General Hospital A+

General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services:?Fixed costs $10,000,000?Variable cost per inpatient days $200 ?Charge (revenue) per inpatient day $1,000 ?The hospital expects to have a patient load of 15,000 inpatient days next year.?a. Construct the hospital”s base case projected P&L statement.?b. What is the hospital”s breakeven point??c. What volume is required to provide a profit of $1,000,000? A profit of $500,000??d. Now assume that 20 percent of the hospital”s inpatient days come from a managed care plan that wants a 25 percent discount from charges. Should the hospital agree to the discount proposal?

You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows:?Revenues (10,000 visits) $400,000?Wages and benefits 220,000?Rent 5,000 ?Depreciation 30,000 ?Utilities 2,500 ?Medical supplies 50,000?Administrative supplies 10,000 ?Assume that all costs are fixed, except supply costs, which are variable.?Furthermore, assume that the clinic must pay taxes at a 30 percent rate.?a. Construct the clinic”s projected P&L statement.?b. What number of visits is required to break even??c. What number of visits is required to provide you with an after tax-profit of $100,000?


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