04 Jul HEALTHCARE FINANCE
5.6 Review the walk-in clinic data presented in Problem 5.5. Construct
projected profit and loss statements at volume levels of 8,000, 9,000,
10,000, 11,000, and 12,000 visits.
a. Assume that the base case forecast is 10,000 visits. What is the clinic’s
degree of operating leverage (DOL) at this volume level? Confirm the net incomes at the other volume levels using the DOL combined with the percent changes in volume.
b. Now, assume that the base case volume is 9,000 visits. What is the
DOL at this volume?
6.2 Refer to Problem 6.1. Assume that the three patient services departments are adult services, pediatric services, and other services. The patients services revenue and house of housekeeping services for departments are:
Department Revenue Housekeeping Hours
Adult Services 3,000,000 1500
Pediatric Services 1,500,000 3000
Other Services 500,000 500
Total 5,000,000 5000
What is the dollar allocation to each patient services department if patient services revenue is used as the cost driver?
What is the dollar allocation to each patient services department if hours of housekeeping support are used as the cost driver?
What is the difference in the allocation to each department between the two drivers?
Which of the two drivers is better? Why?
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