In the United States, organ procurement organizations (OPOs), transplant centres, and the medical professions coordinate the organ
Question:
The payer, the U.S. government, does not want to pay the joint costs assigned to the lungs. The Medicare program pays only for transplanted organs. Over 62% of all kidney transplants are paid for by Medicare. Six years ago, a government audit revealed that, of the total of $80 million in organ acquisition costs, $47 million were unallowable and unsup ported.*
Some organs, such as one kidney, part of a liver, part of a lung, bone marrow, and stem cells, can be recovered from live donors. The recovery of these organs requires major surgery and patients are anaesthetized. The surgeon ensures the donor’s organs are suffused with a protective chemical and removes the organ. The donated organ is preserved in a chemical and placed in a refrigerated container for immediate transport. The donor often recovers after two to five days in hospital.
In contrast, stem cells are recovered from live donors who receive medication to increase the number of stem cells in the blood for four to five days prior to the transplant.
The process is similar to a blood donation. The stem cells are extracted from whole blood removed intravenously from the donor’s arm. The rest of the blood is returned to the donor while the stem cells are sealed in plastic packs, placed in a special container, and transported to the recipient. The donor usually returns home to rest for the remainder of the day before resuming normal life. The stem cells are injected intravenously into the recipient’s arm.
REQUIRED
Form groups of two or more students to complete the following requirements.
1. Of the reasons to use acceptable methods to allocate joint costs, which ones are relevant in this case?
2. What costs are incurred beyond the splitoff point that differ between these two types of donations?
3. What would the separable costs be?
4. In Canada, where all medically necessary care is paid for from tax revenue, of what relevance is joint cost allocation?
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Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ
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