Question

PPO of Millbridge Township (PPOMT) sells health benefit plans to local employers. PPOMT charges its clients (local employers) $ 50 for each office visit provided to a covered employee. PPOMT contracts with individual physicians to provide the office visits to its health plan beneficiaries. PPOMT pays its contracted physicians a fee of $ 40 for each new patient visit and $ 30 for each follow- up office visit. Twenty percent of all office visits are new patient visits. PPOMT maintains an office building where all routine office visits are conducted, and pays $ 6,000 in occupancy expenses each month for the building. PPOMT also incurs monthly staffing costs of $ 12,000 for maintenance and administrative staff at its facility.
1. How many office visits must PPOMT deliver to break even?
2. Assuming that PPOMT’s facility is open 21 days in a typical month, how much profit will it earn if each of its five contracted physicians sees an average of 12 patients each day?



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  • CreatedDecember 19, 2014
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