All utilization and cost date remain same what pmpm rate

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Reference no: EM13477076

Assume that Valley Forge Hospital has only the following three payers groups:

Payer Num of Admissions Ave Revenue PA Variable Cost PA

PennCare 1,000 $5,000 $3,000

Medicare 4,000 $4,500 $4,000

Commercial 8,000 $7,000 $2,500

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 will be removed into capitated plan. All utilization and cost date remain the same. What PMPM rate will the hospital have to charge to retain its Part a net income?

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?

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?

Reference no: EM13477076

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