Revenue cycle management. Penn Hospital generated net patient revenues of $225 million for 20X1, and its cash collections were $210 million. The revenue cycle management costs to collect these...

Revenue cycle management. Penn Hospital generated net patient revenues of $225 million for 20X1, and its cash collections were $210 million. The revenue cycle management costs to collect these revenues were $8 million.

a. Compute Penn’s cost to collect for the year, and provide an assessment of how this cost compares with the hospital industry benchmark of 3 percent.

b. Compute Penn’s cost to collect for the year if 35 percent of the cash collections during the year required human intervention and its EDI costs were $600,000. Provide an assessment of how this cost compares with the hospital industry benchmark of 3 percent.