5,325 825,375
November 5,588 854,964
December 7,020 961,740
  1. Find the fixed and variable portion of costs using the high-low method.
  2. Calculate the contribution margin, the contribution margin ratio, and the per-visit revenue, costs, and operating income.
  3. Discuss the importance of computation of the contribution margin in evaluating the relationship of cost, volume, and profit.
  4. In deciding to continue (or to discontinue) a service, which revenues currently do not cover total cost. Which is more important in the short run, variable cost or fixed cost? In the long run (with more service volume)? Why?

Length: 3–4 pages, excluding title page and references.

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SLP Assignment Expectations

Assessment and Grading: Your paper will be assessed based on the performance assessment rubric that is linked within the course. Review it before you begin working on the assignment.

Your submission should meet the guidelines on file format, in-text citations and references, scholarly sources, scholarly writing, and use of direct quotes noted under Module 1 Assignment Expectations.

Required Reading

Berenson, R. A., & Rich, E. C. (2010). U.S. approaches to physician payment: The deconstruction of primary care. Journal of General Internal Medicine, 25(6), 613-618.

Chang, K. & Said, A.A. (2014). The impact of outsourcing on hospital performance. International Journal of Management Accounting Research, suppl. Special Issue. Health Care Costs and Performance, 4(1), 7-26.

Hennig-Schmidt, H., Selten, R., & Wiesen, D. (2011). How payment systems affect physicians’ provision behavior – An experimental investigation. Journal of Health Economics, 30(4), 637-646.

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