Table 3.

Calculation of Incremental Contribution Margin with and without the Hospitalist

			Group
Payer Category	Payer Mix	Measure	Hospitalist	Control	Variance
Per Diem	25%	Average payment per day	$1,418	$1,418	$0
		Average direct cost per day	$811	$670	$141
		Average length of stay	2.19	3.48	−1.29
		Cost of hospitalist per patient day	$46		$46
		Incremental contribution margin per patient	$1,229	$2,602	−$1,373
Per Case	75%	Average payment per case	$8,048	$8,048	$0
		Average direct cost per case	$1,775	$2,332	−$557
		Cost of hospitalist per case	$101		$101
		Incremental contribution margin per patient	$6,172	$5,716	$456
All Payers	100%	Contribution margin per patient	$4,936	$4,938	−$1.44
		Admissions to GMS	892	892	0
		Total contribution margin (unadjusted)	$4,403,220	$4,404,505	−$1,285
		Additional admissions with hospitalist	266
		Total contribution margin (adjusted)	$5,715,016	$4,404,505	$1,310,510

Notes: Unadjusted contribution margin does not include additional admissions generated by throughput improvement, while adjusted contribution margin includes the incremental margin from throughput improvement with the hospitalist. The cost of the hospitalist is averaged over the number of patients managed in a week with allowance for weekend coverage requirements, and it is expressed as a cost per patient day. Data on mean payment levels under per diem and per case reimbursement methods are estimated from modeled net revenue by payer produced by New England Medical Center's cost accounting system for the study patient population and cost data are estimated from the same source.