Reference no: EM133179414

Question - Assume that CMS (i.e. Medicare) is in current negotiations to contract with St. Vincent's Outpatient Clinic to pay $10,000,000 to provide care to 20,000 individuals (covered lies). If accepted the contract is set to initiate on January 1st, 2022. Actuarial information has identified that these covered lives will need approximately 3.5 visits a year. The clinic's managerial staff has identified the following cost estimates for the clinic: Variable Costs per Visit: $30; Fixed Costs: $7,000,000.

Required -

A. Please identify the total number of expected visits for the covered lives and the project total costs of providing care to this population. Also, based on your financial calculations, would the clinic be able to make a profit on this deal? (In order to receive full credit, please show all work).

B. During the contract period (01/01/2022- 12/31/2022, assume that the Centers for Disease Control & Prevention (CDC) released its quarterly vital statistics (MMR) report. Due to the current Covid 19 pandemic and the start of the influenza season, health providers should expect to see a significant increase in patient visits. Conservative estimates have identified that the pandemic and influenza season may increase patient visits by 2 (to a projected 5.50 visits per member). Based on your financial calculations, how would this increase in utilization affect the clinic? Should we be concerned or not? Why? (In order to receive full credit, please show all work).

C. Please identify at least two potential strategies the clinic should undertake to mitigate the potential effects of this forecast. (Please ensure that your responses to this question can be clearly identified).