How much do Payors pay?
Before you can go on to calculating your revenue you need one more piece of information. In our oil change example we said that full price was $10 and the family discount price was $8. Then we went on to figure out the percentage of customers who pay each price. The payor mixes we have looked at for the hospital tell us the percentage of people who pay each price, but they don’t tell us what each price is. In the oil change example the prices were simply $10 and $8, but we were only dealing with one product. In a hospital it is more complicated than that. There are lots of services to consider, so here’s how the hospital handles it.

Setting Price
The hospital starts by setting a procedure price for every service performed in the hospital. Every service has its own price. For example, it may cost $100 to have an X-ray and $500 to have a CAT scan. Percentage of Price Made According to Payor Type The hospital also sets up a chart, similar to a payor mix, that tells them how much each payor category pays as a percentage of the full price. Let’s look at an example:

Just like in the payor mix you see each type of payor who comes to the hospital. The percentages you see represent how much the hospital makes for each type of patient. So when a service is performed on a Medicare patient the hospital only makes 30% of the total price. That means that even though X-ray costs $100, the hospital will only make $30 when the x-ray is performed on a Medicare patient.

In order to calculate how much money the hospital will make on a procedure you need the hospital’s Percent of Revenue Received table.