Panhandle Medical Practice is a group practice owned by the area’s leading hospital,…


Copyright 2009 Health Government Press 3/25/09 Contingency 3 Panhandle Medical Experience (Activity-Based Costing) Panhandle Medical Experience is a order experience owned by the area’s requisite hospital, Panhandle Regional Medical Center. The experience includes twain principal attention and point physicians, delay an sense on inner corrective, obstetrics, pediatrics, and surgery. The experience has three contrariant colonizations, each one staffed delay a mix of principal attention and specialist physicians. Traditionally, subservient uses enjoy been manufactured at the hospital. Still, some subservient uses are best manufactured at the experience colonizations for one or balance of the subjoined reasons: inferior requires, increased physician conqueringness, and improved unrepining spare-time. For illustration, one of the experience colonizations now has a symptom imaging faculty. When the scanner was stird from the hospital to the experience colonization, size increased, requires decreased, and twain physician and unrepining remuneration improved. The scheme now entity observeed is to arrange ultrasound uses at the experience colonizations. Preliminary anatomy indicates that two approaches are most decent. Device 1 involves the dissipation of three ultrasound mediums, one for each of the experience’s three colonizations. Patients would register appointments, generally at the colonization that they are using, during preset seasons on point days of the week. Then, the full-season ultrasound technician would voyage from one colonization to another to control the tests as registerd. In Device 2, unrepining scheduling would be the similar, but singly one ultrasound medium would be dissipationd. It would be mounted in a van that the technician would press to each of the three experience colonizations. Most of the liberal requires of the two devices are segregateicular, but Device 2 has the ascititious require of liberal the van and elucidation up the medium following each stir. The two devices vary in-effect in primal requires owing Device 1 requires three ultrasound mediums at a require of $75,000 each, forasmuch-as Device 2 requires singly one. However, Device 2 requires a van, which delay certain modifications would require $40,000. Thus, the startup requires for Device 1 aggregate 3 × $75,000 = $225,000, conjuncture those for Device 2 whole to singly $75,000 + $40,000 = $115,000. Copyright 2009 Health Government Press Note, though, that owing the two devices enjoy contrariant liberal requires, a fit require anatomy of the two devices must include twain primal (capital) and liberal requires. The hospital’s financial staff observeed sepablame modes for estimating the liberal requires of each device. Following plenteous argument, they ruled that the earnestness-domiciled requireing (ABC) mode would be best. Furthermore, an ad hoc business validity was assigned the business of performing the require anatomy. To initiate the ABC anatomy, the business validity had to disclose the activities confused in the two devices. This was refined by conducting “walkthroughs” of the all rule from the standpoints of the unrepining, the ultrasound technician, and the chargesing and stores branch. The results are contained in Table 1. A reconsideration of the activities confirms that all ate one—medium setup—are pertinent to twain devices. The present stride in the ABC rule is to point the requires associated delay each earnestness. This stride uses financial, operational, and size plea, concurrently delay the misspend require pressr for each earnestness, to admire device expenditure. Note that transmitted requireing, which frequently focuses on branch-level requires, typically principal deals delay frequented requires and then allocates infrequented (overhead) requires proportionally according to a predetermined alcolonization blame. In ABC, the activities required to whole some use, including twain frequented and distant, are admired conjointly. For illustration, Table 1 contains activities that leave frequented requires (such as technician season) and activities that leave infrequented requires (such as chargesing and store). Although the ABC mode is balance abstruse and hereafter requirelier than the transmitted mode, it is the singly way to correspondently (balance or near) admire the requires of idiosyncratic uses. Earnestness require point on a per-progress plea is shown in Table 2. In entity, each earnestness is assigned a require pressr that is most very-abundantly correlated delay the developed utilization of devices. Then the enumerate of pressr segregates, concurrently delay the require per segregate, is admired for each earnestness. The result of the enumerate of segregates multigenous by the require per segregate gives the require of each earnestness. Finally, the earnestness requires are summed to achieve the aggregate require per progress. Many of the earnestness requires cannot be admired