Fixed costs and average variable cost rate

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Reference no: EM13721623

Grandview Clinic has fixed costs of $2 million and an average variable cost rate of $15 per visit. Its sole payer, an HMO, has proposed an annual capitation payment of $150 for each of its 20,000 members. Past experience indicates that the population served will average two visits per year.

a) Construct the base case projected P&L statement on the contract.

d) What profit gain can be realized if the clinic can lower per member utilization to 1.8 visits?

Reference no: EM13721623

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