Question: Estimate the total variable cost (i.e., including both routine and ancillary) per MSDRG 505 using the departmental cost/charge ratios and variable cost percentages. (Your

Estimate the total variable cost (i.e., including both routine and ancillary) per MSDRG 505 using the departmental cost/charge ratios and variable cost percentages. (Your answer might be slightly different due to rounding. Pick the closest.) Your hospital has been approached by a major HMO to perform all their MSDRG 505 cases (foot surgeries). They have offered a flat payment of $8,000 per case. You have reviewed your charges for MSDRG 505 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 59 Operating Room 1,850 0.70 80 Anesthesiology Lab 210 0.70 75 575 0.65 40 Radiology 275 0.65 50 Medical Supplies 3,220 0.60 85 Pharmacy 955 0.55 85 Other Ancillary 1,015 0.75 55 Total Ancillary $8,100 0.70 75

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