Greed is Good

It all began with a little tweak in the system, with a little deregulation. After the Great Depression, two new laws were enacted in the United States – the Glass-Steagall Act and the Securities and Exchanges Act- aimed at curbing the financial mismanagement that led to it. They restricted irresponsible dealings and required regular and extensive disclosure of financial information. The banking sector was tightly regulated. All was going good and no one suspected the financial sector for a long time; until the Oil Shock struck the world. The Arabs were making money rapidly-faster than they could consume it. Their reserves of petro-dollars was doubling by the day and quadrupling overnight. They invested all this in western banks. The banks now had more deposits than investments. Ideally, this is a good place to be in. But greed crept in through the backdoor. The banks did not want to sit on all the green that they had going on for them. They wanted to ‘investâ€⠄¢ it and ‘diversify’ their funds. They argued that they could allocate all the resources (money) they had more effectively. Of course there would be the occasional profits, they said, but that is all a by-product of a much greater enterprise. In effect their arguments veiled selfishness as altruism. Regan, it seems, was won over by this argument or probably his funders were. There were substantial deregulations during his administration. Of particular relevance is the Garn-St.Germain Act which deregulated the Savings and Loans (SL) companies. This led to a slew of irregularities in this sector. What came into play was a principle that has run amuck whenever a financial crisis has struck – the principle of Moral Hazard, which means that someone else must pay for your sins. It was and still is a very attractive principle for the capitalists. It means that they can take unlimited risks without any liability. When the SL companies were deregulated they were allowe d to play with the life savings of thousands of people. They could throw it anywhere they liked and all they lost was nothing. It was the taxpayers who lost money. There was a $124 billion bailout, courtesy of the honest taxpayer. They were scammed by the Regan Administration, hands-in –glove with the SL companies. This, though, did not mean that there was no accountability. There was the conviction of Charles Keating followed by Michael Milken, Ivan Boesky et al for fraud and insider trading. But neither did it make up for the lax enforcement of law and the deregulations nor did the people get their hard-earned money back. Overall, it was a post-dated cheque. With Bill Clinton in office, Wall Street and Washington got cosier. Under his administration, the Gramm-Leach-Bliley Act was passed. It repealed the Glass-Steagall Act and paved the way for the formation of Citigroup, hence its nickname – The Citigroup Relief Act. As a matter of fact, when the Fed was given pow ers to regulate the financial industry, Alan Greenspan refused to do so, saying that it was unnecessary. After that, the Clinton Administration, especially Larry Summers, Alan Greenspan and Phil Gramm, helped enact the Commodity Futures Modernization Act which banned all regulation of derivate trading and exempted them from anti-gambling laws. A word about the derivate is in order here. In general, they are agreements between two parties that is dependent upon a future outcome. What it is dependent upon and how exactly the future outcome determined is is every mathematician’s nightmare. These financial instruments do not have a value of their own accord. They derive them from various other factors, which, again, are incredibly complex. Along with CDS and CDO’s they form the bedrock of the 2008 crisis. Hardly anybody could understand what it was, using them was a different matter altogether. It was and still is a cruel joke. When Gorge Bush reigned over the United States, the warning signs were all over. The sickening economy was starting to reveal its ugly symptoms. Fannie Mae Freddie Mac ‘s massive accounting fraud was followed by Worldcom inflating its assets by $11 billion. Arthur Andersen was convicted for shredding Enron documents, which may have concealed another scam. Amidst all this, a new variety of extremely complex financial instruments arose – securitization of mortgages in the form of credit default swaps (CDS) and co-lateral debt obligations (CDO). I reiterate what I said earlier – no one , except the statisticians who designed them, knew what they were. That group of ignoramuses included traders and economists. Instead of checking this alarming development, the SEC lifted the leverage limits on the investment banks. Leverage is the ratio of a company’s debt to its total finance. After the SEC lifted the limits, this ratio ran as high as 33 to 1. It meant that a one percent decrease in their asset v alue could virtually wipe out the entire capital. This was indeed a very dangerous situation. In real terms, it meant exploitation of the taxpayers’ money on unimaginable scales. Gradually, a massive housing and credit mortgage bubble grew, fed by the investment banking industry. It was threatening to overwhelm the US economy. Raghuram Rajan, the former chief economist at the IMF, warned of this danger and Larry Summers promptly dismissed him as a Luddite. After the warning and dismissal, Goldman Sachs, Morgan Stanley, Deutsche Bank et al, used CDS to bet against their own securities. What this meant was that they were selling ‘stuff’ to their investors saying that their investment was safe, while at the same time betting that it would fail. They were betting against themselves. It was a crazy system (I do not know if I can use the word system). In 2007, house ownerships were at an all time high while savings at an all time low. The housing bubble burst. The su b-prime mortgage crisis hit the world. March 2008, Bear Stearns collapsed followed by the Lehman Brothers in September. AIG was circling the drain. The US economy was on the verge of a virtual meltdown. A fluttered Bush administration, immediately injected money into the economy, the banks, I mean. A $700 billion emergency bailout was approved for the financial industry. Housing prices dropped by over 30% over the next three years, unemployment rose from 5% to 10% in a year; billions of dollars were lost to the people of the United States. The crisis had hit home. Washington and Wall Street remain unrepentant. Obama, the ‘change man’, appointed many Wall Street executives to senior regulatory and economic policy positions. The two have never been snugger. Democrats or Republicans, it does not matter, it never has. It looks like Greed has won in the long run.

