Breakeven Analysis

Break-even Analysis

Ivelisse Pelaez

University of Phoenix Online

Accounting in Health Care Environment

ACC/HC561

Professor Brown

April 10, 2011

Diagnosis Relevant Group (DRG) analysis allows health care managers to decide and concentrate to the different levels of service that they want to deliver so that the organization could at least break even and possible stay away from any loses. Concentrating in the DGR analysis, health care management will have the opportunity to decide what the most appropriate level is, and be able to deliver services and making the most of any profits (Steven, & David, 2000). Therefore, maximizing profits on services with a minimum marginal cost will allow managers in the health care systems to be over the break even figures. The DRG analysis helps organizations make strategies that will minimize costs of operations, and will be higher than the break-even point so that the health care organizations does not have to face lower revenues.

With Diagnosis-Related Groups (DRG) managers have the ability to classify most procedures in their specific health care organization; managers will classify patients into similar groups even when patients have differences. The classifications may be based on a demographic area, level of treatment, age, medical necessity or diagnostic groupings. These types of classifications will allow managers to allocate the necessary and type of resources to treat the specific patient population in the most appropriate manner. Manager will have a more positive approach understanding the breakdown of specific grouping of patients, so that managers could make wise chooses to either continue providing the services or simple remove it from the line of service, as manager are evaluating to maximize certain strategies, managers will also be able to determine if advertising may be necessary to achieve capacity, or if capacity is already at the highest point. “Break-even analysis allows managers to evaluate which...