DRG Patient Classification - Essay Example

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DRG Patient Classification

Breakeven Analysis Sales variable cost fixed cost Allocation JFC Total FC Breakeven units HR gross margin DRG M 1700 1000 500,000 415000 915,000 1307 2 41.18% DRG J 2600 1200 280,000 249000 529,000 378 5 53.85% DRG P 900 600 110,000 166000 276,000 920 1 33.33% Total 890,000 830000 1,720,000 The company has three different DRG type patients to which the firm provides its health service. The three different types of patients generate various types of revenues streams. The DRG J patients generate $2600 in treatment cost which is the highest revenue figure among the three types of patients. The DRG J patients also have the highest contribution margin at $1400, but also the highest profit margin at 53.85%. One of the negative aspects about the treatment of DRG J patients is that it takes company 5 hours to complete a treatment session for these patients. Time consuming patients limit the ability of the clinic to have high patient turnover. Fewer patients are served each month when a clinic has to spend 5 hours in DRG J patients instead of the two hours and one hour its takes to serve DRG M and DRG P type patients. The DRG P patients have the lowest patient charge at $900. The good aspect of treating the DRG P patients is that the clinic only has to consume one hour of time to serve them. ...Show more

Summary

The use of DRG patient classification has helped the Beach Street office of Getwell Clinics isolate patients which created a systematic way to visualize each type of patient as a profit center. The raw data the clinic has includes patient charge, variable costs, fixed cost, hour per treatment, and joint fixed cost…
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