Question
19. Breakeven. Sure Care Health Maintenance Organization is seeking a managed care con- tract with a local manufacturing plant. Sure Care estimates that the cost
19. Breakeven. Sure Care Health Maintenance Organization is seeking a managed care con- tract with a local manufacturing plant. Sure Care estimates that the cost of providing preventive and curative care for the 500 employees and their families will be $120,000 per month. The manufacturing company offered Sure Care a premium bid of $250 per employee per month.
a. If Sure Care accepts this bid and contracts with the manufacturing firm, will Sure Care earn a profit or loss for the year? How much?
b. What premium per employee per month does Sure Care need to break even?
c. If Sure Care wants to earn $120,000 in profit for the year, what is the required premium per employee per month? d. What concerns Sure Care in this analysis?
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