Illegal Immigration Essay - 1018 Words

Preston Lorenz Period C 5/17/13 Immigration Essay Almost all of us can say we are children of immigrants. Either our great grandparents or grandparents came to America for a better life. We know that the Statue of Liberty and Ellis Island are the symbols of that great dream that so many sought so many years ago. During a visit to Ellis Island last summer I learned that during the early 1900’s we encouraged immigration because it was a time when our country’s territory had grown and we needed more people to help with the continued development of our country. Today, however, we find that immigration is not seen as a positive for our country, but rather it is unquestionably considered a problem today in America. Immigration law is in†¦show more content†¦Many illegal immigrants are coming over and cause crimes and endangering the American citizens. But not all illegal immigrants are bad some illegal immigrants are here because they are trying to make a better live for themselves. Illegal immigration also has a great cost as well. Illegal immigrant households imposed, in total, costs exceeding $26 billion for the federal government, while these immigrants paid only 16 billion dollars in federal taxes, therefore creating a fiscal deficit of $10.4 billion per year at the federal level. The largest contributors to this deficit were Medicaid with $2.5 billion, medical treatment for the uninsured with $2.2 billion, food-assistance programs with $1.9 billion, the federal prison and court systems with $1.6 billion, and federal aid to schools with $1.4 billion. While I believe there are too many illegal immigrants to have them all deported, I do think that those illegal immigrants who are taking up criminal activities are the ones that should be deported; rather than put in our already overcrowded jails. I think the other illegal immigrants who actually want to become a citizen and make a life for themselves should be able to come forward, and if they pass criminal background checks and pay fees and penalties, they can then be eligible for a provisional legal status. Agricultural workers and those who entered as children should also be eligible for the same program. This wouldShow MoreRelated Illegal Immigration Essay1105 Words   |  5 PagesIllegal Immigration   Ã‚  Ã‚  Ã‚  Ã‚  One of the most controversial political issues of today is that of illegal immigrants from Mexico. Illegal immigration into the United States is a problem that should be stopped, as it is unfair to both Americans and to the people of the country from which they illegally immigrated. It is thought that the majority of illegal aliens residing in the U.S. are Mexicans (Anderson 55). Roy Beck clarifies the situation by stating, The national consensus is that the UnitedRead More Illegal Immigration Essays1289 Words   |  6 PagesIllegal Immigration and Health Care With the economy of the United States in shambles, illegal immigration and the effects it has on health care can no longer be ignored. America has a whole needs to be concerned and well informed of the issues rather than collecting information piecemeal by way of media or other biased groups. If illegal immigration stays its present course the American tax-payer will continue to fund the well being of individuals who have broken federal rules and regulationsRead MoreEssay On Illegal Immigration703 Words   |  3 PagesIllegal immigration has negatively affected our country economically and has increased crime rate over the past few decades. Yearly it has cost 2.2 billion dollars to educate 408,000 illegals k-12. In 2002 3,400 immigrants that were convicted with rape, murder, and assault were released. Also 475,000 immigrants travel to the United States illegally. And it is overwhelming of the amount of illegal immigrants to try find and take care of them. The amount of Illegal immigration causing crime rateRead More