finance homework 20

Describe at least three ways a for-profit healthcare firm can increase equity. Include brief examples of each.

Use the following information to answer questions 3, 4, and 5:

You have been asked to establish a pricing structure for radiology on a per-procedure basis. Present budgetary data is presented below:

Budgeted Procedures	$10,000
Budgeted Cost	$400,000
Desired Profit	$80,000

It is estimated that Medicare patients comprise 40 percent of total radiology volume and will pay on average $38.00 per procedure. Approximately 10 percent of the patients are cost payers. The remaining charge payers are summarized below:

Payer	Volume %	Discount %
Blue Cross	20	4
Unity	15	10
Kaiser	10	10
Self-Pay	5	40
	50%

3. What rate must be set to generate the required $80,000 in profit in the preceding example?

4. If the forecasted volume increased to 12,000 procedures and budgeted costs increased to $440,000, while all other variables remained constant, what price should be established?

5. Assume that the only change in the original example data is that Blue Cross raises their discount to 20 percent. What price should be set?

6. You wish to retire a $10,000,000 bond that can be called in 5 years for 110 percent of par value, or $11,000,000. You also need to make year-end interest payments of $700,000 per year in each of the next five years. If you can invest money at 8 percent, how much money must you set aside today to meet these obligations?

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