The director of nursing has been asked to prepare an estimated budget for the intensive care department for the upcoming year

Question

The current fixed costs are $2,750,000, and the variable costs are $3,725,815. If the fixed costs are estimated to increase by 3% and the variable costs by 8% what should the director identify as the cost per patient day? (Calculate to the nearest whole number.)

Answer 1

Correct Answer: $11,024

Total costs of care are a sum of fixed costs and variable costs. Fixed costs are those that do not fluctuate with census or volume; examples are salaries of managers and salaries of the minimum number of nurses needed to staff a unit. Variable costs are a function of census or volume and are over and above the fixed costs. The total costs are used to calculate the cost per unit of service, which in many hospitals is the cost per patient day. For this situation the director should multiply the current fixed costs by 3%, multiply the current variable costs by 8%, add these two figures together, and then divide by 365, which is the number of days in a year: $2,750,000 × 3% = $82,500 + $2,750,000 = $2,832,500; $3,725,815 × 8% = $298,065 + $3,725,815 = $4,023,880; divided by 365 = $11,024, so this is the cost per patient day in the intensive care area.