Illegal Immigration Essay2615 Words   |  11 PagesIllegal immigration is a grave issue that affects everyone in the world. Illegal immigration is the process of an alien, or non-citizen, who has entered a country without government permission or stayed beyond the termination date of a visa (Free Online Law Dictionary). The flow of illegal immigrants is almost entirely from countries of lower socioeconomic levels to countries of higher socioeconomic levels. Basically, foreigners tend to migrate from undeveloped countries to developed countries. ManyRead MoreIllegal Immigration Essay901 Words   |  4 Pagesunfortunately has a poor economy with a high population and the country is still engaged in a war with various Mexican drug cartels which kills more than 80,000 people every year (â€Å"Reasons for Illegal Immigration). Therefore, United States, being one of the most prosperous countries, attracts many of these il legal immigrants. It provides freedom of speech and religion, steady jobs, a safe environment, and benefits for the poor and unemployed. It has become a home to many of them. Some individualsRead More Illegal Immigration Essay2796 Words   |  12 PagesIllegal immigrants in the United States (US) have long been a topic of debate for policymakers and the public. The rationale about them is that they do not pay taxes; they add to the costs of taxpayers and use up funds in resources meant for assisting citizens and legal immigrants (the legal citizens). Therefore, they are perceived as a threat to the US economy. The true impacts of illegal immigrants on the US economy are discussed by debating over the economic benefits as well as economic costsRead MoreIllegal Immigration Essay1838 Words   |  8 PagesThe subject of illegal immigration seems to be a very hot-button topic for many Americans. The subject seems to lose public outcry on either side at any given moment, then suddenl y cause tremendous tremors on our social conscious. The subject of illegal immigration has many sub-issues, but one of the most problematic is that illegal immigrants are a financial drain on the American economy. Ellis Island is the location where European immigrants passed through and were documented. According toRead MoreEssay on Illegal Immigration1966 Words   |  8 PagesWhat Are The Negatives of Illegal Immigration in The U.S.? 1.) What I already know (and don’t know) about my topic I know that illegal immigration is a big topic that is always talked about in the United States. I know that some people believe it is a big problem, but others don’t think it is a problem at all. I know that illegal aliens come to our county for many different reasons. Some of them include work, to get a better life, or to escape a dangerous homeland. These immigrants have to comeRead MoreArgumentative Essay : Illegal Immigration2523 Words   |  11 PagesArgumentative Essay on Immigration Illegal immigration has been a problem for the United States for a long time. This phenomena is not new and thousands of illegal immigrants have come into US through either the Mexico border, the Pacific Ocean, or through many other ways. Some people have entered the country legally through a visit visa, but then have stayed illegally and are working in various places. Illegal immigration is a double edged sword; on the one hand it provide the local economy withRead More Illegal Immigration Growing on the U.S. Essay859 Words   |  4 PagesIllegal Immigration Growing on the U.S. In â€Å"Illegal Immigrants Do Not Harm America’s Economy,† Brian Grow and his colleagues, reporters for Business Week, argue that rather than damaging it, illegal immigrants actually help the economy by paying taxes and advancing general economic growth. The writers are responding to claims that illegal immigrants receive unwarranted negative attention for supposed drains on public services. They also address the fact that, despite possible legal ramifications

