Question: Dr. Eger is a physician who operates on two different types of patients. He has been pressing the Hospital for Ordinary Surgery (HOS) for more
Dr. Eger is a physician who operates on two different types of patients. He has been pressing the Hospital for Ordinary Surgery (HOS) for more operating-room time. HOS is busy and would have to turn away other surgeons if it complies. Eger claims that he has become so efficient lately that the HOS cannot afford to refuse him. As evidence of his improved efficiency, he points out that in August he operated on 18 patients. The total cost of treating the patients was $129,100. In September, he also operated on 18 patients. The total cost of treating the patients was only $127,000. According to Dr. Eger, he has generated a total savings of $2,100.Your investigation determines that in August, he treated 7 type X patients with an average cost of $4,300 and 11 type Y patients with an average cost of $9,000. In September he treated 8 type X patients and 10 type Y patients. Costs in September for his patients were $5,000 for type X and $8,700 for type Y. Although the August cost for type X patients had risen, Eger points out that costs for the higher-volume, higher-cost type Y patients had fallen.Develop a case-mix variance and a cost variance so we can better understand the impact on HOS of the changes in Dr. Eger’s practice from August to September. What other information would be of interest in this particular case?
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