ASSIGNMENT 2: HSA 525
Dr. Japheth Kaluyu
1 What is the value of the cost pool?
The Housekeeping department of Ruger Clinic consisted of $100,000 in total budgeted costs for the year of 2007. The cost pool is basically direct costs of one support department. In the case of Ruger Clinic, the cost pool's value is $100 K.
2aWhat is the allocation rate if patient services revenue is used as the cost driver?
The cost pool, which must be found first, is the total cost of the Housekeeping department which is $100,000, while the patient services revenue was 5,000.00.
The Allocation Rate equals the cost pool divided by the patient ...view middle of the document...
The greater the amount of service provided, the higher the amount of reimbursement.
Cost Approach is a technique that uses utilization forecasts and underlying costs to set premium rates. Under this method, rates are based on the underlying cost of each treatment a hospital offers each patient. A fixed rate is then calculated in order for the insurance company and hospital to agree on payment of services. The type of treatment does not and can not change the fee of the fixed rate that is to be paid to the doctor of facility. The hospital or doctor would then be paid a fixed fee for services they rendered each patient enrolled in the insurance company's plan.
Demographic Approach is technique that uses population demographics and costs to set premium rates. A doctor of the medical facility determines the rates and fees to be paid based on the age and gender of the population.
5 What are the advantages and disadvantages of conventional budgeting versus zero - based budgeting?
Conventional budgeting involves adding funds to the previous year's budget to expand or complete projects, such as construction of health facilities or schools by organizations or governments. This method of budgeting contrasts with unconventional, or zero-based, budgeting, as organizations using the unconventional method draw their budget plans afresh at the start of each financial year.
Conventional budgeting offers decision makers little information on an organization's departments. This is because the kind of expenditure the budgeting process project is speculative and is not reliable for making certain decisions. This...