The Battle Of The Texas Revolution - 1910 Words

Our next discussion in American History takes us on the special journey back to the Texas Revolution. This battle saw a lot of heroes and also coined one of the most famous sayings in the state of Texas, â€Å"Remember the Alamo†! However, before we can get to all the guts and glory we must first look at the causes that lead to this epic revolution to understand both sides of the coin. I will look at the background, battles, people and results of the Texas Revolution, as well as give my opinion of the Mexican government’s innocence or blame in this battle. This story starts back on 10/01/1800, it is this day that the Treaty of San IIdefonso was signed. When the treaty was signed it returned Louisiana from Spain back to France. Spain†¦show more content†¦This is a point where Mexico only had 3,500 native Mexicans settled in Texas; so in 1821, the Spanish government granted permission to Austin to settle 300 families in Texas. Austin’s luck was about to turn around for him with this deal. On the other hand, he would not see his vision come to fruition, as he would perish on a return trip from Mexico City after being robbed. Before his untimely passing, his son Stephen F. Austin promised his father he would carry out the task and see it until the end. The year is now 1824 and a young Stephen F. Austin has attracted 272 colonists to Texas at this point; in addition to that he was also able to persuade the newly independent Mexican government to give empresarios (or land agents) 67,000 acres of land for every 200 families brought to Texas. That’s approximately 335 acres a family which is unheard of. Mexico did agree to the term with two conditions pertaining to land ownership; first the settlers had to become Mexican citizens and secondly they had to covert to Roman Catholicism. Converting to Roman Catholicism proved to be a â€Å"Puritan Problem†, however by 1830 there were 16,000 Americans in Texas. With these numbers the American formed a 4-to-1 majority in the northern section of Coahuila y Tejas, however overall Hispanic heritage formed a majority in state as a whole. With the increased swelling of the â€Å"Anglo†

How Women Abolitionists Fought Slavery

Abolitionist was the word used in the 19th century for those who worked to abolish the institution of slavery. Women were quite active in the abolitionist movement, at a time when women were, in general, not active in the public sphere. The presence of women in the abolitionist movement was considered by many to be scandalous—not just because of the issue itself, which was not universally supported even in states that had abolished slavery within their borders, but because these activists were women, and the dominant expectation of the proper place for women was in the domestic, not the public, sphere. Nevertheless, the abolitionist movement attracted quite a few women to its active ranks. White women came out of their domestic sphere to work against the enslavement of others. Black women spoke from their experience, bringing their story to audiences to elicit empathy and action. Black Women Abolitionists The two most famous black women abolitionists were Sojourner Truth and Harriet Tubman. Both were well-known in their time and are still the most famous of the black women who worked against slavery. Frances Ellen Watkins Harper and Maria W. Stewart are not as well known, but both were respected writers and activists. Harriet Jacobs wrote a memoir that was important as a story of what women went through during slavery, and brought the conditions of slavery to the attention of a wider audience. Sarah Mapps Douglass, part of the free African American community in Philadelphia, was an educator who also worked in the antislavery movement. Charlotte Forten Grimkà © was also part of the Philadelphia free African American community involved with the Philadelphia Female Anti-Slavery Society.   Other African American women who were active abolitionists included Ellen Craft, the Edmonson sisters (Mary and Emily), Sarah Harris Fayerweather, Charlotte Forten, Margaretta Forten, Susan Forten, Elizabeth Freeman (Mumbet), Eliza Ann Garner, Harriet Ann Jacobs,  Mary Meachum, Anna Murray-Douglass (first wife of Frederick Douglass), Susan Paul,  Harriet Forten Purvis, Mary Ellen Pleasant, Caroline Remond Putnam, Sarah Parker Remond, Josephine St. Pierre Ruffin, and Mary Ann Shadd. White Women Abolitionists More white women than black women were prominent in the abolitionist movement, for a variety of reasons: Although the movement of all women was restricted by social convention, white women had more freedom than black women to move about.White women were more likely to have the income to support themselves while doing abolitionist work.Black women were, after the Fugitive Slave Act and the Dred Scott Supreme Court decision, at risk of capture and transport to the South if someone alleged (rightly or wrongly) that they were escaped slaves.White women were generally better-educated than black women were (even though not at all on a par with the education of white men), including in formal oratory skills popular as a topic in education at the time. White women abolitionists were often connected with liberal religions like the Quakers, Unitarians, and Universalists, which taught the spiritual equality of all souls. Many white women who were abolitionists were married to (white) male abolitionists or came from abolitionist families, though some, like the Grimke sisters, rejected the ideas of their families. Key white women who worked for the abolition of slavery, helping African American women navigate an unjust system (in alphabetical order, with links to find more about each): Louisa May AlcottSusan B. AnthonyAntoinette Brown BlackwellElizabeth BlackwellEdnah Dow CheneyLydia Maria ChildLucy ColmanPaulina Kellogg Wright DavisMary Baker EddyMargaret FullerAngelina Grimke and her sister, Sarah GrimkeJulia Ward HoweMary LivermoreLucretia MottElizabeth Palmer PeabodyAmy Kirby PostElizabeth Cady StantonLucy StoneHarriet Beecher StoweMary Edwards WalkerVictoria WoodhullMarie Zakrzewska More white women abolitionists include: Elizabeth Buffum Chace, Elizabeth Margaret Chandler, Maria Weston Chapman, Hannah Tracy Cutler, Anna Elizabeth Dickinson, Eliza Farnham, Elizabeth Lee Cabot Follen, Abby Kelley Foster,  Matilda Joslyn Gage,  Josephine White Griffing, Laura Smith Haviland, Emily Howland, Jane Elizabeth Jones, Graceanna Lewis, Maria White Lowell, Abigail Mott, Ann Preston, Laura Spelman Rockefeller, Elizabeth Smith Miller,  Caroline Severance,  Ann Carroll Fitzhugh Smith, Angeline Stickney, Eliza Sproat Turner,  Martha Coffin Wright.

