Hello,

I need help finding out how many patients I would need to see in each service to break even if I accept the managed care company's offer? Below I have calculated the break even amounts, but when I do my calculation to get the amount of patients my calculations are coming up all wrong. I am, using the formula

(Fixed cost/(Reimbursement Rate - Breakeven Amount Answer from the previous question)

Can you help me find out what I am doing wrong?

The fixed costs for each specialty are listed in the table below:

Total

60,000

75,000

47,000

96,000

The variable costs and estimated number of patients are as follows:

Specialty	Estimated # of patients		Variable Costs
Int. Med.	5000		$40
Gen. Surg.	1875		$65
Peds.	3125		$35
OB-GYN	2500		$60
Total	12,500

Assume that you are looking at each specialty separately. What will each specialty have to charge to breakeven?

Formula = (Fixed cost/Estimated # of Patients)- Variable Cost =Breakeven Amount

Specialty	Formula	Breakeven Amount
Int. Med.	($60,000/5,000) + $40	$52
Gen. Surg.	($75,000/1,875) + $65	$105
Peds.	($47,000/3,125) + $35	$50.04
OB-GYN	($96,000/2,500) + $60	$98.40

You have been approached by a managed care corporation who wants to reimburse you as follows:

Looking at each program separately, how many patients would you need to see in each service to break even if you accept the managed care company's offer? (Remember: the reimbursement rate is equivalent to price)

Specialty	Reimbursement Rate
Int. Med.	$50
Gen. Surg.	$105
Peds.	$55
OB-GYN	$95

2. Looking at each program separately, how many patients would you need to see in each service to break even if you accept the managed care company's offer? (Remember: the reimbursement rate is equivalent to price)