What is the hospitals current receivables balance

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Reference no: EM13850411

A company has annual revenues of $14, 400,000. It has 2 major third party payers, and some of its patients are self payers. The hospital's patient account manager estimates that 10% of the hospital's billings are paid on day 30. 60% are paid on day 60 and 30% are paid on day 90.

a. What is the average collection period ( assume 360 days per year)

b. What is the hospital's current receivables balance?

c. What would the hospital's new receivables balance if a newly proposed electronic claims system resulted in collecting from third party payers in 45 and 75 days instead of 60 and 90 days?

d. Suppose the hospital's annual cost of carrying receivables is 10%. If the electronic claims system costs $30,000 a year to lease and operate, should it be adopted? Assume that the entire receivable balance has to be finance?

Reference no: EM13850411

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