Candidate - 683 Words

Fairfax Metropolitan Hospital: The Candidate Fairfax Metropolitan Hospital: The Candidate M. June Allard Assumption College Worcester State College Professor Emerita Fairfax Metropolitan Hospital is a moderately sized teaching hospital committed to quality care from a qualified staff. The hospital currently suffers from a lack of diversity among its staff, however—a glaring fault in nearly every unit at the hospital and one pointed out by several accrediting agencies. The hospital now seeks to develop a more diversified staff, which they define as one representing the racial/ethnic diversity of their community. In addition to diversifying, there is an urgent need to modernize the nursing department, as its†¦show more content†¦As the HR manager listens, themes emerge from the committee’s discussion of Dr. Soysa. Typical of the comments he hears are the following:â€Å"I am concerned about her health, given that she is so overweight.†Ã¢â‚¬Å"Did you notice how much she ate at lunch?!â€Å"It’s important that we present a good public appearance . . .†Ã¢â‚¬Å"This job involves a lot of public relations; the director has a lot of public exposure† â€Å"Too bad our benefits don’t include fitness clubs or Weight Watchers!†Ã¢â‚¬Å"I just don’t know about her . . .† â€Å"She is qualified, but . . .†Ã¢â‚¬Å"And she is so much younger than the other directors! Do you think she is too young to fit with them?â€Å"Experienced nurses might not accept her . . .†Ã¢â‚¬Å"I just don’t know if she would fit well with our organization.† Someone suggests that maybe they should select one of the male candidates, since there are few male nurses in the unit and the hospital has never had a male in the nursing director’s position. Someone else tentatively suggests that maybe the search should be reopened. As the committee continues its discussion, the HR director is aware that no one is arguing for any other candidate in particular.There seems to be implicit acceptance that Saryn Soysa is by far the best qualified; easily head and shoulders above all the other candidates. Their conversation, however, reflects reservations tinged with some prejudices. Jorge knows that the search team is conscious of its charge to diversify the nursing unitShow MoreRelatedThe Kentucky House Of Representative Candidates Forum For House Districts1167 Words   |  5 PagesThe second group I attended was the Kentucky House of Representative Candidates Forum for house districts: 7, 11, 12, 13, and 14. This group was attended by me via online and took place on campus at Brescia University in Owensboro Kentucky. The Candidates Forum was held on Monday October 17 from 7:00pm-8:30pm CDT. The scene was that of an auditorium with six candidates seated at a table in the front and to what appeared to be the group moderator at a podium to the right of the room. The camera didRead MoreThe Strengths and Weaknesses of the System of Choosing Presidential Candidates1877 Words   |  8 PagesPresidential Candidates It seems reasonable to conjecture that the Achilles heel of the modern presidency is one of recruitment. The long-winded delegate nomination process could in theory be replaced by a daylong direct election of presidential candidates. Instead, tradition dictates that the presidential race is drawn out quadrennially over the pre-primary, primary, Party Convention and campaign seasons. All four phases influence the outcome of candidate selectionRead MorePresidential Candidate Donald Trump s Campaign Strategy And Plan1424 Words   |  6 PagesI would like to discuss Presidential Candidate Donald Trump’s campaign strategy and plan. Donald Trump is a commonly known business mogul and celebrity. He is mainly known for his very large ego and commentary as well as his Real Estate background passed down from his father. He has gone bankrupt three times, which seems to be a large contradiction among his great deal of success of which he claims. Regardless of his past Donald Trump has decided and announced that he is running for presidentRead MoreAnalysis Of The Movie The Manchurian Candidate 1756 Words   |  8 PagesOn the surface, the movie The Manchurian Candidate presents a parallel universe inspired by the paranoid right-wing illusions of people who