1. What is the hospitals' net income? 2. Assume 100,000 covered lives. Assume that 75,000 of these individuals will be moved into a capitated plan. What PMPM rate will the hospital have to charge to retain its net income? 3. What overall net income would be produced if the admission rate in the capitated group would be reduced by 20%? 4. Assuming the utilization reduction from #3 above remains, what income would be produced if the variable cost per admission were lowered to $3,000?

2. Assume 100,000 covered lives. Assume that 75,000 of these individuals will be moved into a capitated plan. What PMPM rate will the hospital have to charge to retain its net income? 3. What overall net income would be produced if the admission rate in the capitated group would be reduced by 20% ? 4. Assuming the utilization reduction from #3 above remains, what income would be produced if the variable cost per admission were lowered to $3,000