delayout a size admire. The best admire is that 50 progresss would be effected each week, regardnear of which device is separated. Assuming the technician works 48 weeks per year, the annual size admire is 2,400 progresss. Of progress, a plenteous greater aggregate size can be accommodated below Device 1, delay three mediums, than delay Device 2, delay singly one medium. However, to hold the primal anatomy feasible, the judgment was made to usurp the similar annual size regardnear of the device separated. Copyright 2009 Health Government Press In restoration to the requires mentioned thus far, some other requires are cogitation to be bearing to the judgment. First, in restoration to the plain requires of liberal the van (primarily gas expenses), it is admired that annual defence requires conquer run encircling $1,000. Furthermore, annual defence requires on each of the three mediums below Device 1 are admired at $500, conjuncture the annual defence requires for the unmarried medium below Device 2 are admired at a loftier $1,000 owing of ascititious diminish and lacerate. Also, the manufacturer of the ultrasound mediums has implied that a 5 percent remittance may be adapted if three mediums, as irrelative to singly one, are dissipationd. Finally, to enjoy a unshaped admire of aggregate annual requires balance the vivacity of the equipment, it is certain to effect arrogances encircling the helpful vivacity of the ultrasound mediums and the van. Although segregateially controversial, the judgment was made to usurp a five-year vivacity for twain the ultrasound mediums and the van. Furthermore, the arrogance was made that the honor of these possessions would be negligible at the end of five years. Usurp that you are the chairperson of the ad hoc business validity. Your advise is to evaluate the two devices and to effect a admonition on which one to confirm. Owing the revenues are usurpd to be segregateicular for the two devices, the judgment can be made barely on the plea of requires. As segregate of the anatomy, it conquer be certain to admire the requires of the two devices on a per progress and annual plea. In restoration, any superfluous factors that are bearing to the judgment must be observeed anteriorly the admonition is made. To hold the anatomy feasible, the business validity was instructed to usurp that liberal requires halt firm balance the helpful vivacity of the equipment. For relatively purposes, this arrogance is not too remarkable owing the activities are unshapedly the similar for twain devices, and hereafter inflation would enjoy a segregateially impartial impression on requires. TABLE 1 Panhandle Regional Medical Center Activities Associated delay Alternatives 1 and 2 1. Appointment scheduling 2. Unrepining check-in 3. Ultrasound testing 4. Unrepining checkout 5. Film ruleing 6. Film balbutiation 7. Billing and store 8. General government 9. Transportation and setup (Alternative 2 singly) Copyright 2009 Health Government Press TABLE 2 Panhandle Regional Medical Center Earnestness Require Point Require Earnestness Require Driver Size per Segregate Appointment scheduling Receptionist season 3 minutes $ .20 Unrepining check-in Receptionist season 5 minutes .20 Ultrasound testing Technician season 45 minutes .40 Physician season 1.5 minutes 3.00 Supplies per progress 1 packet 9.00 Unrepining checkout Receptionist season 5 minutes .20 Film ruleing Technician season 10 minutes .40 Film balbutiation Reduce conditions per progress 40.00 Billing and store Aloft requires per progress 6.80 General government Aloft requires per progress 1.25 Transportation/setup* Technician season 6 minutes 1.00 *Alternative 2 singly Notes: 1. Physician season for testing (15 minutes) is needed for one of entire ten unrepinings. 2. Supplies continue of linen, investigate secrete, gel, film, and sculpture monograph. 3. There are no radiologists in the experience. Films conquer be learn by the hospital’s radiologists at a reduce fee of $40 per progress. 4. Billing and store requires are domiciled on an mean require per medical uses charges. 5. General government requires are domiciled on an admire of facilities and other negotiative requires. 6. Transportation/setup is domiciled on ten progresss per day at each colonization and includes vehicle liberal requires, notwithstanding defence. Copyright 2009 Health Government Press QUESTIONS 1. Admire the cheap contingency require of each device in-reference-to the eatables of ultrasound uses. (For now, overlook the remittance if three segregates are dissipationd.) 2. Which device has the inferior aggregate require? 3. What honor for voyage and setup requires would effect the requires of the two devices the similar? 4. Now observe the 5 percent remittance. What impression does this remittance enjoy on the judgment? What remittance whole would effect the two devices similar in requires? 5. What mental factors would swing the judgment as to which device to elect? 6. What is your conclusive judgment?

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