believed in the Red Scare. The film itself crosses over into several different dramas: war film, political satire, par anoid science fiction, black comedy, suspenseful intrigue, and horror. The notion that the Russian and Chinese Communists were working together to take over the U.S. by infiltrating them was a common idea. Because of the communist brainwashingRead MoreThe Manchurian Candidate by Johnathan Demme Essay1106 Words   |  5 PagesThe Manchurian Candidate, Johnathan Demme directed the remake. Both films portray paranoia, mind control, and conspiracy. Frankenheimer utilizes satire, humor, and symbolism to convey the themes, whereas, Demme uses modern fears, camera angles and focus, and mental illness to achieve similar results. Many of the elements of the 2004 remake have been modernized. While the original movie placed the soldiers in Korea, the remake placed them in Kuwait. Demme did changed the location of the war, in orderRead MorePlot Summary and Review of The Manchurian Candidate Essay739 Words   |  3 PagesThe suspenseful thriller, The Manchurian Candidate, was directed by John Frankenheimer, and written by George Axelrod. The movie is based on a 1959 novel written by Richard Condon. It was released in 1962 but was pulled after the assassination of John F. Kennedy, only to be re-released in 1987 and remade in 2004. The Manchurian Candidate is a movie about a government conspiracy mainly involving a former Korean Prisoner Of War, Sergeant Raymond Shaw, played by Laurence Harvey who was thought to haveRead MoreAssignment 034 Understand the Needs of Children and Young People Who Are Vulnerable and Experiencing747 Words   |  3 Pagesdisadvantage 5. 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We appreciate it when candidate take the time to demonstrate how their past experiences will be transferrable into the locating they are applying for. Whether we talk to candidates in individual or read a cover letter of the alphabet submitted online, we appreciate hearing about their ability to establish lasting human relationship with others and how

Disparity Between Imprisonment Rate And Crime Rate

The Disparity Between Imprisonment Rate and Crime Rate in Australia By Christopher Batho During the period of 2002 to 2014, the imprisonment rate in Australia increased while at the same time the crime rate decreased. This essay will aim to give reasons and theories as to why this apparent disparity between the rising imprisonment rate and decreasing crime rate exists. To do this, the purposes for punishment will be examined, how and why this purpose of punishment has changed over time, the sociological and criminological theories that best explain this disparity, and finally the implications on society through these criminal justice trends. However firstly we will examine the statistics that prove this disparity. Between 2002 and†¦show more content†¦Property crime includes unlawful entry with intent (UEWI), motor vehicle theft (MVT) and other theft. The total number of offences for property crime has decreased from 1,188,582 in 2002 to 773348 in 2012. From both sets of data, it can be calculated that in the period of 2002 to 2012, the impr isonment rate increased 13.5 percent yet the violent crime and property crime rates decreased 26 percent and 35 percent respectively. The question is, how is this possible? This will be answered later but now the purposes for punishment will now be studied. When a person is guilty of a crime, it is society’s job to punish this person for their act. Once the person has been found guilty, they are then sentenced by a judge with a certain purpose or purposes for the punishment. The main four purposes used are retribution, deterrence, rehabilitation and incapacitation. Retribution is defined by Mani as the offender ‘must be punished simply because the wrongful act merits condemnation and punishment.’ (Reference). Deterrence is ‘based on the idea that criminal behaviour can be deterred if punishment is swift, certain, and severe enough to counter the benefits or pleasure gained from committing crime.’ (Reference). Rehabilitation of an offender may be achi eved through education or therapy. However, it must be understood that in order for rehabilitation to be

