Your large urban hospital is considering the possibility of transferring the capacity for 30,000 ambulatory care...

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Your large urban hospital is considering the possibility of transferring the capacity for 30,000 ambulatory care visits from the hospital's outpatient department (OPD) to free-standing clinics. Average costs of care in free-standing clinics are lower than in OPDs. But more important, evidence suggests that in urban areas, in patient utilization and to tal visits decrease when ambulatory care is moved to a free-standing setting. Conservative estimates are that inpatient utilization will drop by 10 percent and that ambulatory utilization will drop by 5 percent. Estimate the benefits (savings) and costs of this initiative. The following provide all of the information you need to know to do the analysis. You should assess savings and costs in both the short run and long run. In the short run, only variable costs of hospital and OPD care can be saved; fixed costs can be eliminated only in the long run. Required information: (1) Number of visits transferred: 30,000 (2) Number of people transferred: 6,000 (3) Current average inpatient days per person: 1.1 (4) Current average ambulatory visits per person: 5.0 (5) Average cost per day--inpatient: $500 (6) Percentage variable cost-inpatient: 30% (7) Average revenue per day-in patient: $450 (8) Average cost per visit-OPD: $70 (9) Percentage variable cost-OPD: 40% (10) Average revenue per visit-OPD: $55 (11) Average cost per visit-new site: $50 (12) Average revenue per visit-new site: $55 Your large urban hospital is considering the possibility of transferring the capacity for 30,000 ambulatory care visits from the hospital's outpatient department (OPD) to free-standing clinics. Average costs of care in free-standing clinics are lower than in OPDs. But more important, evidence suggests that in urban areas, in patient utilization and to tal visits decrease when ambulatory care is moved to a free-standing setting. Conservative estimates are that inpatient utilization will drop by 10 percent and that ambulatory utilization will drop by 5 percent. Estimate the benefits (savings) and costs of this initiative. The following provide all of the information you need to know to do the analysis. You should assess savings and costs in both the short run and long run. In the short run, only variable costs of hospital and OPD care can be saved; fixed costs can be eliminated only in the long run. Required information: (1) Number of visits transferred: 30,000 (2) Number of people transferred: 6,000 (3) Current average inpatient days per person: 1.1 (4) Current average ambulatory visits per person: 5.0 (5) Average cost per day--inpatient: $500 (6) Percentage variable cost-inpatient: 30% (7) Average revenue per day-in patient: $450 (8) Average cost per visit-OPD: $70 (9) Percentage variable cost-OPD: 40% (10) Average revenue per visit-OPD: $55 (11) Average cost per visit-new site: $50 (12) Average revenue per visit-new site: $55

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