# HSM 340 DeVry Week 3 Quiz

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HSM 340 DeVry Week 3 Quiz

HSM340

HSM 340 DeVry Week 3 Quiz

HSM 340 DeVry Week 3 Quiz

Question 1. Question: (TCO 3) When considering how changes in volume affect total fixed costs, it is important to consider:

• the relevant range
• the variable cost per unit
• price
• both A and B
• both B and C

Question 2. Question: (TCO 3) To maximize the amount of profit realized from a rate increase, charges should be increased most in departments with:

• High charge payer mix/high write-offs for bad debt, charity, & discounts
• Low charge payer mix/low write-offs for bad debt, charity, & discounts
• High charge payer mix/low write-offs for bad debt, charity, & discounts
• Low charge payer mix/high write-offs for bad debt, charity, & discounts

Question 3. Question: (TCO 3) Your controller has told you that the marginal profit of DRG 209 (major joint procedure) for a Medicare patient exceeds the marginal profit for an average charge patient. Why might this occur?

• High fixed costs of treatment
• Low Medicare payment
• High prices
• Low prices

Question 4. Question: (TCO 3) Your hospital has been approached by a major HMO to perform all their DRG 225 cases (foot surgeries). They have offered a flat payment of \$8,000 per case. You have reviewed your charges for DRG 225 during the last year and found the following profile:

Average Charge: \$11,300

Average LOS: 4.5 Days

 Cost/Charge Variable Cost % Routine Charge \$3,200 0.75 65 Operating Room 1,850 0.7 80 Anesthesiology 210 0.7 75 Lab 575 0.65 40 Radiology 275 0.65 50 Medical Supplies 3,220 0.6 85 Pharmacy 955 0.55 85 Other Ancillary 1,015 0.75 55 Total Ancillary \$8,100 0.7 75

In the above data set, assume that the hospital’s cost-to-charge ratio is 0.75 for routine services and 0.70 for Total Ancillary services. Using this information, what would the average cost of DRG 225 be? (Your answer might be slightly different due to rounding. Pick the closest.) (Points: 5)

• \$7,613
• \$8,100
• \$7,613
• \$8,000
• \$8,070

Question 5. Question: (TCO 3) David Jones, the new administrator for a surgical clinic, was trying to determine how to allocate his indirect expenses. His staff was complaining that the current method of taking a percentage of revenues was unfair. He decided to try to allocate utilities based on square footage of each department, administration based on direct costs, and laboratory based on tests. Use the information in the chart below to answer the question.

 Square Footage Direct Expenses Lab Tests Utilities 200,000 Administration 2,000 500,000 Laboratory 2,000 625,000 Day-op Suite 3,000 1,400,000 4,000 Cystoscopy 1,500 350,000 500 Endoscopy 1,500 300,000 500 Total 10,000 3,375,000 5,000

Based on the scenario above, what are the Day Op Suite’s total expenses?

What are the Day Op Suite’s total expenses?

What are the Cystoscopy Department’s total expenses?

What are the Endoscopy Department’s total expenses?

Question 6. Question: (TCO 3) Your hospital has been approached by a major HMO to perform all their MS-DRG 470 cases (major joint procedures). They have offered a flat price of \$10,000 per case. You have reviewed your charges for MS-DRG 470 during the last year and found the following profile:

 Average Charge \$15,000 Average LOS 5 Days Routine Charge \$3,600 Cost/Charge 0.80 Variable Cost % 60 Operating Room 2,657 0.80 80 Anesthesiology 293 0.80 80 Lab 1,035 0.70 30 Radiology 345 0.75 50 Medical Supplies 4,524 0.50 90 Pharmacy 1,230 0.50 90 Other Ancillary 1,316 0.80 60 Total Ancillary \$11,400 0.75 50

The HMO in the above example has indicated that their doctors use less expensive joint implants. If this less expensive implant were used, your medical supply charges would be reduced by \$2,000. What is the estimated reduction in variable cost?

Question 7. Question : (TCO 3) How are costs classified?