Getwell Clinic Breakeven Analysis free essay sample

GETWELL CLINICS BREAKEVEN ANALYSIS Analyzing Break-Even Points and Dealing with Practice Constraints INSTRUCTIONS: FILL IN THE YELLOW HIGHLIGHTED AREAS †¢ Explain the relevance of Diagnosis Related Groups (DRG) analysis as a tool that drives costs and affects management decisions in health care. Diagnosis Related Groups is a system that categorized patients into specific groups based on their medical diagnosis and other characteristics, such as age and types of surgery, if any. DRGs are currently used by Medicare and some other hospital payers as a basis for payment (Finkler, 2007). What this does is help an organization determine the resources that will be needed to treat each patient and what the costs will be. Using DRGs as a tool allows the health care organization to develop segments for each patient and give a breakdown of each group of patients. Doing this it allows managers to gain an understanding of what is needed after reviewing each segment, on whether or not a service is still needed or if it should be dropped. We will write a custom essay sample on Getwell Clinic Breakeven Analysis or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Calculate the breakeven points, in numbers of treatments, for each type of DRG, using the weighted average contribution margin approach. 1. Break-even points for the three DRGs can be calculated using the following steps: (a) Find the weighted average charge and variable cost: DRGPROPORITIONChargeVariable Cost M45%x$2,000 =$900 45%x$1,000 =$450 J30%x$3,000 =$900 30%x$1,500 =$450 P25%x$1,200 =$300 20%x$300 =$60 Weighted average charge$2,100 Weighted average variable cost$960 (b) The appropriate level of fixed costs is:$3,310,000 b) This is appropriate level of fixed costs because: This is the appropriate level of fixed costs because if one added the total fixed costs of M,J,P together and then added the Joint Fixed Cost to that, they would get $3,310,000. (c) Calculate the break even point in total treatments as:break-even point in total treatments as:n point in total treatments as: BE =850,000/1,000 =$800,000 /$1,500 =$100,000 /$900 = 111. 11 Total Treatments (d) Distribute the tota l treatments among the three DRGs as follows: DRGPROPORITIONTOTAL TREATMENTS M45%x111. 11 =50 J30%x111. 11 =33 P25%x111. 11 =28 2. DRGChargeVariable CostContribution MarginAvg. Length of Procedure (# of hours)Contribution Margin per Hr. M$2,000 $1,000 $1,000 3 hrs$333 J$3,000 $1,500 $1,500 4 hrs$375 P$1,200 $300 $900 1 hrs$900 †¢ Propose recommendations that answer the following questions: o Which DRG must be promoted in an advertising program if the office has excess capacity? Explain why. After examining the calculations above, the DRG that must be promoted in an advertising program if an office has excess capacity would be DRG J. This is the case because it has the highest contribution margin of $1500, and the organization is not osing money in any way because it has excess capacity. The DRG with the highest contribution must be promoted to maximize Getwells profits. o Which DRG must be promoted if the office is almost at maximum capacity in terms of available hours? Explain why. If the organization is lost to maximum capacity when the hours are concerned they would need to promote DRG P. DRG P must be p romoted because in terms of contribution margin per hour, DRG P has the highest CM per hour and must be promoted to achieve maximum profitability. What rationale may be used to support the use of DRGs as an approach to allocating costs? Fixed costs remain the same, and this means the more the contribution yields, the organization will realize they are gaining more profits. Therefore, this is the rationale that could be used to support the use of DRGs as an approach to allocating costs. Finkler, S. A. , Ward, D. M. , Baker, J. J. (2007). Essentials of cost accounting for health care organizations (3rd ed. ). Sudbury, MA: Jones and Bartlett.