41- 60. (20 points) A consultant working for a small physicians practice group (16 physicians) is asked to estimate the net benefit of a proposed program for managing diabetes. The group serves a patient population of 7,200 persons.

About 20% of this patient population either has or is at high risk of developing diabetes. If the practice group initiates the proposed program, it is estimated that 60% of those patients either with or at high risk of developing diabetes will participate in the program. The diabetes management program would involve the practice group's board-certified endocrinologist, one of the practice group's registered nurses, a dietician (a consultant), and a program manager (full-time). The estimated annual costs of the program (beyond services already provided by the physicians practice group) are entirely the additional costs for the dietician (contract cost of $60,000/year) and salary and benefits for a program manager $75,000/year. Equipment/supplies/phone are estimated at $12,000/year.

Benefits of the program are estimated as the avoided costs of delivering additional medical services to those patients with diabetes and at high risk of developing it. Prior studies have indicated costs savings that average $2,300 per patient/year for those who participate in such a program, due largely to reduced rates of hospitalization.

41 - 45. (5 points) Calculate the annual cost of the proposed diabetes management program.

46 - 50. (5 points) Calculate the annual benefit of the proposed diabetes management program.

51 - 55. (5 points) Calculate the net benefit of the proposed diabetes management program

56 - 58. (3 points) Should the program be implemented?

59 - 60. (2 points) What's the efficiency of the program, as measured by the benefit/cost ratio?