Reference no: EM131013863

Memorial Hospital is trying to calculate their expected payments from a proposed fee structure with a local HMO.

The HMO projects its hospital budget at 465 patient days per 1,000 members, with a payment rate of $1,000 per, patient day. The covered population is 25,000 members which produces a hospital budget of $11,625,000 (465 x 25x $1,000). The HMO proposes that a 10% withhold be put into effect, which translates to an actual per diem payment of $900. The hospital and the physicians would share the risk pool equally, each receiving one half of anybalance at the end of the contract period. The HMOwould assume any negative balance to the risk pool.Calculate the amount of payment to Memorial Hospital under two assumptions: 500 patient days per 1,000 and 400 patient days per 1,000.