You are the Manager/CEO of a hospital and you just hired a new OB/GYN physician/surgeon. Your facility may need to provide malpractice insurance for this doctor with MD credentials. Obtain two quotes from two different malpractice insurance companies specializing in physician malpractice policies for a ten year practicing OB/GYN physician/ surgeon with delivery privileges. The insurance coverage quoted must be documented as either an occurrence or a claims made policy.
Please describe the financial impact of the cost of the malpractice insurance for the OB/GYN physician/surgeon on the hospital. Can the hospital legally provide this policy for the doctor? What means does the hospital have or what budgetary adjustments must be made to afford this policy? How will this additional cost require the hospital to set parameters on the productivity of this physician and the established charges for OB/GYN services? What other legal and ethical impacts will there be to the hospital and community?
1. Describe the financial impact of the cost of the malpractice insurance for the OB/GYN physician/surgeon on the hospital.
Soaring malpractice insurance premiums are forcing doctors to scale back their practices. According to the American Medical Association, 24% of specialists have stopped providing some high-risk services--like delivering babies. A 2002 survey by the American College of Obstetricians and Gynecologists found that 73% of OB/GYN specialists had been forced to retire, relocate or modify their practice.
The level of risk associated with a particular discipline determines the amount of malpractice insurance paid by the physician. Not surprisingly, the higher the risk the higher the cost. One reason rates are so high for OB/GYNs is that doctors get sued after difficult births leave babies with permanent disabilities.
2. Can the hospital legally provide this policy for the doctor?
Physicians usually buy their insurance from a commercial company or a physician-owned mutual company, either individually or through a group practice. Hospitals and other health care facilities purchase their own insurance, and hospitals that directly employ physicians typically buy ...
The solution examines legal and ethical impacts in hospitals and communities by providing malpractice insurance.
Role of Cost in Decision Making in Healthcare Industry
Please answer all questions thoroughly and no plagarism. Please review all answers.
Course material: Neumann, B. R., Clement, J. P., and Cooper, J. C. Financial Management: Concepts and Applications for Health Care Organizations. Dubuque, IA: Kendall/Hunt Publishing Company, 1999, 239.
1. Where would you most likely find each of the following expenses listed: Administration, Physical Therapy, Nursing, or Maintenance?
a. The Administrator's salary
b. Pharmacy supplies
e. Clerical office help
f. Office supplies
g. Physical therapy salaries
h. The salary for the Director of Nursing
i. RN wages
j. Snowplowing expenses
k. Staff education on how to use crutches with a patient
l. Health insurance for the clerical staff in the physical therapy department.
2. Identify each of the following as either direct costs or indirect costs?
a. Real estate taxes
b. Clinic telephone expense
c. Oil for the heat for the whole facility
d. Emergency room medical supplies
e. Liability insurance
f. Nursing wages for the operating room
g. Food for the residents in the medical surgical unit
h. Diapers for the babies in the nursery
i. Computer system for the facility
j. Marketing expense for the new wing
3. What is the contribution margin in the following example?
a. Revenues: $1,200,000
b. Variable Costs: $ 215,000
c. Fixed Costs: $1,000,000
What is the contribution margin percentage?
4. Explain, in your own words, the relative advantages and disadvantages of each of the three primary cost allocation methods (Direct Allocation, Step-Down Allocation, and Reciprocal Allocation).
5. Using the following example, allocate service center costs to each of the three revenue centers using the step-down method:
Full-time Costs Square Feet Meals Employees
Maintenance $150,000 ---- 2,500 10
Dietary 400,000 10,000 ---- 15 Administrative 600,000 20,000 2,500 10
Laboratory 600,000 30,000 2,500 20
Radiology 800,000 40,000 2,500 30
Nursing 2,000,000 100,000 30,000 50
$4,550,000 200,000 40,000 135
6. List three examples of Relative Value Units (RVUs) common to health care.View Full Posting Details