Reference no: EM132705109

Family Medical Care (FMC) is a family medical practice with 8 physicians, a nursing staff of 10 to 12 nurses, and an administrative staff that varies from 6 to 9 personnel. Rajat Patel, the chief physician at FMC, is interested in studying the efficiency of the practice as a basis to set some benchmarks for further improvement, for rewarding his staff, and for comparing the efficiency of the FMC practice to other family medical practices. He is able to get comparable data for other practices from industry sources. So that the data are consistent with the industry sources, Patel has asked Marin & Associates, his accounting firm, to develop a set of productivity measures that would satisfy this requirement. Upon investigation, Joseph Marin finds that the measures to be used are the partial financial and operational productivity measures as defined in the chapter.

The following information is for the last 2 years for the FMC practice:

                                                        Current                  Period
                                                         Year                       Year

Patient visits                           34,000                29,400
Nursing hours used                     21,300                20,400
Administrative hours used             14,425                 14,425
Cost of nursing support per hour    $49.00                $48.00
Cost of administration per hour         $34.60           $34.00

Industry average financial productivity

Nursing                                       0.029               0.028
Administrative                              1.220                    1.240

Required:

Question 1. Compute the partial financial productivity ratios for nursing and administrative support for the current and prior year.

Question 2. Separate the change in the partial financial productivity ratio from the prior year to the current year into productivity changes, input price changes, and output changes.