The types of costs and revenues Mrs. Jones would include in her break-even analysis are revenue, variable and fixed costs, contribution margin, and operating income (Baker & Baker, 2014). Revenue is the amount of money Dr. Jones will gain from administering the tests to his patients. Variable and fixed costs are the expenses associated with administering tests. These expenses are equipment cost, staff salaries, A1C test kits (boxes), and reagents costs and miscellaneous costs such as utilities to run the machine. Point of Care is reporting an office charge at $49.00 with a $13-$20 reimbursement rate per test (Maine Health, 2003). “Comparison of Point of Care HBA1C Test versus Standardized Laboratory Testing” report (2005) lists the Alc Now monitor at $25 per test (Sicard & Taylor, 2005). Point of Care suggests the following breakdown for testing in the office: test kit cost is …show more content…
Jones would loose revenue if he used the Point of Care Hemoglobin A1C test kit for all of his DM patients. He will also loose revenue if he charges below the $49.00 charge per in office test and receive the $13-$20 reimbursement rate. It will be feasible to test 100 DM patients at least once in the first year of owning the machine. Once Dr. Jones increases his revenue through other means, he then can consider using the Point of Care testing for all his DM
Flinker S., Ward D., Calabrese T., (2013). Accounting Fundamentals for Health Care Management, 2nd edition.
Furthermore, uncertainty of new reimbursement models, diminishing reimbursement, and complicated compliance regulations are playing the role of a catalyst for streamlining the Chargemaster process in majority of healthcare organizations. A good example of these challenges was prompted by the Center for Medicare and Medicaid with the release of data and chargemasters from several healthcare facilities. The release of the chargemasters sends a wave shock across the healthcare industry as it depicts a huge price discrepancies among health care providers, and due to this exposure many healthcare organizations attempt to rectify their charges. The main purpose the CMS release the chargemasters was to encourage transparency in hospital’s billing
Payment basis is known as the methods used by the one making payments for services provided by hospitals or doctors. There are three payment determination bases. First, cost-payment basis is a method for determining fees for medical services, and is basically the underlying method for payment is the provider’s cost. The exact amount is determined and agreed upon by both the provider and the patient. For example, the healthcare provider’s cost for providing the service could be $2,000. The healthcare provider can then choose to charge 70% of the total charge, which comes out to be $1500. There are different levels that can be used in cost based reimbursement. On the macro basis, payment can be provided for a whole array of services. Contrarily, payments for specific items are on a micro basis. Critical access hospitals usually use macro level cost reimbursement. On the other hand, healthcare providers often use micro level cost reimbursement when charging for expensive medications, meaning that the price of those medications will be based differently than their usual services (Abbey, 2012).
Chawla, M., Windak, A., Berman, P., & Kulis, M. (1997). Paying the Physician: Review of Different Methods. Data for Decision Making Project,Department of Population and International Health, Harvard School of Public Health, Boston, Massachussetts
With the passage of the Affordable Care Act (ACA), the Centers for Medicare and Medicaid Services (CMS) has initiated reimbursement based off of patient satisfaction scores (Murphy, 2014). In fact, “CMS plans to base 30% of hospitals ' scores under the value-based purchasing initiative on patient responses to the Hospital Consumer Assessment of Healthcare Providers and Systems survey, or HCAHPS, which measures patient satisfaction” (Daly, 2011, p. 30). Consequently, a hospital’s HCAHPS score could influence 1% of a Medicare’s hospital reimbursement, which could cost between $500,000 and $850,000, depending on the organization (Murphy, 2014).
In Medicare's traditional fee-for-service payment system, doctors and hospitals generally are paid for each test and procedure. This drives up costs by rewarding providers for doing more, even when it’s not needed. ACOs continue to utilize fee for service by creating incentives to be more efficient by offering bonuses when providers keep ...
