*See image for scenario

Case Scenario 1: Hospitals A, B, and C are the same with the exception of their treatment of internal charges. The foodservice department at Hospital A does not charge the cost of ward supplies, nourishments, and catering to the receiving departments. Hospital B permits the transfer credit of floor stock, nourishments, and catering at the equivalent raw food cost. Hospital C is managed by a contract foodservice company. Floor stock and nburishments are charged to the receiving department units at raw food cost, but internal catering is charged at the same markup as the external catering as part of the company's agreement with administration. This contractual agreement is often a result of an incentive- based fee structure that awards a contractor a percentage of revenue. Patient days TY D: Gross Dept expenses: Floor stock, nourishments Internal catering Catering cash Cafeteria cash Vending cash Note: YTD = Year-to-Date Hospital A 20,000 $700,000 Hospital B 20,000 $700,000 Hospital C 20,000 $700,000 Food $15,000 $30,000 $10,000 $68,000 $10,000 YTD Sales & Charges $0.00 $0.00 s 25,000 $150,000 s 20,000 Food $15,000 $30,000 $10,000 $68,000 $10,000 YTD Sales & Charges $15,000 $30,000 s 25,000 $150,000 s 20,000 Food $15,000 $30,000 $10,000 $68,000 $10,000 YTD Sales & Charges $15,000 $75,000 s 25,000 $150,000 s 20,000