What is a break-even analysis? What is the break-even point for this organization? List expenses assigned as variable and fixed. Show the calculations. (Net Operating Revenue – Variable Costs = Contribution Margin. Contribution margin/UOS = CM per UOS. Fixed Costs/CM per UOS = # of UOS to Breakeven).

FY19 FY18 INCOME Gross Patient Revenue $30,981,629 $23,072,676 Deductions from Revenue Contractual Allowances $14,995,326 $11,000,000 Charity Care $1,735,909 $1,560,000 Provision for Bad Debt $641,786 $575,000 Total Deductions from Patient Revenue $17,373,021 $13,135,000 Net Patient Revenue $13,608,608 $9,937,676 Premium Revenue $65,882 $56,000 Other Revenue $289,856 $150,000 Total Net Revenue $13,964,346 $10,143,676 EXPENSES: SALARIES AND WAGES $8,925,000 $8,000,000 5&W – REGULAR (Line Staff) $3,470,400 $3,000,000 S&W – REGULAR Executive/Management/Providers) $5,204,600 $4,800,000 PHYSICIAN DIRECTOR FEES $250,000 $200,000 EMPLOYEE BENEFITS EXPENSES $290,000 $304,427 SUPPLIES EXPENSE $81,930 $52,906 MEDICAL SURGICAL SUPPLIES $50,555 $35,000 DRUGS $7,010 $4,843 GENERAL SUPPLIES $21,033 $9,884 WEARING APPAREL EXPENSE $1,657 $1,354 CLEANING COMPOUNDS $1,674 $1,825 PURCHASED SERVICES $21,163 $21,189 OFFSITE RECORD STORAGE $3,566 51,752 ANSWERING SERVICES $12,811 $11,723 GARBAGE AND REFUSE REMOVAL $2,325 $1,150 POSTAGE/COURIER SERVICE $2,462 $6,565 PURCHASED OUTSIDE SERVICES $15,598 $27,459 SECURITY SERVICE $1,528 $838 CLEANING SERVICE $14,070 $26,621 FACILITIES EXPENSE $462,882 $423,538 RENT – EXPENSE $459,844 $408,552 REPAIRS & MAINTENANCE (T&M) $1 865 $10,250 ELECTRICITY $1,172 $4,736 OTHER OPERATING EXPENSES $324,448 $255,271 LICENSURE FEES 5962 $100 INSURANCE – PROF. LIABILITY $238,093 $200,000 TRAVEL/SEMINARS/MEETINGS $38,209 $14,999 EQUIPMENT RENTALS $5,957 $7,111 ED.SUPPLIES/MEMBERSHIP FEES $41,227 $33,061 INTRASYSTEM ALLOCATION $750,000 $700,985 Total Operating Expenses $10,871,020 $9,785,775 Net Income/Loss $3,093,326 $357,901 Units of Service 40,800 35,000

USING THE ABOVE FINANCIAL STATEMENT

 :(1). What is a break-even analysis? What is the break-even point for this organization? List expenses assigned as variable and fixed. Show the calculations. (Net Operating Revenue – Variable Costs = Contribution Margin. Contribution margin/UOS = CM per UOS. Fixed Costs/CM per UOS = # of UOS to Breakeven).

(2) How does a break-even analysis vary between fee-for-service and capitated payments? Explain it using the income statement provided. What are the similarities and differences applicable to the Income statements in fee-for-service and capitated payment options?

(3).  what is the “total contribution margin”? Show the calculations. (Net Sales – Total Variable Costs=Total Contribution Margin). Also calculate the contribution per unit of service (UOS).