Solution-What is the clinic''s average net float

What is the clinic''s average net float

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Reference no: EM13693289

Problem: 1:- On a typical day, Park Place Clinic writes $1,000 in checks. It generally takes four days for those checks to clear. Each day the clinic typically receives $1,000 in checks that take three days to clear.
What is the clinic's average net float?

Problem: 2: - Drugs 'R Us operates a mail order pharmaceutical business on the West Coast. The firm receives an average of $325,000 in payments per day. On average, it takes four days for the firm to receive payment, from the time customers mail their checks to the time the firm receives and processes them. A lockbox system that consists of ten local depository banks and a concentration bank in San Francisco would cost $6,500 per month. Under this system, customers' checks would be received at the lockbox locations one day after they are mailed, and the daily total would be wired to the concentration bank at a cost of $9.75 each. Assume that the firm can earn 10 percent on marketable securities and that there are 260 working days and hence 260 transfers from each of the ten lockbox locations per year.
a. What is the total annual cost of operating the lockbox system?
b. What is the dollar benefit of the system to Drugs'R Us?
c. Should the firm initiate the lockbox system?

PROBLEM 3

Families First is a managed care plan that has been asked to submit a premium bid to ABC Company, a large

manufacturer in its service area. The premium bid includes the primary care for all of the ABC employees.

ABC has provided information about the age and gender of its employees, and Families First has identified

average primary care utilization rates from its own databases. This information is shown below:

ABC Company

Average primary care

Number of

visits per year

Age Band

males

females

Males

Females

20-29

285

325

2.10

3.18

30-39

100

2.60

3.52

40-49

3.28

3.93

50-59

4.14

4.43

60+

4.98

5.04

Each primary care physician can handle about 3,000 patient visits per year, for which he or she is paid

All America HMO pays its primary care physicians (PCPs) by capitation, but a percentage of the total
capitated amount is withheld and distributed to individual PCPs based on aggregate PCP performance. The
financial goal of importance to All America is to achieve total actual specialty care and hospital costs less
than budgeted. To this end, All America provides a financial incentive to its PCPs to encourage careful
referral of patients to these services. The financial incentive is based on the referral gain or loss, defined
as the difference between the actual and budgeted specialty care and hospital cost. More specifically, All
America uses the following risk sharing rules:

	If a total referral gain, then all of the total withhold is returned to the PCPs
	If a total referral loss < total withhold, then the difference (withhold - referral loss) is
		returned to the PCPs based on the number of patients per PCP
	If a total referral loss > total withhold, then none of the withhold is returned to the PCPs

Last year, All America's capitation payment to the PCPs was $20 PMPM, but 15 percent of this amount was
placed into the PCP risk pool. The budgeted amount for specialty and hospital costs was $50 PMPM. At
the end of the year, the following data were recorded for the four All America PCPs:

			Dr Smith	Dr Barney	Dr Wells	Dr Fargo
	Number of patients		600	800	1,000	1,600
	Actual referral costs		$504,000	$470,000	$590,000	$880,000

a. Calculate the total compensation of each PCP at the end of the year.
b. Were each of the PCPs fairly compensated? What incentives does this single risk pool based on aggregate
PCP performance present to the individual PCPs? What should be investigated to assess the fairness of
the PCP compensation?

Problem 4:

Pleasant View Nursing Home has decided to immunize its portfolio against interest rate and reinvestment
rate risk by buying a bond that has a duration equal to the years until the funds will be needed
(approximately ten years from today). The home is considering a 20-year, 9 percent annual coupon bond
bought at its par value of $1,000.
a. What is the duration of this bond?
b. If the nursing home purchases $4,224,000 worth of this bond, what would be the value of the bonds at the
end of the duration period if interest rates fall to 7 percent immediately after the purchase and remain at
that level? If interest rates rise to 12 percent?

Reference no: EM13693289

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What is the clinic''s average net float

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