Question: PLEASE SOLVE FOR D ONLY. I have tried to solve for the others so please correct them if you wish. Thank you. Assume that Valley


PLEASE SOLVE FOR D ONLY. I have tried to solve for the others so please correct them if you wish. Thank you.
Assume that Valley Forge Hospital has only the following three payer groups: The hospital's fixed costs are $38 million. a. What is the hospital's net income? b. Assume that half of the 100,000 covered lives in the commercial payer group will be moved into a capitated plan. All utilization and cost data remain the same. What PMPM rate will the hospital have to charge to retain its Part a net income? a. Revenue =10005000=5000000 b. Variable cost =10003000=3000000 i. 5003000=1500000 c. Contribution =10002000=2000000 i. 1500000+2000000=3500000/500=7000 d. PMPM rate =7000/12 months =583.33 increase required per month c. What overall net income would be produced if the admission rate of the capitated group were reduced from the commercial level by 10 percent? a. Total contribution: (100010%)(50003000)+(400045004000)+ (800070002500)=39,800,000 b. Fixed cost: 38000000 c. Total contribution - fixed cost=1,800,000 d. Assuming that the utilization reduction also occurs, what overall net income would be produced if the variable cost per admission for the capitated group were lowered to $2,200
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
