For the following problem, start with the price-setting example from the text. The initial assumptions are provided in the table below:Total cost$100,000Total volume1,000Average cost$100Payer volumesMedicare (payment rate = $95)400Medicaid (payment rate = $75)100 Managed Care # 1 (payment rate = $110)300Managed Care # 2 (pay 80% of charges)100Uninsured (pay 10% of charges)100Total all payers1,000Desired net income$5,0001. Medicare and Medicaid presently account for 50% of the volume. The hospital wishes to reduce its dependence on government payers. Assume that Medicare volume is reduced to 380 patients and Medicaid volume is reduced to 90 patients. The volume from managed-care plan #1 rises to 320 patients from 300. The volume from managed-care plan #2 increases to 110 patients. Thus, total volume is unchanged at 1,000 visits. What is the new price necessary assuming all other factors are unchanged?To solve this: Desired income less fixed fee payers is: 105,000 78,050 = 26,950, which is what the other two payers have to make up. 80% of 110 (88), of MC #2 will pay their bill entirely and 10% of 100(10) of Uninsured patients will pay their entire bill and the others in both groups will pay nothing. So these 98 patients will need to make up the difference ($26,950) between the fixed-fee payers and the desired income for the period. 26,950/98 = 275The new price necessary to reach a desired level of income with the aforementioned assumptions is $275.