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HSA 304 LC Financial Aspects of Health Care Administration Exercise

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Assignment # 3 Noel Ruiz, MPA
Name:
Class: HSA 304
Date:
End of Chapter Problems Page 150
5.2 The Audiology Department at Randall Clinic offers many services to the clinic’s patients.
The three most common, along with cost and utilization data, are as follows:
Service
Variable cost per
service
Annual Direct Fixed
cost
Annual Number of
Visits
Basic Examination
$5.
$50,000
3,000
Advanced
Examination
7
30,000
1,500
Therapy Session
10
40,000
500
a. What is the fee schedule for these services, assuming that the goal is to cover only variable
and direct fixed cost?
Basic examination :
5 * 3000 + 50000 = 65000
Cost Per person = 65000 / 3000 = $21.66
Advanced examination:
7 * 1500 + 30000 = 40500
Cost Per person = $27
Therapy session:
10*500 + 40000 = 45000
Cost Per person=$90
b. What is the fee schedule for these services, assuming that the goal is to cover only variable
and direct fixed cost?
Same Answer as (A).
c. Assume that the Audiology Department is allocated $100,00 in total overhead by the clinic,
and the department director has allocated $50,000 of this amount to the three services listed
above. What is the fee schedule assuming that these overhead cost must be covered? To
answer this question, assume that the allocation of overhead costs to each service is made on
the basis of number of visits.
total number of visits=3000 +1500 +500=5000
Per visit allocation = 50000 / 5000 = 10$
Basic Examination = 21.66 - 10$ = 11.66$
Advanced examination = 27 - 10 = 17$
Therapy session = 90 - 10 = 80$
d. Assume that these services must make a combined profit of $25,000. Now, what is the fee
schedule? To answer this question, assume that the profit requirement is allocated in the

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Assignment # 3 Noel Ruiz, MPA Name: Class: HSA 304 Date: End of Chapter Problems Page 150 5.2 The Audiology Department at Randall Clinic offers many services to the clinic’s patients. The three most common, along with cost and utilization data, are as follows: Service Variable cost per Annual Direct Fixed Annual Number of service cost Visits Basic Examination $5. $50,000 3,000 Advanced 7 30,000 1,500 Examination Therapy Session 10 40,000 500 a. What is the fee schedule for these services, assuming that the goal is to cover only variable and direct fixed cost? Basic examination : 5 * 3000 + 5 ...
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