Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

7.4 Assume that Valley Forge Hospital has only the following three payer groups: Number of Average Revenue Variable Cost Payer Admissions per Admission per Admission

7.4 Assume that Valley Forge Hospital has only the following three payer groups: Number of Average Revenue Variable Cost Payer Admissions per Admission per Admission PennCare 1,000 $5,000 $3,000 Medicare 4,000 4,500 4,000 Commercial 8,000 7,000 2,500 The hospital's fixed costs are $38 million, a. What is the hospital's net income? b. Assume that half of the 100.000 covered lives in the commercial payer group will be moved into a capitated plan. All utilization and cost data remain the same. What PMPM rate will the hospital have to charge to retain its Part a net income? c. What overall net income would be produced if the admission rate of the capitated group were reduced from the commercial level by 10 percent? d. Assuming that the utilization reduction also occurs, what overall net income would be produced if the variable cost per admission for the capitated group were lowered to $2,200

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Information for Decisions

Authors: John J. Wild

9th edition

1259917045, 978-1259917042

More Books

Students also viewed these Accounting questions

Question

1. Empirical or factual information,

Answered: 1 week ago

Question

1. To take in the necessary information,

Answered: 1 week ago