Average Charge $15,000 Average LOS 5 Days cost charge Routine Charge 3,600 Varol, Cost % 60 Operating Room 2,657 293 1,035 345 Medical Supplies 4,524 1,230 1,316 $11,400 0.80 0.80 0.70 0.75 0.50 0.50 S0 80 30 50 90 90 60 50 Anesthesiology Lab Radiology Pharmacy Other Ancillary Total Ancillary Your hospital has been approached by a major HMO to perform all their MS-DRG 470 cases procedures). They have offered a flat price of $10,000 per case. You have reviewed your charges for MS-DRG during the last year and found the following profile (major joint The HMO in the above example has indicated that their doctors use less expensive joint implants If this les expensive implant is used, your medical supply charges would be reduced by $2.000 What is the estimated reduction in variable cost