What would be the estimated profit or loss associated with the Medicare service line?

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November 16, 2020
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What would be the estimated profit or loss associated with the Medicare service line?

What would be the estimated profit or loss associated with the Medicare service line?

The president of Gentiva Health Services is considering increasing her number of Medicare patients served next year. However, to do so she must begin to use RNs for client visits, which Medicare reimburses at $45 per visit. An RN costs $35 per hour versus the current cost of $15 for an LPN or nurse’s aide. The president believes she can increase her patient visits by 15% by accepting Medicare patients. She is also aware that if she increases her Medicare patients, the company’s administrative costs will increase by approximately $10,000 per year because of the claims file complexity.

Using the Gentiva Health Services Statement of Income http://investors.gentiva.com/financials.cfm, use the following volumes for your calculations: Volume for the year:

• Flexible budget: 6,000 visits

• Static budget: 5,945 visits

• Actual budget: 5,889 visits Prepare a two-page report that addresses the following:

1. How many more visits will the company generate if it accepts Medicare patients?

2. What would be the estimated profit or loss associated with the Medicare service line?

3. Would you recommend that Gentiva Health Services increase its number of Medicare patients served? Why or why not?

Business Plan

Review the quarterly report and develop a business plan for the organization for its upcoming financial year. Be sure to include the following in your organized business plan:

• Organization segment

• Marketing segment

• Financial segment

• Projected cash flow statement

• Projected income statement

• Projected balance sheet

Feel free to take liberties with information needed that is not available in the report.

You may find the quarterly report at http://investors.gentiva.com/financials.cfm Include all required tasks for this assignment in a Word document.

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