It is very important that we utilize cost control methods in the health care field. The reason being is that about 10% of the population, usually with chronic to severe problems, use approximately 70% of the total spending (Shi, & Singh, 2008). If we didn’t monitor the costs and spending we wouldn’t be using the money efficiently. To avoid potential problems we frequently use six different cost control methods to monitor what medical services are necessary, the most cost efficient way for these services to be provided, and keep an up to date chart of the patient’s condition to offer only treatment deemed necessary.
It’s also an ethical issue to use the Break-even analysis. First of all, it’s extremely complicated for Bayview Surgery Center to calculate and examine the margin of safety for based on the overstated revenues collected and associated
Direct fixed costs result from any resource in the practice that is specifically involved in the delivery of the service, but the cost that is not directly related with volume of service delivered. With the pharmacy division of CVS focusing on prescriptions, the most substantial direct fixed cost of dispensing a prescription is personnel cost, especially the cost of the pharmacist. This typically represents about 50% of the cost of dispensing a prescription. Since the pharmacy staff that is scheduled to work on a particular day, this causes the cost of the practice to remain the same regardless of whether an additional prescription is dispensed that day. Their wages and benefits are also considered fixed costs for the corporation.
Miller, J. (2013). Payers rethink utilization costs. Managed Healthcare Executive, 23(11), 9-9,15. Retrieved from http://search.proquest.com/docview/1458614037?accountid=36202
In recent times, healthcare organization across the nation are facing unprecedented challenges as they strive to improve the overall quality of care provided to their patient’s population, while improving their organization’s financial performance. Furthermore, uncertainty of new reimbursement models, diminishing reimbursement, and complicated compliance regulations are playing the role of a catalyst for streamlining the Chargemaster process in majority of healthcare organizations.
Among them is its emphasis on productivity. Fee for service encourages the delivery of care and maximizing patient visits. As a payment mechanism, it is relatively flexible in that it can be used regardless of the size or organizational structure of a physician’s practice, the type of care provided such in clinic visit, surgery, therapy session, and the place of service such as physician’s office, nursing home, hospital, surgery center or the geographical location of care. Fee for service does support accountability for patient care, but it is often limited to the scope of the service a particular physician provides at any point in time. Although fee for service is easy to understand conceptually, it can be difficult to understand in practice. Patients may struggle to decipher the coding and nomenclature involved in billing, manage the numerous bills and explanations of benefits they might receive, and understand its application in inpatient settings, especially for lab, radiology, and anesthesia services. Because payment is limited to one provider for one interaction, fee for service does little to encourage management of care across settings and among multiple
Total revenue, which is the total amount of income received from the sales of a certain quantity of goods or services. Total revenue can be calculated by multiplying the price of a product times the quantity sold. For instance, if 160 baseball caps are sold and each baseball cap was priced at $5 each, the total revenue would be (160*5) $180.
Up until recent years Revenue Management was something that has never been heard of. Now days, it is something that hotel managers cannot go without. They spend numerous amounts of time checking their computers for the nightly rates of the hotel. But what exactly is Revenue Management? “Revenue Management (RM) is a scientific technique that combines Operations Research, Statistics and Customer Relationship Management and categorizes customers into price bands, based on various services” (Revenue Management, 2010). In other words someone might reserve a room that is at a going rate of $245 per night while their cousin who reserved a room at the same hotel months in advance only has to pay $105 per night. Now you may ask yourself how hotels can get away with doing this? But what it all boils down to is that someone who reserves a room last minute will end up paying the higher amount because his or her demand for the room is higher.
...d procedures are now being monitored to improve clinical processes. Ensuring that these processes are implemented in a timely, effective manner can also improve the quality of care given to patients. Management of the processes ensures accountability of the effectiveness of care, which, as mentioned earlier, improves outcomes. Lastly, providing reimbursements based on the quality of care and not the quantity also decreases the “wasting” and overuse of supplies. Providers previously felt the need to do more than necessary to meet a certain quota based on a quantity of supplies or other interventions used. Changing this goal can significantly decrease the cost of care due to using on the supplies necessary to provide effective, high-quality care. I look forward to this implementation of change and hope to see others encouraging an increase in high-quality healthcare.