Case $1$

Houston Dialysis Center

$($Cost Allocation Concepts$)$

Houston Dialysis Center is a department of Houston General Hospital, a fullservice not$-$for$-$profit acute care hospital with $325$ beds. The bulk of the hospital's facilities are devoted to inpatient care and emergency services. However, a $100,000$ square$-$foot section of the hospital complex is devoted to outpatient services. Currently, this space has two primary uses. About $80$ percent of the space is used by the Outpatient Clinic, which handles all routine outpatient services offered by the hospital. The remaining $20$ percent is used by the Dialysis Center.

The Dialysis Center performs hemodialysis and peritoneal dialysis, which are alternative processes for removing wastes and excess water from the blood for patients with end$-$stage renal $($kidney$)$ disease. In hemodialysis, blood is pumped from the patient's arm through a shunt into a dialysis machine, which uses a cleansing solution and an artificial membrane to perform the functions of a healthy kidney. Then, the cleansed blood is pumped back into the patient through a second shunt.